Amid protests against the three farm laws , the government began procurement of Kharif crops at the Minimum Support Price (MSP). It also announced MSPs for the Rabi season to allay the fears of farmers, many of whom felt the laws might end the procurement programme. An analysis of 10 crops sold in the last one month in the mandis shows that in 68% of instances, crops were sold below the MSP.
Even in the case of paddy, which is procured in significant quantity, the selling price was far less than the MSP in many instances.
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Support price
The chart shows MSPs for select crops for the 2020-21 season. The MSP is the price the govt. has to pay if it procures the crop. But it is not legally bound to do so.
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Sale below MSP
Often, due to various reasons which vary from insufficient procurement levels, unawareness of the MSP programme, inaccessibility of procurement agencies, pre-pledged crops. etc., farmers sell their crops below the MSP.
An analysis of modal prices (the price at which most transactions take place during the peak marketing period on a particular day for a specific crop) at which 10 select crops were sold between September 14 and October 14 in over 600 wholesale markets shows that in 68% of instances, farmers sold their crops below the MSP.
An instance is defined as a crop’s average modal price on a particular day in a specific market. So, in the case of Bajra, of the 2,215 such instances in the considered period, 2,156 (97%) saw the modal price going below the MSP.
The data analysed are from the government’s Agmarknet portal, which tracks the sales of crops inside the mandis. A significant share of transactions also takes place outside the mandis . However, it is important to note that most such farmgate transactions outside mandis may have fetched the farmer less than the MSP if the transaction cost incurred by the trader to reach the farm is factored in.
Distress sale
While the govt. announces the MSP for many crops, only paddy and wheat are procured in significant quantities. Even in paddy (common), procurement is mostly limited to certain States. The graph shows the sale of paddy in various instances (as defined earlier) across States.
In Punjab and Haryana , on all instances, paddy was sold at or above the MSP (green circle) between October 1 and October 13. In other States, in most instances, it was sold at a price much lower than the MSP (red circle). In several instances the modal price was ₹300 to ₹1000 per quintal less than the MSP. In the case of paddy (common) the MSP was ₹1,868. Analysis limited to paddy varieties sold in Punjab and Haryana.
Source: agmarknet, PIB
