CACP recommends 8% hike in wheat MSP
The Commission for Agricultural Costs and Prices (CACP) is understood to have recommended a 8% hike in Minimum Support Price (MSP) for wheat to Rs 2300/quintal from forthcoming rabi season (2023-24) besides proposing 3-8% hikes in MSP of pulses and oilseeds.
For the current marketing season (2023-24) the increase in MSP was 5.45% compared to previous year.
“With the market prices ruling around Rs 2400/quintal currently against current season’s MSP of Rs 2125/quintal, the farmers next season must get reasonably higher prices so that they are encouraged to grow more grain,” an official told FE.
Higher MSP is expected to encourage farmers to sell wheat to the Food Corporation of India (FCI), and prevent official stocks falling below the buffer. Based on recommendation of CACP and inputs from the states, the cabinet will announce the MSP for rabi crops next month prior to the commencement of sowing.
Because of lower output, FCI’s wheat procurement had dropped by 130% to 18.79 million tonne (MT) in 2022-23 marketing season on year while in the current year, FCI could purchase only 26.2 MT of wheat.
The official said that CACP, which recommends the MSPs for around 23 crops to the government, in its report submitted to agriculture ministry recently, has suggested expansion of area under pulses which are currently concentrated in a few states and adoption of price deficiency payment mechanism for oil seeds farmers for reducing large imports of two commodities.
India imports about 56% and 15% of its annual edible oil and pulses consumption. Sources said that MSP of lentil (masoor) in the next season is likely to increased substantially while in the current season MSP was hiked by 9% to Rs 6000/quintal.
In the 2022-23 crop year (July-June), because of largely stagnant production and rising demand of lentils, the country imported 0.86 million tonne (MT) of lentils, while the domestic production according to the agriculture ministry was estimated at 1.58 MT.
In case of chana, which has a share of 50% in the country’s total pulses production 27.5 MT in 2022-23 crop year, the MSP hike is likely to moderate next season.
While MSP of mustard, which has a share of more than 40% in the country’s edible oil production was hiked by 7.9% to Rs 5450/quintal this season from previous year, this year too it could see a sharp rise in MSP for boosting production and reducing imports.
However, to protect farmers against fall in oilseeds prices because of a surge in imports, the CACP has recommended to the government to consider implementing a price deficiency payment system where farmers are compensated for the price difference between average mandi prices in key producing states and MSP.
In 2017, Madhya Pradesh had launched Bhavantar Bhugtan Yojana or price deficiency payment programme but had to stop it because of allegations that it benefitted traders.
The CACP has recommended that procurement of oilseeds by the government is not a sustainable model.
Sources said that the government is likely to announce higher MSP of several winter crops next month, as there are several elections to states especially in Madhya Pradesh, Rajasthan and Chhattisgarh followed by general elections in May next year.
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