Summer crop prices hiked 50-80% for farmers in big Cabinet decision
The announcement came as the June-to-September monsoon for 2020, predicted by the India Meteorological Bureau to be normal, made its onset over Kerala, its first port of call in the Indian mainland, on June 1, as predicted.Updated: Jun 01, 2020 19:14 IST
The Union Cabinet on Monday approved federally fixed minimum support prices (MSP) for 14 kharif or summer-sown crops, which will offer 50-83% profit over cultivation cost, agriculture minister Narendra Singh Tomar said.
The announcement came as the June-to-September monsoon for 2020, predicted by the India Meteorological Bureau to be normal, made its onset over Kerala, its first port of call in the Indian mainland, on June 1, as predicted.
A normal monsoon will likely lessen the strain on the agriculture economy from widespread disruptions caused by the Covid-19 pandemic. The summer rains are critical because nearly 60% of India’s net arable land lacks irrigation and nearly half the population depends on a farm-based livelihood.
The MSP for paddy, the main summer staple, has been raised by Rs 53 to Rs 1,868 per quintal for the 2020-21 crop year, which will give a return of 50% over cost of cultivation, according to an official statement.
“(The) government has increased the MSP of Kharif crops for marketing season 2020-21, to ensure remunerative prices to the growers for their produce,” a Cabinet statement said.
The highest increases in MSP are for nigerseed (Rs 755 per quintal) followed by sesamum (Rs 370 per quintal), urad (Rs 300 per quintal) and cotton (Rs 275 per quintal). “The differential remuneration is aimed at encouraging crop diversification,” the official statement said.
For cotton, the MSP has been increased by Rs 260 to Rs 5,515 per quintal, Tomar said. The support prices of arhar or tur, a type of lentil, has been fixed at Rs 6,000, which represents a 58% return over cost of cultivation.
The increase in MSP for kharif crops is in line with the Union Budget 2018-19 announcement of fixing the MSPs at a level of at least 1.5 times of the countrywide weighted average cost of production, which aims to give at least 50% returns for each crop.
According to official calculations, the returns to farmers over cost of production are estimated to be highest in case of the coarse cereal, bajra (83%), followed by urad (64%), tur (58%) and maize (53%).
“To correct demand-supply imbalances, the government has realigned the MSPs more in favour of oilseeds, pulses and coarse cereals to encourage farmers to shift to these crops,” said Abhishek Agrawal, an analyst with Comtrade, a commodities trading firm.
Fresh indicators show the country’s farm sector, which employs nearly half the population, has coped well with the Covid-19 crisis, with a larger summer crop area than last year, higher sales of fertilisers and seeds, and better prices, leading Reserve Bank Governor Shaktikanta Das to last month call it a “beacon of hope”.
The farm sector is poised to grow at least 3% in 2020-21, despite disruption in the economy due to the coronavirus pandemic. According to government think tank Niti Aayog’s assessment in April, agriculture will aid overall growth.
There are other indicators too, ranging from sowing to input sales, which show the agriculture economy is heading into the summer-sown or kharif operations in decent shape.
Farmers have planted rice in about 3.48 million hectares (1 hectare equals 2.4 acre) compared to 2.52 million hectares during the corresponding period of last year, an increase of nearly 37%, official data as on May 21 show.
The area under pulses -- a major summer crop with up to 70% share in farm incomes in some states – stands at nearly 1.28 million hectares against 0.96 million hectares during the same period of last year, which is higher by one-third (33%).