Higher MSPs for oil seeds and pulses; only a 5.4% increase in the price of paddy support
The Cabinet on Wednesday approved increases in the minimum support prices (MSP) for 14 crops for the 2024-25 kharif season, with hikes ranging from 1.4% to 12.7%. The support price for paddy, the main summer crop, rose modestly by 5.35% to Rs 2,300/quintal, compared to a 7% increase the previous year.
With significant rice stock surpluses, the government aims to encourage farmers, particularly in Punjab and Haryana, to shift towards more profitable pulses and oilseeds. Current central pool rice stocks total 31.98 million tonnes (MT), with the Food Corporation of India (FCI) holding 50.08 MT, well above the buffer requirement.
For the 2024-25 season, MSP for moong increased by 1.4% to Rs 8,682/quintal, while tur/arhar rose by 7.9% to Rs 7,550/quintal. Groundnut and soybean saw MSP hikes of 6.4% and 6.3%, reaching Rs 6,783/quintal and Rs 4,892/quintal, respectively.
These adjustments are part of ongoing efforts to realign MSPs towards oilseeds, pulses, and coarse cereals to balance supply and demand. Since 2018-19, MSP policy has aimed for at least 50% profits over production costs, with that year seeing hikes from 4.1% to 28.1%.
Higher MSPs for pulses and oilseeds are expected to drive agricultural gross value added (GVA) in the latter half of the year, with procurement starting in October. Agri GVA grew by only 1.4% in FY24 due to below-normal monsoon rainfall.
According to Information and Broadcasting Minister Ashwini Vaishnaw, the new MSP decisions will provide farmers with Rs 2 trillion, an increase of Rs 35,000 crore from the previous season. However, MSP purchases remain stronger for paddy and wheat than for oilseeds and pulses. India imports 56% of its edible oil needs and 15% of its pulses consumption.
For the 2024-25 season, the MSP for medium staple cotton increased by 7.6% to Rs 7,121/quintal, while MSPs for other cereals like maize, bajra, ragi, and jowar rose by 5-11.5%.
Expected farmer margins over production costs for 2024-25 are highest for bajra (77%), followed by tur (59%), maize (54%), and urad (52%), with other crops estimated at a 50% margin.
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