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Govt may hike rabi crops’ MSP by 2-7%

The most substantial hikes are expected for wheat and lentil (masur). (Bloomberg)
The most substantial hikes are expected for wheat and lentil (masur). (Bloomberg)

Summary

Last year, MSP for wheat, the main winter crop, was raised by 5.5% from the previous year to 2,125 per quintal

NEW DELHI : The government may raise the minimum support price (MSP) of six rabi or winter crops, with increases ranging from 2% to 7%, for the 2024-25 marketing season as it gears up for high-stakes general and state assembly elections, two officials said. The most substantial hikes are expected for wheat and lentil (masur), the officials said, requesting anonymity.

MSP serves as a crucial safety net for farmers by guaranteeing them a minimum income regardless of market prices. It also helps ensure food security by encouraging farmers to cultivate certain crops, helping stabilize prices of staples such as wheat, rice and lentils.

Last year, MSP for wheat, the main winter crop, was raised by 5.5% from the previous year to 2,125 per quintal (100 kg), while the minimum price of masur, one of the two key winter pulses, witnessed a significant 9.1% hike to 6,000 per quintal.

Graphic: Mint
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Graphic: Mint

“MSP in the next season could be increased by around 7% for wheat and masur to 2,275-2,300 and 6,425-6,450 a quintal, respectively, compared to the current year so that FCI (Food Corporation of India), NAFED (National Agricultural Cooperative Marketing Federation of India Ltd) and NCCF (National Cooperative Consumers’ Federation of India Ltd) can purchase a substantial quantity of the grain and the pulse from farmers to boost the stock," one of the officials said on condition of anonymity.

The MSP increases for barley and chana (Bengal gram) are expected to remain consistent with the previous year. While chana may see a modest 2% increase to 5,440-5,475 per quintal, barley could see a 6.6% hike to 1,850-1,900 per quintal. The Centre raised MSP of chana by 2% and barley by 6.1% for the 2023-24 rabi marketing season.

For major oilseeds such as rapeseed and mustard, MSP could be increased by 3.6%-4% to 5,650-5,700 per quintal, while safflower MSP could be raised by 2.6%-3% to 5,800-5,850 per quintal.

The rabi season contributes to almost half of India’s total foodgrains output.

“The Commission for Agricultural Costs and Prices (CACP) has submitted its recommendations, and the cabinet note has been sent to concerned departments for their comments," the official said.

The final decision on MSP, likely next month, will rest with the Cabinet Committee on Economic Affairs. The Centre sets MSP of kharif and rabi crops in June and October, respectively, based on the recommendation of CACP. The government sets MSP in line with the Union Budget 2018-19 announcement of fixing MSP at a level of at least 1.5 times the all-India weighted average cost of production to ensure adequate compensation for farmers.

Queries sent to the agriculture ministry remained unanswered. The government recently announced several measures, including stock limits, export curbs and open-market sales, to control food inflation before elections next year.

These moves were in response to surging prices of several agricultural commodities, including wheat, rice, and pulses. Edible oils, except for groundnut oil, have, however, declined significantly from record highs.

As of 16 September, all-India average wheat prices in the retail market rose 3.6% from a year earlier and 0.4% from the preceding month to 30 a kg. In the wholesale market, wheat prices increased nearly 4% from a year earlier and 0.2% from the preceding month to 2,663 a quintal.

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