Clamour for higher kharif MSP grows

The MSP announcement hasn’t gone down too well with many farmers. They want higher MSP or minimum support price. However faced with budgetary constraints this is perhaps the best the government could come up with to boost cultivation of oilseeds and pulses. Will it really encourage farmers?

Clamour for higher kharif MSP grows
Not a rewarding harvest

FARMERS in many parts of the country are a tad disappointed with the minimum support price (MSP) announced for the ensuing kharif season, 2021-22.

There is a belief that the government should have hiked the MSP for many of the crops particularly paddy, something which is echoing in the major paddy growing region of south India.

The contention of the farmers is that if the government had implemented the MS Swaminathan committee recommendation on 50% profit over cost, the MSP for a quintal of paddy (grade A) would be ₹2,950 and not ₹1,940 which was announced. Even at ₹1,940 per quintal, the new MSP represents a 3.81% increase.

But faced with budgetary constraints, this was perhaps the best the government could offer by way of encouraging the farming community.

Focus on oilseeds and lentils

The hike in MSP has been more pronounced in case of oilseeds and pulses; two key weak spots as far as India’s dietary requirements are concerned.

The hike in MSP in case of sesame (til) is the maximum in absolute terms at ₹452 per quintal. On the other hand the MSP for moong (green gram) is one of the lowest at ₹79 per quintal.

Prices going lower

Meanwhile moong prices were seen soft. On the NCDEX, moong was trading at ₹6,725 per quintal or down 0.37%.

Meanwhile traders are adopting a wait and watch approach. While the government has permitted imports of pulses, traders are worried that inventory norms would be slapped on them if they were to buy both local produce and go in for imports.

Traders are pegging that India would need to import 2.5 lakh tonnes of toor dal, 1.5 lakh tonnes of moong besides half a lakh tonne of urad dal. The imports should be arriving by November 30.

However traders are waiting how the acreage under oilseeds and pulses would be in the ensuing kharif 2021-22. A normal monsoon should increase acreage.

Stoking inflation

India’s overdependence on imported oilseeds and pulses has only managed to stoke inflationary pressure. While CPI has managed to decline, individual pockets of worry do persist. This is best exemplified in case of oilseeds. Edible oil prices have risen by over 30% over the last six month much to the consternation of the consumers.

And with some assembly elections due next year, getting prices under control becomes extremely important for the government. However this time around, inflation is also being stoked by international factors thanks to some key geographies like Brazil facing a prolonged spell of dry weather.