Government raises crop MSPs by 4-10% but returns to farmers negative
New Delhi: The centre has increased the guaranteed price for rain-fed kharif crops by 4-10%, but a comparison with costs of cultivation shows that farmers can at best hope for thin margins. The government is yet to formally announce these so-called minimum support prices (MSPs) although farmers have began planting crops with the onset of monsoon.
For the 2017 kharif or monsoon-crop season, MSP for paddy has been fixed at Rs1,550 per quintal, 5.4% higher than that offered last year, according to a government document seen by Mint. However, when compared with the costs of cultivation as calculated by the Commission for Agricultural Costs and Prices (CACP) for the 2017-18 season, returns to farmers are just 4.4% (see chart).
According to CACP, farmers spend Rs1,484 to grow a quintal of paddy.
This includes expenses on inputs such as seeds and fertilizers, imputed costs for family labour, land rent and interest costs.
For cotton, MSP has been fixed at Rs4,020 per quintal, a 4.2% increase over 2016. It costs farmers Rs4,376 to grow a quintal, which means a loss of 8%.
For moong (green gram), farmers stand to lose 2.2%, and on sunflower seeds, 9.4%. The highest returns are on pulses such as arhar (pigeon pea) and urad (black gram), at 18.2% and 19.5%, respectively, if the produce is sold at support prices.
Interestingly, in 2016-17 most farmers sold these crops below MSP rates due to a record harvest and weak public procurement.
To be sure, as many farmers cultivate on their own land and use unpaid family labour they can expect some monetary returns on their crops.
Beginning June, farmers in several states such as Maharastra and Madhya Pradesh launched protests seeking remunerative prices and a waiver of crop loans.
They have also asked the ruling Bharatiya Janata Party (BJP) to fulfil its pre-poll promise (made in 2014) to fix support prices at 50% over costs.
“Cost calculations by CACP are usually suppressed to show higher returns and the government still does not understand that low prices are the primary source of discontent for growers,” said Kavitha Kuruganti of the Association for Sustainable and Holistic Agriculture, a network of farm organizations.
Kuruganti was a member of a government panel set up in 2013 to suggest ways to revamp MSP calculations that submitted its report in 2015. The committee was headed by agriculture expert Ramesh Chand, currently a member of government think-tank NITI Aayog.
“We suggested a thorough overhaul of how costs are calculated,” Kuruganti said. “However, the government has been sitting over the report for two years now.”