Rabi crops trading much above MSP, fixing support price for Kharif major challenge for Centre

Vibha Sharma

New Delhi, May 24

With Rabi crops trading much higher than Minimum Support Price, the fixing of the MSP for upcoming Kharif Marketing Season is believed to have become a major challenge for the Centre which is aiming to better rice procurement to compensate for lesser wheat in the Rabi Marketing Season.

Based on a positive outlook in the agriculture commodities market, experts are predicting a higher-than-normal acreage of Kharif crops this year, provided weather conditions remain conducive. Though higher acreage and higher production are expected to provide relief to consumers and policy makers struggling from sky-rocketing inflation, sourcesindicate certain predicament over the fixing of the base price for the year.

Notably, the Commission for Agricultural Costs and Prices (CACP) recommends MSPs of various crops to the government on the basis of a formula which includes costs directly incurred by farmers like seeds, fertilisers, pesticides, hired labour, leased-in land, fuel/diesel and irrigation.

Given a substantial increase in input costs, a higher-than-usual MSP of grains, including paddy, is being predicted this year,which will be good for farmers. However, higher MSPs will not only increase the Centre’s procurement costs for welfare programmes, they will influence themarket, availabilityand selling patterns.

“The government has to look after the interests of both farmers and consumers,” say officials.

After a decrease in wheat procurement in Rabi season, the Centre reduced wheat allocation to several states and UTs under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) which is being compensated with rice to keep the overall figure intact. The government will also have to procure extra rice to continue the free food grains distribution scheme beyond September.

Notably wheat procurement under the central pool has been less as compared to last season as traders offered prices higher than the MSP to farmers. Procurement declined by more than half to 19.5 million tonnes in the current RMS, resulting in a series of decisionsrelated to export of wheat.