Farmers who sold cotton, soyabean, paddy and jowar crops in the agricultural produce marketing committee (APMC) markets from October to December 2022, the key harvesting season, have earned an additional ₹8,241.6 crore over the combined minimum support price (MSP) value, even as growers who stuck to urad, moong, bajra and ragi were unable to realise the MSP.

Data on arrivals and average all-India mandi (market) prices during the last three months, as captured by the official Agmarknet portal — an arm of the Agriculture Ministry, shows that cotton was priced ₹8,326/quintal, 37 per cent more than its MSP of ₹6,080/quintal (medium variety). Similarly, soyabean fetched ₹5,051/quintal, 17.5 per cent above the MSP (₹4,300), and paddy sold at an average of ₹2,171/quintal, 6 per cent above the MSP of ₹2,040. Jowar reported a modest ₹3,092/quintal average mandi rate, 4 per cent above its MSP of ₹2,970.

With cotton farmers in Telangana protesting against falling prices of the fibre crop, officials said the fall is about ₹500/quintal in a month from what was in November and now. “The drop is insignificant since this year the volatility is so high that cotton prices have jumped or dropped ₹800/quintal in a day in some markets. The government will definitely intervene in case rates fall below MSP. But it looks prices of cotton will remain robust for at least 1-2 months,” an official said. He cited the instance of soyabean which moved up further to ₹5,339/quintal now from ₹5,254/quintal in December. 

Ragi fares the worst

Mandi rates of tur, maize and groundnut were nearly 1 per cent lower than MSP. Urad prices were 11 per cent lower than MSP, while moong and bajra sold 14 per cent below the official rates. Ragi sold more than 30 per cent below the MSP, data show.

The farmers who incurred a presumptive loss of ₹568 crore in the absence of a legal guarantee have, however, received more than the cost of production (A2+family labour), as calculated by the Commission for Agricultural Costs and Prices (CACP). Only in the case of ragi the drop was more than 30 per cent; the return over costs for urad, moong and bajra is not as bad since the MSP has been decided on the formula of minimum 50 per cent profit over cost.

“The market has the inherent resilience to absorb the legal guarantee, which is best seen in the current situation. The flare-up in commodities prices following the Russia-Ukraine war has proved that there would be no dent on exchequer when the legal guarantee of MSP is implemented,” said VM Singh, president of MSP Guarantee Morcha, an umbrella body of over 200 organisations. This is the right time to accept the demand, Singh said.

‘Tap market opportunities’

Speaking at a conclave on agriculture, Niti Aayog member Ramesh Chand had said last month that though MSP of crops could guarantee stable prices to farmers, the best rates would only be ensured through fair competition in the market. Responding to the farmers’ demand for MSP as a legal right, he said farmers want the best price for their produce as well as protection from price fluctuations.

Chand, who is also a member of the government-appointed committee on MSP, felt that farmers should take advantage of market opportunities rather than becoming dependent on MSP. If the fair market price is lower than the MSP, businessmen are likely to withdraw from the market, creating a fiscal problem for the government, he said.