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Business News/ Industry / Agriculture/  Farmers hit as prices of kharif crops plunge below MSPs

Wholesale prices of just-harvested kharif crops are trading at lower than minimum support prices (MSPs), despite the government’s promise to ensure better prices for farmers.

The centre significantly raised MSPs in July to ensure 50% returns over costs and followed it up with a new procurement mechanism named PM-AASHA. However, farmers in several states are selling soya bean, and pulses such as moong and urad at lower than MSP.

The low prices come in the wake of the third consecutive year of record harvest in 2018 and may have serious implications for the ruling Bharatiya Janata Party in the forthcoming assembly elections in Madhya Pradesh and Rajasthan, which go to polls in less than two months.

“The year 2018 is turning out to be another year where farmer incomes have not seen a material pick-up," Crisil research said in a note earlier this week.

Higher MSPs have done little to lift crop profitability as mandi prices trail government announced support prices, the note said.

Data from the government’s Agmarknet portal, which records daily arrivals and prices in major wholesale markets, show that the price differential is the steepest for pulse varieties. In Rajasthan’s Ajmer, moong or green gram sold for just 4,200 per quintal on Tuesday, 40% less than the MSP of 6,975. The latest farm gate price of moong is not only less than this year’s MSP but also less than the MSP of last year ( 5,575 per quintal) and production costs estimated at 4,650 per quintal.

In Madhya Pradesh’s Mandsaur, where five farmers died in police firing while protesting low crop prices in June last year, urad or black gram sold for 3,510 per quintal on Monday, 37% lower than the MSP of 5,600 per quintal. Current prices are only marginally higher than the production cost of 3,438 per quintal, but lower than last year’s MSP of 5,400 per quintal.

Like pulses, soya bean, a major kharif oilseed, is selling in Madhya Pradesh’s wholesale markets between 2,800 and 3,000 per quintal, at least 10% lower than the MSP of 3,399 per quintal.

“The state government has said it will begin procurement of crops at MSP from 20 October but by then 60% of the produce will be sold by small farmers who are not in a position to hold on to their produce," said Kedar Sirohi, a farmer leader from Harda in Madhya Pradesh and also the state president of the farmer’s wing of the Congress.

Crop prices have been on a downward spiral since India bounced back from consecutive years of drought in 2014 and 2015 to reap a record harvest in 2016-17. In June 2017, protests by farmers began in Maharashtra and spread across the country, with demands of remunerative crop prices and loan waivers. Since then, several protest marches have rocked the central and state governments, including the latest one at the Delhi-Uttar Pradesh border last week.

Following the protests in June last year, the centre procured more than 30,000 crore worth of pulses and oilseeds in 2017-18 but it was not enough to lift wholesale prices.

“The Narendra Modi government has repeatedly raised farmers’ expectations by making promises and announcing new schemes...but as MSP-based procurement is failing to show results on the ground it will bear the electoral consequence in Madhya Pradesh and Rajasthan," said Avik Saha, convener of Jai Kisan Andolan, a farmer’s movement.

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Updated: 11 Oct 2018, 06:54 AM IST
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