File photo used for representational purposes only. The Union Cabinet approved a ₹143 hike in the MSP of paddy to ₹2,183/quintal for 2023-24.
| Photo Credit: Nagara Gopal

The Centre has set the Minimum Support Price (MSP) for paddy sown in the kharif or monsoon season at ₹2,183 per quintal, a hike of ₹143 per quintal in comparison to last year. The 2023-24 MSPs for 17 kharif crops and variants were approved at a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, .

The sowing of the crops, mainly paddy, has started in most States. While the Centre said that its aim was to ensure reasonably fair remuneration for the farmers and to encourage crop diversification, several farmers’ organisations said that the increase was not in tune with rising input costs.

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‘Highest increase’

Food Minister Piyush Goyal told reporters after the CCEA meeting that farmers will benefit from the increase in the MSP at a time when the retail inflation is declining. “In agriculture, we have been fixing MSP from time to time based on the recommendations of Commission for Agricultural Costs and Prices (CACP). The increase in MSP of the kharif crops for this year is highest compared to the previous years,” he said.

Apart from paddy, new MSPs have been set for major pulses. The MSP for moong is ₹8,558 per quintal, an increase of ₹803 from last year, one of the highest increases among kharif crops. The MSP for tur or arhar has been set at ₹7,000 per quintal, which is estimated to be 58% above the cost of production. This is in keeping with the Centre’s promise to set MSPs which are at least one and a half times the all-India weighted average cost of production.

Bajra, tur margins high

“The expected margin to farmers over their cost of production are estimated to be highest in case of bajra (82%) followed by tur (58%), soybean (52%) and urad (51%). For the rest of the crops, the margin to farmers over their cost of production is estimated to be at least 50%,” said an official statement.

The MSP of ‘A’ grade variety of paddy has been increased to ₹2,203 per quintal from ₹2,060. For jowar (hybrid) and jowar (maldandi) the rates are ₹3,180 and ₹3,225 per quintal respectively. Last season, it was ₹2,970 and ₹2,990. For maize, the increase is ₹128 per quintal and the new rate will be ₹2,090. For ragi, this year’s MSP will be ₹3,846 per quintal, which is an increase of ₹268.

Among oilseeds, the MSP for sesamum is ₹8,635 per quintal, ₹6,377 for groundnut, and ₹4,600 for soybean. In the case of niger seed, the new MSP is ₹7,734 per quintal, and for sunflower seed, it is ₹6,760. For cotton (long stable) and cotton (medium stable), the MSPs are at ₹7,020 per quintal and ₹6,620 per quintal respectively.

‘Faulty production estimates’

The Samyukt Kisan Morcha, a platform of about 500 farm outfits, questioned the Centre’s claims and said that the new MSPs were not linked to the real expenses of farming. Senior SKM leader Ashok Dhawale said that the MSP for kharif crops is nowhere near the C2+50% formula proposed by the Swaminathan Commission.

“The cost of production estimates given by the government are themselves extremely faulty and underrated, and thus the MSP figures are also very unsatisfactory. The SKM and All India Kisan Sabha express anger at the constant short-changing of farmers by the BJP regime led by Narendra Modi, and vow to intensify their struggle for a fair and just MSP, which can only be won by changing the current BJP government in the general elections next year,” he said in a statement.

Senior farm leader Hannan Mollah said that the Centre has not taken into account the increase in irrigation costs and fertiliser costs. “The government has betrayed the farmers by announcing MSP far below C2+50%. It has not put up the ‘Report on Price Policy of Kharif Crops for 2023-24 Season’ by the CACP yet,” he added.

A farmer spreads fertilizer in a field at a village in Madurai. File
| Photo Credit: PTI

With fertilizer prices continuing to remain high due to global factors — such as a fall in production and hiked logistics costs, especially due to the Ukraine situation — the Centre expects this year’s fertilizer subsidy to cross ₹2.25 lakh crore. Accordingly, the Union Cabinet on Wednesday approved a ₹1.08 lakh crore subsidy for the ongoing kharif or monsoon season, Fertilizers Minister Mansukh Mandaviya said.

Out of this, ₹38,000 crore will subsidise phosphatic and potassic (P&K) fertilizers, while ₹70,000 crore will go toward the urea subsidy. Last year, the total fertilizer subsidy was about ₹2.56 lakh crore.

Stable urea, DAP rates

Mr. Mandaviya told journalists that the Centre would ensure that the prices of urea and diammonium phosphate (DAP) would remain unchanged during the season. At present, the subsidised rate of urea is ₹276 per bag and the price of DAP is ₹1,350 per bag. The decision will benefit about 12 crore farmers, the Minister added.

The total consumption of urea in the country is about 325 to 350 lakh metric tonnes (LMT). Apart from this, 100 to 125 LMT of DAP; 100 to 125 LMT of NPK; and 50 to 60 LMT of Muriate of Potash (MoP) are also sold in the country. “Farmers should get fertilizers on time. They should not be burdened at a time international prices are high,” he said.

12 cr farmers benefit

The Minister said that the fertilizer subsidy usually ranged between ₹1 lakh crore and ₹1.25 lakh crore. “Last year, it was ₹2.56 lakh crore,” he said, adding that as cultivation takes place on 1,400 lakh hectares of land across the country, the fertilizer subsidy for one hectare is about ₹8,909 subsidy. “We have 12 crore farmers and one farmer gets ₹21,223 subsidy,” he said.

The actual price of a bag of DAP was ₹4,000, Mr. Mandaviya said. “But for farmers, the rate is ₹1,350 per bag. ₹2,461 per bag is the subsidy,” he explained. The NPK subsidy is ₹1,639 per bag, while the MoP subsidy amounts to ₹734 per bag. The Centre spends ₹2,196 per bag of urea

“The rate of subsidy is based on the average price of fertilizer imported to the country in the last six months. We have to stock fertilizer so that farmers do not face any difficulties. We have adequate stocks of 150 LMT, which is available for kharif season,” he said, adding that the subsidy could go beyond ₹2.25 lakh crore this year.

Representational image.
| Photo Credit: Kommuri Srinivas

A Finance Ministry report on September 17 underlined the need for deft management of stocks of agriculture commodities in view of lower crop-sowing for the Kharif Season, stressing there should be no room for complacency on the inflation front.

Overall, inflationary pressures in India appear to be on a decline with a pre-emptive set of administrative measures by the government, agile monetary policy and easing of international commodity prices and supply-chain bottlenecks, according to the monthly Economic Review released by the Finance Ministry.

However, it said, there is no “room for complacency on the inflation front as lower crop-sowing for the Kharif season calls for deft management of stocks of agricultural commodities and market prices without unduly jeopardising farm exports.”

India’s rice production could fall by 10-12 million tonnes during the Kharif season this year due to a fall in paddy sowing area, Food Secretary Sudhanshu Pandey had said earlier this month.

The Kharif season contributes about 80% of India’s total rice production.

There was a huge lag in paddy sowing in the states of Jharkhand (9.80 lakh ha), Madhya Pradesh (6.32 lakh ha), West Bengal (4.45 lakh ha), Chhattisgarh (3.91 lakh ha), Uttar Pradesh (2.61 lakh ha), and Bihar (2.18 lakh ha) so far this kharif season.

Paddy is the main kharif crop and its sowing begins with the onset of the southwest monsoon from June and harvesting from October onwards.

Observing that India’s growth has been robust and inflation in control at a time when slowing growth and high inflation are afflicting most of the major economies of the world.

The report further said inflation in India, a net commodity-importing country, has been a by-product of externally situated exogenous pressures.

“Increase in international prices was reflected in an uptick in domestic prices, though the increase in domestic prices was relatively modest on account of the timely interventions taken by the government. Further, as these external pressures ease, inflationary pressures in India are also likely to subside,” it said.

Several indicators are already pointing to the easing of external pressures, the report said, adding, industrial metals and edible oil prices after peaking in March 2022, have softened, led by recessionary fears in advanced economies.

Crude prices have dropped 19.1% by August since the peak in the month of June 2022 and supply chains are getting restored with decline in port congestion.

The impact is already reflected in the decline in retail and WPI inflation since April 2022. Retail inflation eased to 7% in August as compared to 7.8% in April 2022.

According to a notification by the Revenue Department, an export duty of 20% has been imposed on ‘rice in husk (paddy or rough)‘ and ‘husked (brown) rice’.
| Photo Credit: Sandeep Saxena

The Centre on Thursday imposed an export duty of 20% on rice, brown rice, and semi-milled as well as wholly milled rice except for parboiled rice to boost domestic supplies, effective September 9.

According to a notification by the Revenue Department, an export duty of 20% has been imposed on ‘rice in husk (paddy or rough)‘ and ‘husked (brown) rice’.

The development comes in the wake of concerns about lower paddy sowing by farmers this Kharif season amid uneven monsoons in parts of the country, that have exacerbated inflationary expectations and nudged up retail prices for rice in recent weeks.

The Central Board of Indirect Taxes & Customs further said the export of ‘semi-milled or wholly-milled rice, whether or not polished or glazed(other than Parboiled rice and Basmati rice)‘ will also attract a customs duty of 20 per cent.

The export duty will come in force from September 9, the notification added.The area under the paddy crop has been down by 5.62% at 383.99 lakh hectares in the ongoing Kharif season so far due to poor rains in some states, as per the latest data released by the Agriculture Ministry.

India, the world’s second-largest rice producer after China, commands a 40% share in the global trade.

The country exported 21.2 million tonnes of rice in the 2021-22 fiscal year, of which 3.94 million tonnes were Basmati rice. It exported non-Basmati rice worth $6.11 billion in the same period, as per official data.

The country exported non-Basmati rice to more than 150 countries in 2021-22.

Welcoming the export duty, former president of All India Rice Exporters Association Vijay Setia said Indian rice was being exported at a “very low price”. The export duty would lead to a reduction in non-Basmati rice shipments by 2-3 million tonnes, but the realisation from the exports would remain the same because of the 20% duty.

“It is a good decision in view of fall in paddy acreage,” Mr. Setia said.

The association’s current president Nathi Ram Gupta said the export of raw rice from southern parts of the country would be impacted, but shipments of parboiled may go up.

Paddy is the main Kharif crop, sowing of which begins with the onset of the southwest monsoon in June and harvesting starts from October onwards.

Rice production rose to a record 130.29 million tonnes in the last crop year as against 124.37 million tonnes in 2020-21.

The government has already restricted exports of wheat.