Kharif Crops: Central Determination of Minimum Support Price for Kharif Crops

The Government of India has approved the Minimum Support Price (MSP) for Kharif crops for the year 2023-24 seasons with the aim of providing fair remuneration to the farmers. However, farmer organizations have expressed concern over MSP not increasing with rising costs. Minimum Support Price: MSP is a guaranteed amount paid to farmers at which the government purchases their produce. The government announced MSP for 22 essential crops and Fair and Remunerative Price (FRP) for sugarcane. The essential crops are 14 Kharif season crops, 6 Rabi crops and two other commercial crops. Apart from this, the MSP of rapeseed and peeled coconut is decided on the basis of MSP of rapeseed/mustard and copra respectively.  MSP is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP), considering 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 (approval) at the level of MSP. The objective of MSP is to ensure remunerative prices to producers for their produce and to encourage crop diversification.

Kharif crops:

 Kharif crops are those crops which are sown in the rainy season from June to September. Paddy, maize, millet, pulses, oilseeds, cotton and sugarcane are some of the major Kharif crops. Kharif crops contribute about 55% to the total food grain production in India.

MSP for Kharif crops for the year 2023-24:

 The Center has claimed that the increase in the Minimum Support Price for Kharif crops for the year 2023-24 is in line with the announcement made in the Union Budget 2018-19 to fix the MSP at the level of at least 1.5 times the all-India weighted average cost of production. The MSP for all 14 Kharif crops has been increased by 5.3 to 10.35 percent. Practically speaking, it has increased by Rs 128 to Rs 805 per quintal. In the year 2022-23, green gram (moong) saw the highest increase of 10.4%, followed by oilseeds with 10.3% increase.

Farmers’ concerns:

 Inadequate costing: Farmers have pointed out that the cost of production used by CACP to calculate MSP (A2+FL cost) does not include all expenses incurred by farmers; Land rent, interest on loan, family labor etc. have not been included. Their demand is that MSP should be determined on the basis of the comprehensive cost of production (C2) recommended by the Swaminathan Commission.

Three types of production costs:

 ‘A2’: It covers all the costs incurred by the farmer directly in cash and kind on seeds, fertilizers, pesticides, hired labour, leased land, fuel, irrigation etc. ‘A2+FL’: This includes A2 and an imputed value of unpaid family labour.’C2′: This is a more comprehensive cost excluding rent and interest on land and fixed capital assets owned on top of A2+FL.

Lack of market reflection:

 They have also argued that the MSP does not reflect actual market conditions and inflation trends. He has demanded that MSP should be linked to Wholesale Price Index (WPI) or Consumer Price Index (CPI) to ensure proper benefits to the farmers. Doubts on procurement mechanism: He has also raised doubts on the procurement mechanism and availability of adequate infrastructure and storage facilities to ensure MSP to farmers for their produce. They allege that the government often resorts to import or export policies to manipulate market prices and reduce MSP. Regional disparities and crop-specific issues: He also highlighted regional disparities and crop-specific issues in the implementation of MSP. He has claimed that MSP benefits only some crops and some states, while denying many other crops and regions. He has demanded that MSP should be extended to all crops and all states and there should be legal guarantee for MSP.

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