Government increases Minimum Support Price (MSP) for Rabi Crops

The Indian Government on 21st September 2020 declared an increases in the Minimum Support Price (MSP) for six rabi crops up to six percent for 2020-21. Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister approved the MSPs of six rabi crops.

The Minimum Support Price (MSP) of wheat has been increased by Rs. 50 per quintal, barley by Rs. 75, gram (chana) by Rs 255, rapeseed & mustard by Rs. 225 and safflower by Rs. 112.

This decision took a day after Parliament approved the agriculture reform bill which is opposed by opposition parties that new reform might end MSP-based procurement and laws are “anti-farmer” at ahead of Bihar election. This decision shows a strong message to farmers on continuation of MSP-based procurement system and government’s purchase of crops at MSP rates would continue. The Farmer would also be free to sell outside APMC Mandis.

Background of MSP :

The food shortages faced during the 1960s pushed India to reform its agriculture policy and accordingly India adopted significant policy reforms focused on the goal of achieving food grain self-sufficiency. Series of institutional reforms were undertaken to boost the agriculture production and modernizing the farming practices. These included land reforms, agriculture administrative arrangements, initiation of price support policies including the Introduction of of the Minimum Support Price (MSP) for major agriculture produces, introduction of new technologies (Green Revolution), etc.

The Government is fixed MSP for major agriculture products each year. MSP is an instrument which gives guarantee to the farmers, prior to the sowing seasons. It is in the nature of an assured market at minimum guarantee price offered by the Government.

The MSP is fixed on the recommendation of Commission for Agriculture Costs and Prices (CACP). This is a statutory body which submits their reports recommending prices for Kharif and Rabi seasons. Then the government take final decision.

Following are major crops covered under MSP:

-> Food Grains : Paddy, Wheat, maize, jowar, bajra, ragi, etc.

-> Pulses : Kharif – Tur, Moong, Urad, etc. and Rabi – Gram, Masur, etc.

-> Oilseeds : Groundnut, sunflower, soyabean, etc. -> Cash Crops : Sugarcane, cotton, jute & mesta and Tobacco

The states have come up with their own implementation for procurement of food grains and other agriculture produce under the MSP.

Mechanism of Maharashtra : Food Corporation of India (FCI) works through the state designated agency (Maharashtra Cooperative Marketing Federation Ltd. & Tribal Development Corporation). The collector of district approves the list of procurement centres in each taluka where godowns are available.  The Procurements made under MSP, Market Intervention Schemes (MIS) and Commercial Operation (Com).

The farmers sell their produce at Agriculture Produce Market Committee (APMC). The APMC, the prices are fixed based on the quality and grade and the farmers get good price through open market method.

The evaluation of study had done by NITI Aayog report based on data that implementation of a scheme can be achieved if the targeted population is aware of a scheme. Regarding MSP, the farmers need to be aware of prevailing of MSP, time of their announcement and the process of procurements, the facilities provided and payment mechanism.

Source: TOI, NITI Aayog report

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