MSP for Kharif Crops

MSP for Kharif Crops

News: Recently, the Central government approved the Minimum Support Price (MSP) for kharif crops for the 2023-24 season, aiming to provide fair remuneration to farmers.

What is MSP?
 MSP is the guaranteed amount paid to farmers when the government buys their produce. Government announces MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
 The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops.
 MSP is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
 While recommending MSPs, the CACP looks at the following factors: the demand and supply of a commodity; its cost of production; the market price trends (both domestic and international); inter-crop price parity; the terms of trade between agriculture and non-agriculture (that is, the ratio of prices of farm inputs and farm outputs); a minimum of 50 per cent as the margin over the cost of production; and the likely implications of an MSP on consumers of that product.

Who decides on MSP?
 The Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Minister of India takes the final decision (approve) on the level of MSPs.

What is MSP for Kharif crops 2023-24?
 The Centre claimed that the hike in MSP for kharif crops for 2023-24 is in line with the Union Budget 2018- 19 announcement of fixing the MSP at a level of at least 1.5 times the All-India weighted average cost of production.
 The MSP has been hiked for all 14 kharif crops in the range of 5.3 to 10.35 %. In absolute terms, it has been increased by Rs 128 to Rs 805 per quintal.
 Green gram (moong) got the highest hike of 10.4% over 2022-23 followed by sesamum that saw an increase of 10.3%.

What are concerns of farmers?
 They have pointed out that the cost of production used by the CACP to calculate the MSP (A2+FL costs) does not include all the expenses incurred by the farmers such as rent of land, interest on loans, family labour, etc
 They have demanded that the MSP should be based on the comprehensive cost of production (C2) as recommended by the Swaminathan Commission.
 Concerns raised over procurement methods and poor storage infrastructure.
 MSP benefits few crops and in few states thereby stating that there is regional disparities.
 MSP does not reflect the actual market conditions and the inflationary trends.
 Farmers have demanded that the MSP should be linked to the wholesale price index (WPI) or the consumer price index (CPI) to ensure fair returns to the farmers.
Source – Indian Express, Vikaspedia