The new support prices for rain-fed kharif crops will be 50% over the costs of production, says Prime Minister Narendra Modi. New Delhi: The central government will approve the much-awaited higher minimum support prices (MSP) for kharif crops in a cabinet meeting next week, Prime Minister Narendra Modi told farmers at his residence on Friday.
The new support prices for rain-fed kharif crops will be 50% over the costs of production, Modi said. The decision follows an announcement in this year’s budget promising higher MSPs to farmers.
The announcement next week “would ensure a significant boost to the income of farmers” said the Prime Minister’s Office. It added that within the next two weeks the government will also approve higher fair and remunerative price (FRP) for sugarcane farmers for the 2018-19 season, compared to the year before.
Modi’s latest attempt to reach out to farmers follows repeated protests by them as prices fell after successive years of record harvests and as growers took to the streets demanding loan waivers. The new MSP regime is likely to significantly raise the support prices for crops such as paddy, ragi, maize, moong, groundnut, sunflower, soybean and cotton. Going by the MSPs announced for these crops in the 2017-18 crop year, returns to farmers were under 50% of the costs of cultivation.
The centre had earlier clarified it will take the A2+FL cost matrix while fixing MSPs, which include all paid-out costs for inputs like seeds and fertilizers, including an imputed value of family labour.
The new MSP regime, likely to provide relief to farmers battered by falling crop prices, will also increase the costs for the exchequer because of higher outlays for procurement of crops such as paddy, which is supplied under the subsidized public distribution system, and pulses, of which government procured a record ?20,768 crore worth in 2017-18, trying to arrest a price crash.
The government is also likely to unveil a new MSP policy ahead of the kharif harvest which begins in October to ensure farmers benefit from MSP announcements.
Currently, government purchase at support prices is limited to rice, wheat and some pulses, leading to a situation where farmers have little choice but to sell to traders at lower than MSP when market prices crash.

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