The government has bought over 4 million tonne of paddy from nearly 350,000 farmers, who have been paid minimum support price (MSP) of Rs 8,032 till October 11 since procurement of crops began on September 24. The quantity procured so far is 33% higher than the corresponding period last year, according to data cited by the farm ministry.
While the procurement of the kharif staple is robustly continuing, farmers in Punjab and Haryana, however, continue to protest a set of laws enacted by Parliament to deregulate agricultural markets, which they fear will weaken the MSP system, whereby farm produce is bought by the government at assured prices.
The Centre would also procure pulses, oilseeds and copra at MSP prices beyond the quantity approved so far from any state where the market rate falls below MSP under its price support scheme, the agriculture ministry said a statement.
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Despite this, several summer-sown crops, such as soyabean and maize, are selling below minimum set by the government because the government procures too little of non-cereals.
The government “continues to procure kharif 2020-21 crops at its MSP from farmers as per its existing MSP schemes” and procurement is “going on smoothly”, a farm ministry statement said, pointing to the higher procurement trend.
Till October 11, the government through its food agencies has additionally procured 606.56 tonne of two pulses—moong and urad—with an MSP value of Rs 4.36 crore.
The government has also approved requests from 10 states to procure 3.70 million tonne of pulses and oilseeds. These states are Tamil Nadu, Karnataka, Maharashtra, Telangana, Gujarat, Haryana, Uttar Pradesh, Odisha, Rajasthan and Andhra Pradesh.
The government has also sanctioned the procurement of 100,000 tonne of copra, a perennial crop, from Andhra Pradesh, Karnataka, Tamil Nadu and Kerala.
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Crops, such as soyabean, ragi, maize and cotton, are selling up to 30% below MSPs, data from Agmarknet, the agriculture ministry’s portal that tracks prices in mandis or wholesale markets, shows.
Poor returns from crops have been a lingering problem for farmers, especially during episodes of glut, such as now. MSPs, which are fixed at 50% over cost for nearly two dozen crops, don’t necessarily lead to higher farm incomes as the government’s procurement at MSP rates is largely restricted to wheat and rice. For most other crops, farmers are mostly price takers, meaning they are forced to accept whatever the markets dictate.
“Nudging the private sector towards triggering a market-clearing price that is closer or equal to MSP will depend on the extent of government’s procurement,” economist Abhijit Sen said.
For commodities, such as pulses and oilseeds, the government’s procurement is insufficient to improve market rates. For instance, the nearly 3.70 million tonnes of pulses and oilseeds they government has approved for procurement at MSP is less than 15% of the total production—too small a quantity to make a difference in prices offered by private entities.