New Delhi: The government on Wednesday increased the minimum support price (MSP) of raw jute by Rs200 per quintal to Rs3,700 per quintal for the 2018-19 crop season, an official release said.

The decision to increase the MSP for fair average quality (FAQ) of raw jute to Rs3,700 per quintal for 2018-19 season from Rs3,500 per quintal in 2017-18 was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi in New Delhi.

The MSP would yield returns of 63.2% over the weighted average A2 + FL (covers actual paid-out costs plus an imputed value of unpaid family labour) cost of production, the release said.

“The increased MSP is based on recommendations of Commission for Agricultural Costs and Prices (CACP)," it said.

The decision would benefit jute farmers mainly in West Bengal, Assam and Bihar which account for 95% of the country’s jute production. The government in the Budget for 2018-19 had announced fixing MSPs at 1.5 times the cost of production for various crops.

The Jute Corporation of India would continue to act as central nodal agency to undertake price support operations at the MSP in jute growing states, according to the release.

Presently, the CACP gives three definitions of production costs: A2, A2+FL and C2, the report said. A2 costs cover all paid-out expenses, both in cash and kind, incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel and irrigation, among others.

A2+FL covers actual paid-out costs plus an imputed value of unpaid family labour. C2 costs are more comprehensive, accounting for the rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL.