Government raises Kharif MSP by 5% to 9%

Higher Kharif MSP announced

by 5paisa Research Team Last Updated: Jun 09, 2022, 05:13 PM IST

On 08th of June 2022, the Cabinet Committee on Economic Affairs (CCEA) approved the minimum support prices (MSP) for all the Kharif crops for marketing season 2022-23. The CCEA on MSP is chaired by the prime minister of India.

The Kharif Market season extends from July of the current year to June next year. The current Kharif Market Season will extend from July 2022 to June 2023. The increase in MSP is based on the formula that has been followed and agreed upon.

For the Kharif Marketing Season 2022-23, the MSP continues to be based on the premise as to provide at least 50% mark up to the farmers over and above the cost of production.

That has been captured in the last column of the table presented below. Normally, there is an implicit growth over the previous year and this season the year on year hikes range from 5% to 9%. The average hike has been 5.8% overall.

The maximum hike in the MSP has been in the specific Kharif crops like Soybean, Sunflower Seed and Bajra, where the government wants to encourage production with more remunerative pricing.

While output of Soybean and Sunflower Seed are more to do with the tweaks to the edible oil basket, the focus on jowar is more due to the crop being lower on water consumption and higher on nutrition value.

Crop

MSP

2021-22

MSP

2022-23

Cost of Production

(2022-23)

Return over

cost (%)

Paddy (Common)

1940

2040

1360

50

Paddy (Grade A)^

1960

2060

-

-

Jowar (Hybrid)

2738

2970

1977

50

Jowar (Maldandi)^

2758

2990

-

-

Bajra

2250

2350

1268

85

Ragi

3377

3578

2385

50

Maize

1870

1962

1308

50

Tur (Arhar)

6300

6600

4131

60

Moong

7275

7755

5167

50

Urad

6300

6600

4155

59

Groundnut

5550

5850

3873

51

Sunflower Seed

6015

6400

4113

56

Soyabean (yellow)

3950

4300

2805

53

Sesamum

7307

7830

5220

50

Nigerseed

6930

7287

4858

50

Cotton (Medium Staple)

5726

6080

4053

50

Cotton (Long Staple)^

6025

6380

-

-

 

The return over cost ranges from 50% on the lower side and 85% on the higher side in the case of jowar. This increase in MSP for Kharif Crops is in line with the premise announced in the Union Budget 2019, which had fixed the MSP at a minimum mark-up of 50% over the All-India weighted average Cost of Production. This is in line with the government focus on doubling farm incomes by 2024.
 

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It will also be the key to ensuring that farmers maintain a high level of output in the Kharif season. In the last few years, the government has consistently tried to realign the MSP in favour of oilseeds, pulses and coarse cereals.

The idea is to encourage farmers to shift larger area under these crops and also invest in the best technologies and farm practices. This will also ensure to correct the demand supply imbalance. 

As per third Advance Estimates for 2021-22, production of Food grain in the country is estimated at a record level of 314.51 million tonnes. This is nearly 3.77 million tonnes more than the production of foodgrain in the Kharif year 2020-21. 

The production during 2021-22 is higher by 23.80 million tonnes as compared to the average of the previous five years between the year 2016-17 and the year 2020-21.

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