During the first two months of the Kharif harvesting season, average mandi prices in leading producing States were 2 to 34% lower than their respective minimum support prices (MSPs) in at least ten crops.
According to data from the Agmarknet portal, only cotton and soyabean prices increased by 27 and 26%, respectively, during October and November, out of the 12 major crops for which MSPs are announced. The analysis did not include Niger or sesame.
‘MSP clarification is required.’
Even after the Central Government’s decision to repeal the three farm laws, farmer leaders have decided to keep protesting until the government provides a legally enforceable MSP mechanism. They have also requested a formal clarification from the government on the MSP issue.
On Saturday, the Samyukt Kisan Morcha (SKM) has named five representatives to negotiate and resolve issues such as MSP with the government.
‘If the MSP is legally guaranteed, there will be no pressure on the government to buy the crops because farmers will get the lowest rates anywhere,’ said Dharmendra Malik, spokesman for the Bharatiya Kisan Union (BKU).
In response to farmer protests, the government has increased rice procurement to half of total production for the 2020-21 season (October-September), up from 30% in 2013-14.
This year, procurement has also been going well, with as much as 18.6 million tonnes (mt) purchased until November 25, despite the fact that the target is 50 mt by March 31 because purchases will be completed in most states by then. The procurement of Kharif-grown paddy will continue in a few states, including Assam, until May.
In the current season, rice procurement in Punjab has reached 12.5 mt, exceeding the target of 11.3 mt, while purchases in Haryana were 3.7 mt, slightly less than the 4-mt target. Procurement has come to an end in both states.
During October-November, however, the average mandi price of paddy in Uttar Pradesh, the second-largest grower after West Bengal, was 4% lower than the MSP of ₹1,940/quintal.
‘With the continuation of free rice and wheat distribution under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for four months until March-end, open market demand will fall, resulting in lower paddy crop buying activity.’
‘Farmers will face difficulties if they are unable to sell their crops at MSP to government agencies,’ said Arun Goyal, a Kanpur trader. Paddy prices are likely to fall further as mandi arrivals increase, he added.
Ragi, a high-nutritional cereal, experienced the greatest drop (34%), followed by Bajra (29%), and Jowar (25%). While the Centre has made states responsible for procuring coarse cereals based on offtake in the public distribution system, many states have complained that there is little demand for them.