Floods, low crop prices plague agriculture, India struggles to protect farmers

India struggled to protect farmers as the country’s agrarian distress worsened in 2025.

Severe monsoon rains caused devastating floods in Punjab, inundating almost 200,000 hectares of farmland, besides damaging crops in Haryana and Maharashtra, notably the Marathwada region. As a result, farmers faced a loss of income and soil damage and sought better compensation and long-term support.

If that was not enough, the lower market prices for their produce further eroded their income. Prices for several key commodities slipped below the minimum support price (MSP), at which the government procures produce from farmers. While the broader macroeconomic environment benefited from low food inflation, the decline in farm-gate prices raised serious concerns about rural incomes and the overall stability of the agricultural economy.

Low inflation can adversely affect rural incomes if farmers are forced to sell below the benchmark procurement price. The prices of grains, most pulses and oil seeds such as soybean, groundnut and sunflower are currently below their MSP (See graphic).

The deflation in wholesale crop prices pulled consumer inflation down to a record low of 0.25% in October (year on year). Food prices, which account for about 40% of the consumer basket, fell 5% from a decline of 2.3% in September.

The development assumes significance given that about 42% of India’s 1.4 billion population depends on agriculture for livelihood. The sector accounted for 18% of India's GDP in FY24.

The Centre is working on a contingency plan to prevent distress sales during the procurement season, when crop prices slipped below the MSP in many states, Mint reported on 24 October.

Officials from the agriculture ministry, department of food and public distribution and Niti Aayog discussed increasing procurement to protect farmer incomes, following the steep disinflation in the prices of pulses and oilseeds this year, which came after a sharp surge in FY24. Besides assured procurement at the MSP, the plan was to include supportive measures such as facilitating the export of produce to overseas markets and covering part of the losses due to the price slump.

Pulses mission

Taking a step in this direction, the government, under the pulses mission, announced 100% procurement of tur, urad and masoor at MSP for four years. The prime minister launched the Mission for Aatmanirbharta in Pulses (FY26 to FY31) with a budgetary allocation of ₹11,440 crore on 11 October. It aims to ensure 100% procurement of these pulses at MSP, besides increasing their cultivation area and production.

The government also approved continuation of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) to FY26. The scheme enables procurement of oilseeds at MSP by the central agencies including the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) and the National Cooperative Consumers' Federation of India Ltd. (NCCF).

Analysts are of the view that with enhanced procurement and buffer-stock building, the government is taking steps to prevent distress sales. However, these are still not sufficient.

“The fall in mandi prices below MSP through 2025 signals a worrying trend for 2026," said Ramesh Chandra Lahoti, past pres­id­ent of the Fed­er­a­tion of Karnataka Cham­bers of Com­merce and Industry. "While the government has stepped up procurement and buffer-stock building, these measures are still not broad-based enough to stabilize prices across crops and regions. Unless procurement operations become more predictable and cover a wider share of farmers, the stress in rural markets may deepen in the coming year."

Procurement operations have been expanded in select states and for certain commodities, but farm experts argue that coverage remains uneven. While procurement is robust for rice and wheat, the same cannot be said for oilseeds and pulses.

Experts said the earnings and profit of farmers are diminishing at a fast pace because of government policies. The MSP and government procurement were reduced to symbolic and newspaper headlines.

“Statistics from various sources including the Economic Survey indicated that a major share of farmers’ income is coming from labour," said Professor Sudhir Panwar, farm expert and a former member of the UP Planning Commission.

Rainfall impact

Rainfall over the country during the 2025 southwest monsoon season (June-September) was 108% of its long period average (LPA). Rainfall over northwest India, central India, the southern peninsula, and northeast India was 127%, 115%, 110% and 80% of the respective LPAs.

According to experts, India has completed kharif harvests (of monsoon-autumn crops) and begun rabi sowing (for winter-spring crops), but farmer distress is evident.

"Unseasonal October–November rains damaged ready-to-harvest crops, creating a double whammy to the farmers—weather losses and low prices. Low agri-commodity prices stem from multiple factors. Globally, the US-triggered tariff war pushed prices to multi-year lows," said Suresh Rajagopalan, CEO of Samunnati Agri Innovations Lab, the technology and innovation arm of the Samunnati Group.

According to him, oilseeds have only recently recovered from August 2025 troughs, while edible oils remain an exception due to palm oil’s dominance.

"Also, free imports have added to oversupply in cotton and pulses. Importers stocked aggressively ahead of anticipated restrictions," added Rajagopalan.

According to him, late rains may boost the rabi output, pressuring prices further, though higher yields could partially offset farmer income losses. Overall, agri-commodity prices would remain in a multi-year downtrend.

Analysts also believe that despite the government’s measures, farmers are at the receiving end.

"In the recent past, the agrarian distress has worsened because farmers are unable to realize a fair price. The Organisation for Economic Cooperation & Development (OECD) has claimed that Indian farmers have lost ₹45 lakh crore in a 16-year period, between 2000 and 2016," said Devinder Sharma, an agricultural policy expert. “In fact, its latest analysis is more damning. India is the only country among 54 major economies engaged in farming where farmers have been incurring losses, year after year, since the year 2000."

Sharma added that he doesn’t think the distress will reverse in 2026.

"As I have often said, agriculture has been deliberately kept impoverished… While economists rejoice at low inflation, farmers pay the price. But then, the reality is who cares?" he added.

Climate stress

In previous years, India’s farm sector faced significant climate stress through 2023 and early 2024 as a strong El Niño event contributed to a below-normal monsoon, weakening crop output and intensifying drought-like conditions across key grain belts. Monsoon rains in 2023 were about 94% of the long-period average. Prolonged dry spells in critical growing months dented kharif production and led to delayed rabi sowing in parts of the country.

The deficit rainfall and heat stress trimmed foodgrain production by an estimated 6% in the 2023-24 crop year compared with the previous year, prompting concerns about supply tightening and price pressures. In response to rising food prices, the government eased import tariffs on pulses, allowed duty-free imports of key staples and imposed export curbs or taxes on rice, onions and other sensitive commodities to cool inflation.

India's final foodgrain production for FY25 was estimated to grow 8% to a record 357.73 million tonnes from 332.3 million tonnes a year earlier. Rice output increased 9% to 150.18 MT and wheat production climbed 4.1% to 117.94 MT.

The first advanced estimates of production of the main kharif crops for FY26 show an increase of 3.87 MT to 173.33 MT. Overall foodgrain production for FY26 is estimated to be 362.50 MT.

Experts said market reforms will play a crucial role in shaping next year’s outlook. Encouraging private-sector participation in storage, processing and futures markets could improve price discovery and reduce volatility. Also, investments in cold chains and modern warehousing would give farmers alternatives to distress selling, particularly in perishable and oilseed segments.

Overall, the outlook for 2026 hinges on balancing the benefits of low inflation with the need to secure farmer incomes. If prices continue to languish below MSP, rural consumption—one of India’s growth engines—could weaken, affecting multiple sectors.