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MSP hike: Cotton, oilseeds to take over pulses' acreage this kharif season

MSP hike insufficient for pulses; Centre's procurement may decide sowing prospects next season

Dilip Kumar Jha  |  Mumbai 


and are likely to take over a significant part of pulses’ acreage this due to a sharp increase in their (MSP) for the current season coupled with better price realisation last year.

As against the of Rs 5,400 a quintal for 2017-18 kharif season, average price stood at Rs 4,720 a quintal for May 2017, which steadily declined further to stabilise at Rs 3018.5 a quintal towards the beginning of the current sowing season in May 2018. Similarly, and also traded substantially below the throughout 2017-18 season.

By contrast, however, soybean and prices traded substantially higher than their respective MSPs, barring a couple of occasions when they slipped marginally below the government’s threshold price. Encouraged by the government’s timely interventions, spot prices of and soybean along with other moved higher.

ALSO READ: MSP hike could stoke inflation, prompt RBI to raise interest rates: Experts

“Sowing area and production of are set to contract this due to lower realisation yielded by farmers last year. By contrast, however, sowing area and production of and cotton may rise this year,” said Sanjay Kaul, managing director, National Collateral Management Services (NCML).

Based on lower acreage so far this season, forecasts India’s production to decline by 7.7 per cent at 8.32 million tonnes (mt) this kharif season, second slump in a row, compared to 9.01 mt produced last year as per the third Advanced Estimates for 2017-18 from the Union Ministry of Agriculture.

ALSO READ: Experts see 50-90 bps hike in inflation on MSP move; CPI may rise by 70 bps

In a first-of-its-kind of kharif crop production forecast, estimates oilseeds and cotton output to rise by 9 per cent and 7.6 per cent to 22.57 mt and 37.5 million bales (1 bale = 170 kg) this year, from 20.68 mt and 34.86 million bales last year, respectively.

“The hike is insufficient to encourage farmers to bring in sowing under Compared to pulses, paddy, jowar, cotton, and oilseeds offer better prospects. But, pulses procurement by government agencies might encourage farmers to bring in some area next sowing season,” said D K Joshi, chief economist, CRISIL.

ALSO READ: Paddy MSP raised by Rs 200/quintal, coarse cereal farmers get big boost

The data compiled by the Union Ministry of Agriculture showed a sharp decline in sowing area under all primary kharif crops, including pulses, cotton, and oilseeds due to erratic rainfall this monsoon season. Despite a normal long period average (LPA) forecast, the monsoon rainfall took a break of nearly 10 days after initial showers early this season. Feared with crop damage, the government of Maharashtra advised farmers in the state to wait for actual rainfall before commencement of sowing this

Normally, farmers switch to pulses during deficient rainfall, which is highly unlikely this season.

Reacting to the MSP hike, chana prices moved up by 1 per cent across all contracts and soybean prices declined by up to 1.72 per cent towards the end of day trading on Wednesday.

Trade sources, however, believe that the Centre and the state need to come together to devise a formula for sharing incentives for farmers.

First Published: Thu, July 05 2018. 06:40 IST