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Cabinet hikes wheat MSP by Rs 105 per quintal for 2018-19

The government announces minimum support prices (MSPs) for most crops yearly to set a benchmark.

ET Online and Agencies|
Updated: Oct 04, 2018, 08.16 AM IST
Modi cabinet likely to clear MSP hike for rabi crops today
Modi cabinet likely to clear MSP hike for rabi crops today
The Government Wednesday announced 6 per cent hike in support price of wheat at Rs 1,840 per quintal, a move that will give farmers an additional income of Rs 62,635 crore and help contain their simmering discontent over high input cost and low sales realisation.

The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi approved higher minimum support price (MSP) for winter-sown or Rabi crops.

The decision will help farmers earn an additional income of Rs 62,635 crore, Law Minister Ravi Shankar Prasad told reporters here after the meeting.

The decision comes within months of announcing higher price for Kharif crops, when the government fulfilled its promise of giving farmers 50 per cent more price than their cost of production.

The Cabinet has approved a Rs 105 per quintal hike in wheat MSP to Rs 1,840 for 2018-19 season, Agriculture Minister Radha Mohan Singh said.

The MSP of wheat was Rs 1,735 per quintal in the 2017-18 crop year.

Singh said the MSP for all Rabi crops is higher than the cost of production ranging from 50-112 per cent.

As per the CCEA decision, the MSP of barley has been increased by Rs 30 per quintal to Rs 1,440 per quintal, while that of gram (Chana) by Rs 220 per quintal to Rs 4,620 per quintal.

Masur's MSP has been raised by Rs 225 to Rs 4,475 per quintal, while the support price of rapeseed/mustard has been hiked by Rs 200 to Rs 4,200 per quintal. Safflower MSP has been increased by Rs 845 per quintal to Rs 4,945.

The support price has been increased based on the recommendations of farm advisory body CACP (Commission for Agricultural Costs and Prices) and is in line with the government's announcement to provide farmers a 50 per cent profit over the cost of production.

From Reuters:
The government announces minimum support prices (MSPs) for most crops yearly to set a benchmark, although state agencies usually buy limited quantities of staples such as rice and wheat at those prices due to a lack of storage and funds. Market prices for many crops typically run well below MSPs.

This year, Modi's cabinet is expected to raise the MSP on wheat by 105 rupees ($1.44) to 1,840 rupees per 100 kg, the sources said, declining to be named ahead of an expected official announcement. The 6 percent rise compares with a 7 percent hike the previous season.

The farm ministry's Commission for Agricultural Costs and Prices (CACP) estimates that the average cost of production for wheat this crop season would be 1,339 rupees, according to a government document reviewed by Reuters.

Modi and his ministerial colleagues are also expected to raise the floor prices for mustard, lentils, sunflower, chickpeas, barley and sunflower, according to local media.

A farm ministry spokesman could not immediately be contacted.

In the government document, CACP said that MSPs alone do little for farmers as market prices for all winter crops last season were below the government recommended rates.

"This trend essentially shows that a high MSP is not the only policy instrument to sustain higher production and income but it should be backed up by an effective procurement mechanism to arrest the prices falling below MSP," CACP said.

"This emphasizes the importance of public procurement machinery and adequate preparatory measures for establishment of proper procurement system along with adequate modern storage and warehousing facilities with active participation of state agencies."

Low crop prices and protests by farmers are bad news for Modi's Bharatiya Janata Party ahead of three big state elections this year and a general election early next year.

The police on Tuesday fired teargas and water cannons to halt and scatter a march by thousands of protesting farmers heading for New Delhi to demand better prices for their produce.

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