Higher Kharif sowing this monsoon raises questions about MSP and farmers’ profitability

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Higher than normal monsoon rainfall across the country – 5% above normal so far – has boosted sowing of kharif crops by 19% this year, brightening the prospects of another year of bumper harvest, as reported here last week.  The locust attack has also been brought under control and there are no reports of any serious pest attacks either.

However, farmers’ profitability will hinge on minimum support prices (MSP). Over 30 per cent of paddy production is procured at minimum support price (MSP) by the government for distribution of rice through the ration shops. Currently, the mandi prices of paddy are near about the benchmark level. However, this is not the same for kharif pulses and oilseeds as seen the last two years when prices in mandis ruled up to 30 per cent below their MSPs.

As of now, most rabi crops are being sold profitably by farmers, and this has helped avert a rural distress during the pandemic period, along with the works available under the rural employment guarantee scheme.

The production of rice, the main kharif crop, was 101.7 million tonne in 2019-20 crop year (July-June), marginally lower than all-time high of 102.04 million tonne in 2018-19. Rice production has been increasing in recent years, even as area has remained unchanged, indicating rising productivity.

This time around, the all-India planting area of paddy has been higher. Most of the farmers in West Bengal, Uttar Pradesh, Punjab, Haryana, Chhattisgarh, Odisha, Andhra Pradesh and Telangana are dependent on rice for their income. While kharif oilseeds, pulses, coarse cereals are mostly grown in Madhya Pradesh, Maharashtra, Karnataka, Gujarat and Rajasthan.

Almost 75 per cent of land has already been sown with kharif crops this year. If rains in August and September are also normal, a bumper kharif crop is expected. Unless demand increases, the prices may be depressed. The demand will also depend on economic recovery and measures the government takes steps to check the spread of Covid 19 pandemic. As area under several crops, like cotton and soybean, is higher than last year, prices may be under pressure. A bumper production may not be able to bring in good news for farmers if prices are subdued due to lack of demand. Normal functioning of restaurants and hotels are not expected in near future, unless a Covid vaccine is successfully developed and deployed.

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