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Centre Sets Minimum Support Price for Kharif Crops

  • 08 Jun 2023
  • 8 min read

Why in News?

The Indian government has approved the Minimum Support Price (MSP) for kharif crops for the 2023-24 season, aiming to provide fair remuneration to farmers.

  • However, concerns have been raised by farmers' organisations regarding the increase not keeping up with rising input costs.

What is Minimum Support Price?

  • MSP is the guaranteed amount paid to farmers when the government buys their produce.
    • Government announces MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
      • The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops.
    • In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.
    • MSP is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP), which considers various factors such as cost of production, demand and supply, market price trends, inter-crop price parity, etc.
      • CACP is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India. It came into existence in January 1965.
    • The Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Minister of India takes the final decision (approve) on the level of MSPs.
  • The MSP is aimed at ensuring remunerative prices to growers for their produce and encouraging crop diversification.

What are Kharif Crops?

  • Kharif crops are the crops that are sown in the rainy season, from June to September.
    • Some of the major kharif crops are paddy, maize, millets, pulses, oilseeds, cotton and sugarcane.
  • Kharif crops account for about 55% of the total foodgrain production in India.

What is the MSP for Kharif Crops for 2023-24?

  • The Centre claimed that the hike in MSP for kharif crops for 2023-24 is in line with the Union Budget 2018-19 announcement of fixing the MSP at a level of at least 1.5 times the All-India weighted average cost of production.
    • The MSP has been hiked for all 14 kharif crops in the range of 5.3 to 10.35 %. In absolute terms, it has been increased by Rs 128 to Rs 805 per quintal.
    • Green gram (moong) got the highest hike of 10.4% over 2022-23 followed by sesamum that saw an increase of 10.3%.

What are the Concerns of the Farmers?

  • Inadequate Cost Consideration: They have pointed out that the cost of production used by the CACP to calculate the MSP(A2+FL costs) does not include all the expenses incurred by the farmers such as rent of land, interest on loans, family labour, etc.
    • They have demanded that the MSP should be based on the comprehensive cost of production (C2) as recommended by the Swaminathan Commission.

Three Kinds of Production Cost:

  • ‘A2’: Covers all paid-out costs directly incurred by the farmer in cash and kind on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
  • ‘A2+FL’: Includes A2 plus an imputed value of unpaid family labour.
  • ‘C2’: It is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets, on top of A2+FL.
  • Lack of Market Reflection: They have also argued that the MSP does not reflect the actual market conditions and the inflationary trends.
    • They have demanded that the MSP should be linked to the wholesale price index (WPI) or the consumer price index (CPI) to ensure fair returns to the farmers.
  • Doubts over Procurement Mechanism: They have also raised doubts over the procurement mechanism and the availability of adequate infrastructure and storage facilities to ensure that the farmers get the MSP for their produce.
    • They have alleged that the government often resorts to import or export policies to manipulate the market prices and undermine the MSP.
  • Regional Disparities and Crop-Specific Issues: They have also highlighted the regional disparities and crop-specific issues in the implementation of the MSP.
    • They have claimed that the MSP benefits only a few crops and a few states, while leaving out many other crops and regions.
    • They have demanded that the MSP should be extended to all crops and all states, and that there should be a legal guarantee for the MSP

Way Forward

  • Technological Solutions: Implementing advanced technologies like precision agriculture, IoT (Internet of Things), and remote sensing can help optimise crop yields, reduce production costs, and enhance farmers' access to information.
    • Developing mobile applications and platforms that provide real-time market information, weather updates, and best practices to farmers, enabling them to make informed decisions about crop selection and pricing.
  • Diversification of Crops: Promoting crop diversification by encouraging farmers to cultivate high-value and climate-resilient crops can reduce their dependence on MSP for traditional crops.
    • Introducing innovative farming practices like organic farming, vertical farming, and hydroponics can help farmers tap into niche markets and earn higher profits.
  • Public-Private Partnerships (PPPs): Facilitating partnerships between the government, private sector, and farmer organisations can create market linkages, enhance value addition, and improve farmers' bargaining power.
    • Collaborative initiatives can include contract farming, agri-logistics infrastructure development, and agro-processing units to ensure a fair and remunerative market for farmers.

UPSC Civil Services Examination Previous Year Question (PYQ)

Q. Consider the following statements: (2020)

  1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support price (MSP) is unlimited in any State/UT of India.
  2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.

Which of the statements given above is/are correct?

(a) 1 only 
(b) 2 only 
(c) Both 1 and 2
(d) Neither 1 nor 2

Ans: (d)

Q. Consider the following statements: (2023)

  1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds.
  2. Niger is cultivated as a Kharif crop.
  3. Some tribal people in India use niger seed oil for cooking.

How many of the above statements are correct?

(a) Only one
(b) Only two 
(c) All three 
(d) None

Ans: (c)

Source: TH

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