The state-owned corporation’s intervention has led to open market prices crossing the MSP for kapas in most mandis, thereby not necessitating further official purchases.ĭon't miss from Explained | Why experts aren’t buying Centre’s argument against MSP for cropsĪll in all, the additional fiscal outgo, from the government undertaking the maximum required procurement for guaranteeing MSP to farmers, may not be more than Rs 1-1.5 lakh crore per year. Take cotton, where CCI has so far procured 87.85 lakh bales out of the current year’s (October 2020-September 2021) projected crop of 358.50 lakh bales. Mopping up even a quarter or third of the market arrivals is usually enough to lift prices. Thirdly, government agencies don’t have to buy every single grain that comes to the market. The combined MSP value of the procured quantities of these would have exceeded Rs 2.7 lakh crore in 2019-20. Secondly, the government is already procuring many crops – especially paddy, wheat, cotton and also pulses and oilseeds. The onus for paying cane MSP, as earlier pointed out, lies on sugar mills and not the government.
To start with, one must exclude sugarcane from the calculations. So, is this the money that the government would have to spend in order to ensure farmers get MSP?
This is the MSP value of production that is the marketable surplus - which farmers actually sell. Taking an average of 75% would yield a number of just over Rs 8 lakh crore. The marketed surplus ratio for different crops is estimated to range from below 50% for ragi and 65-70% for bajra (pearl-millet) and jowar (sorghum) to 75% for wheat, 80% for paddy, 85% for sugarcane, 90% for most pulses, and 95%-plus for cotton, jute, soyabean and sunflower. Farmers retain part of it for self-consumption, seed for the next season’s sowing and also for feeding their animals. Not all this produce, however, is marketed. The chart shows that the MSP value of the total production of the 23 crops worked out to around Rs 10.78 lakh crore in 2019-20. The MSP is now applicable on 23 farm commodities: 7 cereals (paddy, wheat, maize, bajra, jowar, ragi and barley), 5 pulses (chana, arhar, moong, urad and masur), 7 oilseeds (groundnut, soyabean, rapeseed-mustard, sesamum, sunflower, nigerseed and safflower) and 4 commercial crops (sugarcane, cotton, copra and raw jute). But how much of farmers’ produce can the government buy at MSP? Further, they purchased 105.23 lakh bales of cotton (MSP value of Rs 28,202 crore in terms of raw un-ginned kapas), 2.1 mt of chana or chickpea (Rs 10,238 crore), 0.7 mt each of arhar or pigeon-pea (Rs 4,176 crore) and groundnut (Rs 3,614 crore), 0.8 mt of rapeseed-mustard (Rs 3,540 crore) and 0.1 mt of moong or green gram (Rs 987 crore). In 2019-20, government agencies - Food Corporation of India, National Agricultural Cooperative Marketing Federation of India and Cotton Corporation of India (CCI) – procured 77.34 million tonnes (mt) of paddy and 38.99 mt of wheat, worth roughly Rs 140,834 crore and Rs 75,060 crore at their respective MSPs. The second route is, of course, the government itself buying the entire crop that farmers offer at the MSP. Explained | When Parliament passed Bills but govt did not give effect to those laws