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LATEST NEWS UPDATES | Why MSP at cost plus 50% is no big deal -Rajalakshmi Nirmal

Why MSP at cost plus 50% is no big deal -Rajalakshmi Nirmal

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published Published on Apr 24, 2018   modified Modified on Apr 24, 2018
-The Hindu Business Line

The MSP for many crops is already 1.5 times cost; and procurement is either absent or very minimal except for paddy and wheat

There has been much speculation on the Budget promise to farmers of 50 per cent return on cost of production. But this may not help farmers much, as many crops already enjoy 50 per cent profit at minimum support price (MSP), according to the price policy document of the Commission for Agricultural Costs and Prices (CACP).

The MSP of rabi crops such as barley, gram, lentil, rapeseed and wheat is already more than 1.5 times the cost.

For wheat, in fact, it is two times — with cost at ?817/quintal and MSP at ?1,735.

For kharif crops such as bajra, arhar and urad, too, the MSP is over 1.5 times the cost of production.

The cost considered by CACP is as per the A2+FL formula, which includes expenses on farm inputs — including seeds, fertilisers, fuel and irrigation — and imputed value of Family Labour.

That said, there are crops where the support price just about covers the cost. MSP is likely to go up sharply in such crops. These include jowar, ragi, sunflower seed, sesamum and nigerseed.

For jowar, the MSP will increase by 44 per cent, and for ragi, by 54 per cent.

However, the MSP increase will be ineffective in crops where the market prices are higher.

For instance, the current jowar price is about ?26/kg in Gujarat. The MSP at 1.5 times the cost (assuming a 5 per cent increase in cost of production from last kharif) will work out to ?2,450/quintal, or ?24.5/kg.

The same is the case with sesamum (gingelly), where the market prices now rule at ?65-75/kg, while the MSP next season is likely to be ?64/kg.

Poor procurement

In the few crops where the MSP is actually attractive, it is doubtful if the Centre will be able to enforce MSP.

Though MSP is announced for over 20 crops, procurement is effective only in paddy and wheat. In all others, it is either absent or very minimal.

In 2016-17, the total procurement of pulses was 1.47 million tonnes, against production of 23.13 million tonnes.

For oilseeds, the picture is worse; in 2016-17, kharif procurement in groundnut by the National Agricultural Cooperative Marketing Federation of India (NAFED) was 1.8 lakh tonnes, versus the season’s production of 60.5 lakh tonnes.

Sunflower, procurement stood at 4,249 tonnes against the kharif season production of 98,000 tonnes.

“There is no guaranteed procurement today. There is no action if someone buys below MSP, so there is no point in even announcing the support price…,” says GV Ramanjeneyulu, Executive Director, Centre for Sustainable Agriculture.

Please click here to read more.

The Hindu Business Line, 22 April, 2018, https://www.thehindubusinessline.com/news/why-msp-at-cost-plus-50-is-no-big-deal/article23638485.ece


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