Cabinet Approves Minimum Support Prices for Rabi Crops for 2024-25 Season

Minimum Support Prices

The Cabinet Committee on Economic Affairs, chaired by the Hon’ble Prime Minister Shri Narendra Modi, has approved the increase in the Minimum Support Prices (MSP) for all mandated Rabi Crops for Marketing Season 2024-25. This move by the government involves an increase in the Minimum Support Prices of Rabi Crops for the said season, with the aim of ensuring that farmers receive remunerative prices for their produce. This decision underscores the government’s commitment to supporting and enhancing the income of agricultural producers.

Government has increased the Minimum Support Prices of Rabi Crops for Marketing Season 2024-25, to ensure remunerative prices to the growers for their produce. The absolute highest increase in MSP has been approved for lentil (masur) at Rs.425 per quintal followed by rapeseed & mustard at Rs.200 per quintal. For wheat and safflower, an increase of Rs.150 per quintal each has been approved. For barley and gram an increase of Rs.115 per quintal and Rs.105 per quintal respectively, has been approved.

New Minimum Support Prices for Rabi Crops

Refers to cost which includes all paid out costs such as those incurred on account of hired human labour, bullock labour/machine labour, rent paid for leased in land, expenses incurred on use of material inputs like seeds, fertilizers, manures, irrigation charges, depreciation on implements and farm buildings, interest on working capital, diesel/electricity for operation of pump sets etc., miscellaneous expenses and imputed value of family labour.

The increase in MSP for mandated Rabi Crops for Marketing Season 2024-25 is in line with the Union Budget 2018-19 announcement of fixing the Minimum Support Prices at a level of at least 1.5 times of the All-India weighted average Cost of Production.  The expected margin over All-India weighted average Cost of Production is 102 percent for wheat, followed by 98 percent for rapeseed & mustard; 89 per cent for lentil; 60 per cent for gram; 60 percent for barley; and 52 percent for safflower. This increased Minimum Support Prices of rabi crops will ensure remunerative prices to the farmers and incentivise crop diversification. 

Significance of Minimum Support Prices Increase for Rabi Crops

The decision to raise the Minimum Support Prices for mandated Rabi Crops during the Marketing Season 2024-25 aligns with the announcement in the Union Budget 2018-19, which aimed to fix the Minimum Support Prices at a minimum of 1.5 times the All-India weighted average Cost of Production. The expected margin over the All-India weighted average Cost of Production is 102% for wheat, 98% for rapeseed & mustard, 89% for lentil, 60% for gram, 60% for barley, and 52% for safflower.

This increase in Minimum Support Prices for Rabi Crops will provide farmers with remunerative prices for their produce and serve as an incentive for crop diversification. It is part of the government’s ongoing efforts to support and boost the agricultural sector in India.

The Government is promoting crop diversification towards oilseeds, pulses and shree anna/millets to enhance food security, increase farmers’ income, and reduce dependence on imports. Besides the Price Policy, the Government has undertaken various initiatives such as the National Food Security Mission (NFSM), Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), and the National Mission on Oilseeds and Oil Palm (NMOOP) with the objective to provide financial support, quality seeds to encourage farmers to cultivate oilseeds and pulses.

Moreover, to extend the benefits of the Kisan Credit Card (KCC) Scheme to every farmer across the nation, Government has launched the Kisan Rin Portal (KRP), KCC Ghar Ghar Abhiyaan, and Weather Information Network Data Systems (WINDS) with the aim to provide timely and accurate weather information to empower farmers in making timely decisions regarding their crops. These initiatives aim to revolutionize agriculture, enhance financial inclusion, optimize data utilization, and improve the lives of farmers across the nation.

What is Minimum Support Prices?

Minimum Support Price is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. Minimum Support Prices is a price fixed by the Government of India to protect the producers – farmers – against excessive falls in price during bumper production years. The minimum support prices are a guaranteed price for their produce from the Government.

• The MSP is a key component of the Indian government’s agricultural policy.
• The MSPs are announced by the Government of India at the beginning of the sowing season for certain crops.
• It is designed to protect farmers from price volatility and to ensure that they receive a fair price for their produce.
• The MSP is announced for 23 crops, including wheat, rice, pulses, oilseeds, and cotton.
• The government procures these crops at the MSP from farmers through the Food Corporation of India (FCI) and other agencies.

The MSP is an important tool for supporting farmers and ensuring food security in India. However, it has also been criticized for being too costly and for distorting the market.

Read also: Why Managed Technology Services are Crucial for Modern Businesses

Benefits

• It protects farmers from price volatility.
• It ensures that farmers receive a fair price for their produce.
• It helps to increase agricultural production.
• It contributes to food security in India.

Criticisms

• It is too costly.
• It distorts the market.
• It encourages farmers to grow crops that are not necessarily in the best interests of the country.
• It leads to the overproduction of some crops.

The MSP is a complex issue with both benefits and drawbacks. It is important to weigh the pros and cons carefully when making decisions about agricultural policy.

Read also: Uttarakhand CM thanks PM Modi for hike in MSP for rabi crops

How MSP is calculated?

The Minimum Support Price is calculated by the Commission for Agricultural Costs and Prices (CACP), which is an advisory body to the Government of India. The CACP considers a number of factors when calculating the MSP, including:

• Cost of cultivation: This includes the cost of inputs such as seeds, fertilizers, pesticides, and labor.
• Market prices: The CACP considers the market prices of crops over the past few years when setting the MSP.
• Inter-crop price parity: This ensures that farmers receive a fair price for their produce relative to other crops.
• Terms of trade between agriculture and non-agriculture: This ensures that farmers are not disadvantaged relative to non-agricultural sectors.
• Likely implications of MSP on consumers of that product: The CACP also considers the impact of the MSP on consumers when setting the price.

The CACP submits its recommendations for the MSP to the Government of India, which then makes a final decision on the MSP.