Centre hikes MSP for kharif crops says Union Agriculture Minister Narendra Singh Tomar

New Delhi: The Union Cabinet on Wednesday raised the minimum support prices (MSP) of kharif crops, increasing them by 1.8% and 6.7%, in keeping with a policy to offer farmers at least 50% returns over the cost of cultivation, Union Agriculture Minister Narendra Singh Tomar said.

The new rates come amid ongoing protests by farmers, especially from Punjab, Haryana and Uttar Pradesh, who want the government to scrap three agricultural laws passed in September 2020 and offer a legal backing for MSPs.

The MSPs announced on Wednesday are geared toward nudging farmers to shift away from plentiful cereals, by setting higher prices for oilseeds and pulses, whose output and supply are relatively scarce. For instance, India imports up to two-thirds of its vegetable oil to meet domestic demand.

"We have been saying all along that there should be no doubt over MSP. The MSP system has been there and will be there," Tomar said. The new rates will offer returns of between 50% and 62% over cost of cultivation, he said.

The rates for coarse cereals jowar and bajra were hiked by Rs 118 or to stand at Rs 2738 and Rs 2250, which translate to a raise of 21% and 5%, respectively. The prices of urad, a lentil, has been increased sharply by Rs 300 to stand at Rs 6300 a quintal.

The highest increase over the previous year was for sesamum, an oilseed, whose MSP was raised by Rs 452 a quintal, to stand at Rs 7307 a quintal, up from Rs 6855.

To fix MSP, the government uses a measure of cost, called A2 + FL, which refers to the cost of cultivation plus the value of family labour.

MSPs are Centrally-fixed floor prices for crops aimed at avoiding distress sale by farmers and signalling a benchmark rate for private traders.

The government buys large quantities of cereals from farmers at MSP rates and distributes them to beneficiaries through the public distribution system at subsidized rates. This is primarily how farmers benefit from the MSP system.