Wheat MSP raised by 4.6% to Rs 1925/qtl, but it's still lowest in 5 years

Minimum support price for wheat will now be Rs 1,925 a quintal, lowest in the last five years

Saddled with bulging stocks and rising economic cost, the Cabinet on Wednesday increased the minimum support price (MSP) of wheat for the 2020-21 rabi marketing season by 4.61 per cent to Rs 1,925 a quintal, lowest in the last five years. 

In the current wheat marketing season that will end in March 2020, MSP was increased by 6.1 per cent as compared to the 2018-19 season. The average weighted cost of production of wheat for the 2020-21 season has been estimated at Rs 923 a quintal. This is up Rs 57 from the current season’s average weighted cost of production.

The government claimed that the new MSP was 109 per cent more than the average weighted cost of production, thus keeping its promise of providing MSP which is 50 per cent more than A2+FL cost of production.

The support price of mustard, the main oilseed grown during the rabi season was fixed at Rs 4,425 a quintal, an increase of 5.35 per cent from the current (2019-20) marketing season. Chana (the biggest pulses grown during the rabi season) was fixed at Rs 4,875 a quintal, up 5.51 per cent compared to the 2019-20 MSP.

“The hike in wheat MSP is very little and it should have been a minimum 10 per cent more than last year as production cost of several items have risen sharply. According to our calculations, the MSP of wheat for 2020-21 should be at least Rs 2,000 a quintal,” said farmers’ leader Pushpendra Singh, head of the Kisan Shakti Sangh.

Wheat stocks in the central pool as on October 1 was estimated to be 39.31 million tonnes, almost 92 per cent more than the buffer stock norms for the same period. Meanwhile, data showed that MSP of barley has also been increased by Rs 85 to Rs 1,525 per quintal from Rs 1,440 per quintal last year, a rise of 5.9 per cent.

Also, to encourage the cultivation of pulses, the support price of masoor has been increased by Rs 325 to Rs 4,800 per quintal from Rs 4,475 per quintal last year. The minimum support price for safflower has been hiked by Rs 270 to Rs 5,215 per quintal from Rs 4,945 last year.

The MSP for rabi crops announced this year is in line with the recommendations of the government's farm price advisory body – Commission for Agricultural Costs and Prices or CACP. Wheat is the main rabi crop, sowing of which will begin next month. The crop will be marketed from next April.

“I think more than a significant increase in MSP, what is more needed is that MSP should be available to a wider number of farmers,” said Tajmul Haque, former chairman of CACP and a noted agriculture economist.

He said as of Wednesday, wheat has been procured from Punjab, Haryana, western UP and MP only while farmers in western and eastern parts of the country are completely untouched by the MSP regime.

“Instead of hiking MSPs, the government should increase the payouts under PM-KISAN as that would benefit more farmers,” Haque added.