Farmers say that the Centre failed to account for rising inflation while increasing MSP for Kharif crops.
Stakeholders in the agriculture sector have mixed reactions to the Centre’s announcement of a 4.4% to 8.86% increase in the minimum support price (MSP) for Kharif crops on Wednesday. Farmers believe the government could have done much more to cover rising costs, while the trade, particularly the oilseeds sector, believes the increase in MSP will result in increased acreage.
Anil Ghanwat, leader of the Shetkari Sanghatana, stated that the increase in MSP will not benefit farmers in any way. ‘Input costs have risen much more than the government-announced MSP increase. The government must recognise that raising MSPs is not the solution to the problems farmers are facing,’ he said.
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Furthermore, Ghanawat stated that the MSP will encourage farmers to grow more paddy and wheat as the government focuses on grain procurement. He believes that diversification into other crops will be hampered.
‘Because the government has not procured from farmers, farmers have been selling urad, tur, and moong below MSP.’ Farmers can sell their produce for a higher price if the government stops intervening in the market and stops importing when domestic prices are high. Let the market determine prices, and the MSP will be unnecessary,’ Ghanwat said.
Stay away from grains
According to Basavaraj Ingin, President of the Karnataka Pradesh Red Gram Growers Association, the Centre could have announced a higher MSP for pulses because input costs, including labour wages, have increased significantly. The MSP increase for pulses such as tur and urad is 4.76 per cent, while moong is 6.6 per cent.
‘The MSP increase is nominal, not even 10%. The government should have taken better care of pulse growers by announcing a higher MSP that accounted for inflation,’ he said.
Suresh Nagpal, Chairman of COOIT (Central Organisation for Oil Industry and Trade), believes the increase in MSP for oilseeds is a positive step. As farmers receive a guaranteed price for their crops, it will encourage more farmers to grow oilseeds and push them away from grains. The area under oilseed cultivation has been steadily increasing in recent years, and with today’s increase, we expect it to rise even further. The cultivation of mustard seed reached 91.44 lakh hectares during the last Rabi crop season as a result of the Government’s guaranteed price (MSP). Needless to say, farmers, customers, and other stakeholders will all benefit, Nagpal said.
According to Rahul Chauhan of IGrain India, farmers only remember prices when they are selling or sowing. Farmers in Punjab, Haryana, and Uttar Pradesh will increase acreage as the MSP for paddy exceeds 2,000. According to Chauhan, acreage for pulses may decrease while acreage for oilseeds increases in Madhya Pradesh, Maharashtra, and Rajasthan.
Inflationary stress
According to Kalyan Goswami, Director General of the Agro Chem Federation of India, the increase in MSP of commodities such as oilseeds, pulses, Nutri-cereals, and cotton is greater than that of paddy. This would encourage farmers to grow fewer water-intensive crops and encourage crop diversification. This would also aid in the reduction of imports of oilseeds and pulses. However, while increased MSPs may increase rural incomes and purchasing power, they may also increase inflationary pressures.
To be sure, wholesale inflation in April 2022 reached 15.08 per cent, the highest level in over a decade and a half. As a result, Goswami believes that the MSP increase should be approached with caution and logic, keeping all of these factors in mind.
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While farmers in Gujarat welcomed the Centre’s decision on MSP, they criticised it as insufficient in comparison to overall inflation. ‘The increase in MSP is lower than the price rise we have seen in inputs and logistics costs, said Vitthal Dudhatara, a farmer leader from Saurashtra. There was a need for at least a 10% increase in the MSP; anything less is insufficient.’
Notably, market prices for groundnuts and cotton are already higher than MSP. As a result, farmers believe that the increase in MSP is ineffective on the ground. ‘Even though the market price for cotton was nearly double that of last year, crop damage was up to 40%. As a result, farmers did not receive the expected returns. Because market prices are currently high, no procurement will take place. So there is no benefit for farmers,’ said Vijay Kakadiya, a cotton grower from Lilapur village in Rajkot district’s Jasdan taluka.
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