Rabi MSPs reflect the govt desire to cut purchasing costs

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The Cabinet Committee on Economic Affairs (CCEA) approved minor increases in minimum support prices (MSPs) for crops to be grown during the rabi season beginning October 1 on Wednesday.

Given the forecast of ample rains this month, which could contribute to enhanced soil moisture conditions, hopes for a bountiful winter harvest have risen. The rise will ensure that growers receive fair rates for their produce, while the prices have been set to encourage crop variety, according to a statement from the agriculture ministry.

Lentil (Masur) and mustard have been given the greatest increases in MSP over the previous year (7.8% and 8.6%, respectively, or Rs 400 per quintal). In the case of safflower, a price increase of Rs 114 per quintal, or 2.1 percent, has been declared, compared to last year. According to the ministry, differential remuneration is intended to encourage crop diversity.

Wheat, the most important winter cereal, would have a new MSP of Rs 2,015 per quintal, up to Rs 40 or 2% from the previous year. In comparison to previous recent years, this is a smaller growth. This is significant since the government is dealing with increased grain production and the resulting strain on procurement.

In the years 2020-21, the country produced a record 109.5 million tonnes (MT) of wheat (July-June). The goal for this year is 110 MT.

Naturally, all MSPs follow the idea that these prices must be at least 150 percent of the manufacturing cost (A2+FL).

“Over the last few years, deliberate efforts have been made to realign the MSPs in favor of oilseeds, pulses, and coarse cereals to encourage farmers to shift to larger areas under these crops and adopt best technologies and farm practices, in order to correct the demand-supply imbalance,” according to the ministry. The Rabi MSP announcement for the crop year 2021-22 has been pushed back two weeks from the previous year.

The India Meteorological Department (IMD) has already forecast above-average precipitation for September, with 115 percent of the long-term average (LPA). So far in September, rainfall has been 115 percent of LPA, and a predicted wet spell in the coming week may be beneficial to rabi crops, as planting is slated to begin next month.

On the ground, the price support system without procurement does not appear to be working. Despite the fact that government purchases have grown in the recent five years compared to the preceding five, MSPs benefit largely paddy and wheat farmers in Punjab, Haryana, and Madhya Pradesh. Last year, the FCI purchased a large quantity of paddy in Telangana and Andhra Pradesh for the first time. The Centre procured roughly 1.2 MT of pulses and oilseeds in 2020-21, which is less than 2% of their total output of 61.8 MT. Paddy and wheat procurement, on the other hand, were 48 percent and 40 percent against the production, respectively.

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