MINIMUM RELEVANCE PRICE

As farmers are poised to march on New Delhi once again, the MSP has not been seen much in action for critical crops the last few seasons

Once again, thousands of farmers are poised to march to New Delhi. Once again, barricades are being put up at Delhi's borders. And once again, at the core of the issue is the minimum support price, or MSP.

The farmers want to press their long standing demand for legalising the MSP, agree upon when three farm laws were repealed in December 2021.

In July 2022, the government had set up a committee to make MSP more effective and transparent, to promote natural farming, and to change crop patterns keeping in mind the changing needs of the country. This committee, though yet to submit a final report, has said that the recent price movement in critical crops such as wheat indicates the need for keeping market prices at reasonable levels to lessen the need for the support system.

In the last few seasons, though, the high market prices of cereal crops such as wheat have ensured that farmers preferred private buyers rather than selling to the government at the MSP, which was lower than the prevailing mandi rates. In the rabi marketing season of 2019-20 (April to March) to 2021-22, wheat procurement showed an increasing trend and reached a record level of 43.3 million tonnes in 2021-22.

However, procurement recorded a steep decline in the rabi marketing season of 2022-23 and reached a record low of 18.8 million tonnes, but increased by about 40 per cent to 26.2 million tonnes in 2023-24.

In both 2022-23 and 2023-24 marketing seasons, the procurement was less than the target, as market prices were higher than the MSP, and farmers preferred private buyers. That the crop was on the lower side contributed to the lower procurement by state agencies.

MSP and coming rabi

In the forthcoming rabi marketing season, say trade sources, market prices of wheat might remain above the MSP or close to it, as demand is firm, which would mean state procurement could remain below the estimates.