Cabinet approves steep hike in MSP for Kharif crops

NEW DELHI: The Centre on Wednesday announced new Minimum Support Price (MSP) of 14 Kharif (summer sown) crops for the 2018-19 marketing season, syncing it with its budget promise to provide farmers a profit margin of minimum 50% over their cost of production for all the notified crops across the country. Less water consuming millets – recently categorised by government as ‘nutri-cereals’ – got substantial hike as compared to the water guzzler paddy.
The announcement was made by the Union home minister Rajnath Singh after its approval from the Cabinet Committee on Economic Affairs (CCEA).
Analysis of the new MSP shows the government’s intent to encourage farmers to opt for cultivating ‘millets’ (Ragi, Bajra and Jowar) in a big way, besides the usual focus on pulses and oilseeds.
The Centre had in April notified the millets as “Nutri-Cereals” which are not only a powerhouse of nutrients but also climate resilient as these crops consume less water and can be grown in drought prone areas.

Among the millets, Ragi (finger millet) got the maximum hike (over 52%) as compared to its existing MSP followed by Jowar with 42% (Sorghum) and Bajra (pearl millet) with 36% hike. The MSP of nigerseed (oilseed) and moong (pulse) is also quite substantial as compared to the water consuming paddy.

“Since the government has allowed inclusion of millets in the Public Distribution System (PDS) for improving nutritional support, the focus on these cereals is in sync with the food security plan which has, so far, concentrated on procurement of paddy and wheat,” said an official.
The new MSP, announced on Wednesday, is only for the summer sown crops for the Kharif Marketing Season (KMS), beginning October. The procurement of winter-sown crops (Rabi) has already been continuing since April based on the MSP announced by the government last year. The MSPs of most of the Rabi crops – wheat, barley, gram and lentil – provide more than 50% profit to farmers over their cost of production.
A similar approach is now adopted for Kharif crops. The government has adopted A2+FL formula (which includes actual paid out cost of all inputs plus imputed value of unpaid family labour) to calculate the cost of production.

Through the farmer organisations have been demanding C2 formula (Comprehensive cost including imputed rent on owned land and interest on value of owned capital assets) to arrive at the cost of production, the government preferred the A2+FL formula – the ones which was used to arrive at MSP of most of the Rabi crops.
The next big challenge of the government will now be on procurement of all the notified crops so that most of the farmers get benefit of the MSP unlike the current situation where the benefit largely goes to big farmers and that too in a limited number of states.

“The government is expected to come out with a new procurement mechanism for this purpose soon,” said another official.
The Centre’s new procurement mechanism will focus on all 23 notified crops which come within the ambit of MSP, unlike the existing practice where wheat and paddy get all attention and that too in a limited number of states.