Centre hikes Kharif crops’ MSP; paddy at Rs 2,183 per quintal

On June 7, 2023, the central government announced an increase in the minimum support price (MSP) of 17 Kharif crops for the marketing season 2023-24.

Minimum Support Price (MSP) is an intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.

MSP for paddy, which is the most cultivated Kharif crop, was hiked to Rs 2,183 per quintal for this year’s Kharif marketing season (KMS). This is a 7.01 per cent increase over last year’s Rs 2,040 per quintal.

The highest increase in the paddy MSP in the last 10 years was by Rs 200 per quintal in 2018-19. The MSP hike was recorded in the range of 5.3 per cent to 10.35 per cent for all mandated Kharif crops for marketing season 2023-24.

Moong saw the highest increase and urad the lowest. In the 2022-23 marketing season, the increase in kharif crop MSP was recorded in the range of 4.44 per cent to 8.86 per cent.

The Centre said the expected margin to farmers over their cost of production is at least 50 per cent or higher. The current MSP hike is significant as this will be the last hike for Kharif crops before the general elections in early 2024.

A release by the Press Information Bureau said total foodgrain production is higher by 14.9 million (330.5 million tonnes) tonnes as compared to 2021-22. This is the highest increase in the last five years.

The hike in MSP for Kharif crops for the marketing season 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.

Weighted average cost accounting calculates the average cost of inventory units available for sale over a specific period, which is then used to determine the cost of goods sold and the value of remaining goods.

“This move is to ensure remunerative prices to growers for their produce and to encourage crop diversification,” Union minister Piyush Goyal said while addressing a press conference.

However, several farmers’ organisations have said this increase is not in tune with the rising input costs. It is nowhere close to the C2+50 per cent formula proposed by the Swaminathan Commission which includes the input cost of capital and the rent on the land (called ‘C2’) to give farmers 50 per cent returns.