09 Jun Ahead of sowing, Kharif MSP revealed
Ahead of sowing, Kharif MSP revealed – Today Current Affairs
The Union Cabinet raised the minimum support price (MSP) for paddy by ₹100 a quintal for the Kharif season of 2022-23. The rates for 14 crops have been increased in the range of 4% to 8%.
This is similar to the increase in MSP in 2021-22, which was in the range of 1% to 7%.
MSP for paddy (common), which was ₹1,940 a quintal in 2021-22, and paddy (grade A), which was ₹1,960 a quintal, had increased by ₹100. The highest increase had been for two varieties of jowar at the rate of 8%. And the lowest increase of ₹92 had been for maize, whose price was ₹1,870.
Today Current Affairs
What is minimum support price (MSP)?
Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). MSP is price fixed by Government of India to protect the producer – farmers – against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the Government. The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.
Historical perspective of MSP : The Hindu Analysis
The Price Support Policy of the Government is directed at providing insurance to agricultural producers against any sharp fall in farm prices. The minimum guaranteed prices are fixed to set a floor below which market prices cannot fall. Till the mid 1970s, Government announced two types of administered prices :
- Minimum Support Prices (MSP)
- Procurement Prices
The MSPs served as the floor prices and were fixed by the Government in the nature of a long-term guarantee for investment decisions of producers, with the assurance that prices of their commodities would not be allowed to fall below the level fixed by the Government, even in the case of a bumper crop. Procurement prices were the prices of kharif and rabi cereals at which the grain was to be domestically procured by public agencies (like the FCI) for release through PDS. It was announced soon after harvest began. Normally procurement price was lower than the open market price and higher than the MSP. This policy of two official prices being announced continued with some variation upto 1973-74, in the case of paddy. In the case of wheat it was discontinued in 1969 and then revived in 1974-75 for one year only. Since there were too many demands for stepping up the MSP, in 1975-76, the present system was evolved in which only one set of prices was announced for paddy (and other kharif crops) and wheat being procured for buffer stock operations.
Determination of MSP : The Hindu Analysis
In formulating the recommendations in respect of the level of minimum support prices and other non-price measures, the Commission takes into account, apart from a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities, the following factors:-
Cost of production
Changes in input prices
Input-output price parity
Trends in market prices
Demand and supply
Inter-crop price parity
Effect on industrial cost structure
Effect on cost of living
Effect on general price level
International price situation
Parity between prices paid and prices received by the farmers.
Effect on issue prices and implications for subsidy
The Commission makes use of both micro-level data and aggregates at the level of district, state and the country. The information/data used by the Commission, inter-alia include the following :-
Cost of cultivation per hectare and structure of costs in various regions of the country and changes there in;
Cost of production per quintal in various regions of the country and changes therein; The Hindu Analysis
Prices of various inputs and changes therein;
Market prices of products and changes therein;
Prices of commodities sold by the farmers and of those purchased by them and changes therein;
Supply related information – area, yield and production, imports, exports and domestic availability and stocks with the Government/public agencies or industry;
Demand related information – total and per capita consumption, trends and capacity of the processing industry;
Prices in the international market and changes therein, demand and supply situation in the world market; The Hindu Analysis
Prices of the derivatives of the farm products such as sugar, jaggery, jute goods, edible/non-edible oils and cotton yarn and changes therein;
Cost of processing of agricultural products and changes therein;
Cost of marketing – storage, transportation, processing, marketing services, taxes/fees and margins retained by market functionaries; and
Macro-economic variables such as general level of prices, consumer price indices and those reflecting monetary and fiscal factors.
The increase in MSP for Kharif Crops is in line with the Union Budget 2018-19 announcement of fixing the MSPs at a level of at least 1.5 times of the All-India weighted average Cost of Production (CoP), aiming at reasonably fair remuneration for the farmers.
Crops covered : The Hindu Analysis
Government announces minimum support prices (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. The list of crops are as follows.
- Cereals (7) – paddy, wheat, barley, jowar, bajra, maize and ragi
- Pulses (5) – gram, arhar/tur, moong, urad and lentil
- Oilseeds (8) – groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed
- Raw cotton
- Raw jute
- De-husked coconut
- Sugarcane (Fair and remunerative price)
- Virginia flu cured (VFC) tobacco