Economy
Agriculture The Union Cabinet in June
raised the minimum support price (MSP) for paddy by Rs 100 a quintal for the
Kharif season of 2022- 23.
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The Cabinet Committee on Economic Affairs
increased the MSP for all mandated Kharif crops for marketing season 2022-23.
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The rates for 14 crops have been increased
in the range of 4% to 8%.
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Paddy is
the main Kharif crop, the sowing of which has been already begun.
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The MSP for paddy (common), which was Rs
1,940 a quintal in 2021 -22, and paddy (grade A), which was Rs1,960 a quintal,
had increased by Rs 100 The highest
increase had been for two forms of jowar at the rate of 8 of 8%.
·
And the low EST increase of Rs 92 had been
for maize, whose price was Rs 1,870.
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The present increase comes against the
backdrop of spiraling input rates, especially due to a sharp increase in
fertilizer rates Minimum Support Price.
·
The MSP is the rate at which the govt purchases crops from
farmers, and is based on a calculation of at least one-and-a-half times the
cost of production incurred by the farmers.
·
MSP is a “minimum price” for any crop that
the government considers as remunerative for farmers and hence deserving of
“support”.
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Crops under MSP the Commission for
Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops
and fair and remunerative price (FRP) for sugarcane.
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CACP is an attached office of the Ministry of
Agriculture and Farmers Welfare.
·
The
mandated crops include fourteen crops of the kharif season, six rabi crops and
2 other commercial crops.
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In addition, the MSPs of toria and
de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and
copra, respectively.
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Factors for Recommending the MSP.
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The CACP considers various factors while
recommending the MSP for a commodity, including cost of cultivation.
·
It takes into account the supply and
demand situation for the commodity, market price trends (domestic and global)
and parity vis-à-vis other crops, and implications for consumers (inflation),
environment (soil and the water
use) and terms of the trade between agriculture and non-agriculture sectors.
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Three Kinds of Production Cost the CACP
projects three kinds of production cost for every crop, both at state and
all-India average levels.
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‘A2’:Covers all paid-out costs directly incurred by
the farmer in cash and kind on the seeds, fertilisers, pesticides, hired
labour, leased-in land, fuel, irrigation, etc.
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‘A2+FL’:
Includes A2 plus an imputed value of unpaid family labour.
·
‘C2’:
It is a more comprehensive cost that factors in rentals and interest forgone on
owned land and fixed capital assets, on top of A2+FL.
·
CACP considers both A2+FL and C2 costs while
recommending MSP. CACP reckons only A2+FL cost for return.
·
However, C2 costs are used by CACP primarily
as benchmark reference costs (opportunity costs) to see if the MSPs recommended
by them at least cover these costs in some of the major producing States.
The Cabinet Committee on Economic Affairs
(CCEA) of the Union government takes a final decision on the level of MSPs and
other recommendations made by CACP.
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