MSP increase alone may not boost pulses and oilseeds output, shows data

Data reveals that between 2014-15 and 2020-21, despite a 37 percent increase in MSP for paddy, the acreage under the crop decreased only marginally, by around 2.5 percent

The government has recently increased the minimum support price (MSP) of kharif crops by 5-12.7 per cent, with larger hikes for oilseeds and pulses than for cereals such as paddy.

This move aims to motivate farmers to transition from water-intensive paddy cultivation to more in-demand pulses and oilseeds.

Such a shift is also expected to reduce the country's substantial import bill for major pulses and edible oils. However, this strategy has yielded mixed results over the years.

Data reveals that between 2014-15 and 2022-23, despite a 50 per cent increase in MSP for paddy, the acreage under the crop rose by 8.43 per cent.

 

While the MSP for wheat increased by 46.55 per cent during this period, the area under cultivation dropped by just 0.19.

In contrast, the MSP for chana rose by almost 68 per cent, and saw a corresponding increase in the crop area of approximately 26.91 per cent.

For soybeans, the MSP rose by almost 68 per cent, and nearly 20 per cent increase in the crop area.

The data suggests that while MSP hikes may have encouraged the cultivation of more pulses and oilseeds, they have not been successful in diverting farmers from paddy and wheat.

One of the reasons is the consistent procurement of almost 100 per cent of the marketable surplus of paddy and wheat by the government, providing income security for farmers.

In contrast, the procurement of marketable surplus for other crops is not as reliable.

Markets also play a significant role, as the artificial suppression of market prices through export bans and cheap imports discourages farmers from transitioning away from paddy or wheat towards pulses and oilseeds.