Kharif crop minimum support prices to be in place next week

Prime Minister Narendra Modi said on Friday the much-awaited minimum support prices (MSPs) for kharif crops for the 2018-19 season, to be fixed at least 1.5 times of the production cost, would be announced next week.

Addressing a group of sugarcane farmers at his residence, Modi said that in the next two weeks, the government would also announce the fair and remunerative price (FRP) for sugarcane. 

This price will not only be higher than the FRP of the 2017-18 season, but will also incentivise those farmers whose recovery from sugarcane will be higher than 9.5 per cent. The sugar season starts from October onwards. For the 2017-18 season, the Centre had fixed a sugarcane FRP of Rs 255 a quintal, which was Rs 25 more than the previous year’s FRP.

Modi also apprised the 140-odd sugarcane farmers, who had come from sugarcane producing states, about the various steps taken by the government to ensure better incomes for them and also clear pending dues. He said that in the last 7-10 days itself, around Rs 40 billion of sugarcane dues had been cleared due to the new policy measures.

“I think it is much-awaited decision (on MSP), and should be good for farmers. As far as the impact of high inflation on farmers is concerned, I don’t think it would have any impact because in wheat and rice, PDS operations act as a buffer against rising prices. In other crops, too, it won’t push up wholesale prices,” said PK Joshi, South-Asia director of the International Food Policy Research Institute (IFPRI).

He said studies conducted by the IFPRI showed that in pulses and oilseeds, high MSPs had not pushed up prices at the retail level.

“Inflation is more the work of rising incomes and dwindling supplies which isn’t the case anymore at least in case of supplies, therefore I don’t think that food inflation would rise due to hike in MSP,” Joshi said.

Though the MSP announcement is a routine exercise and has limited practical value for farmers except for those who grow wheat, rice and cotton to some extent, this time it has acquired added importance as the Budget 2018-19 had promised to mandatory fix it at 50 per cent over the cost of production for all the 23 notified crops.

Not only this, the government has also promised to devise a fool-proof mechanism in consultation with the NITI Aayog to ensure that maximum procurement of crops takes place under MSP systems for crops other than wheat and rice.

Calculation of the cost for determining the MSP has been another contentious issue with some farmers group wanting it to fixed at over comprehensive cost (C2). 

The Centre is expected to fix it at over A2+FL cost of production.

A2+FL broadly is all input cost plus own and family labour while comprehensive cost (C2) includes all paid out expenses incurred, plus imputed value of unpaid family labour along with rentals and interest foregone on owned land and fixed capital. MSP fixed on the basis of C2 cost is much higher than that fixed over A2+FL cost.

Modi also told the farmers that the Centre had requested  tate governments to take effective measures for liquidation of cane arrears. He also exhorted farmers to use sprinkler and drip irrigation, latest farming techniques, and solar pumps. Modi also apprised farmers of his recent interactions with corporates, where he has called for greater private sector investment for value addition, warehousing, storage facilities, better quality seeds, and market linkages for improving farmers’ income.