This year the wheat farmers may have overall gotten Rs. 5994 crore extra as compared to the MSP because they could sell at market prices. It’s heartening to know that crores of wheat farmers across the country benefitted significantly from the higher market rates during this crop season as majority of them sold their produce to the private traders at higher price in comparison to the Minimum Support Price (MSP). In this way, farmers reaped higher remuneration for their produce than MSP, as market system worked better for them. The prevailing geo-political situations also provided more options to farmers to sell their produce. It has been reported that during this season the farmers sold their produce at an average rate of Rs. 2150 per quintal in the open market. Accordingly, on the estimated procurement quantity of 444 lakh MT, the farmers may have earned around Rs. 95,460 crore at the rate of Rs. 2150 per quintal instead of Rs. 89,466 crores at the MSP of Rs. 2015 per quintal.
The market prices of wheat remained higher than the MSP throughout this procurement period across the country. The market prices were in the range of around Rs. 2100/- to 2500/ per quintal, which gave enough leeway to the farmers to earn higher. The downward trend in public procurement is attributed to the significantly higher purchase of wheat by private traders as wheat price in the international market shot up due to international demand-supply mismatch on account of prevailing geo-political situations. The MSP of wheat for Rabi Market Season (RMS) 2022-23 was also announced by the Government of India well in advance during the month of September 2021 with a hike of Rs. 40/-per quintal to Rs. 2015/per quintal from Rs. 1975/ per quintal earlier. The MSP of wheat has increased by around 49% to Rs. 2015/quintal in 2022-23, in comparison with Rs. 1350/quintal in 2013-14.
A transparent and uniform policy for procurement of wheat by FCI and state government agencies has helped this. Because if any farmer gets better price in comparison to MSP, he is free to sell his produce in the open market. Inspired by the conducive policies of the government, this year, farmers in greater number in major wheat procuring states in the country with substantial contribution to public procurement like Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan, preferred to sell major part of their produce to the market.
The MSP of 22 mandated agricultural crops is announced by the Government of India at the beginning of the sowing season of crops to ensure remunerative price of the produce to farmers. MSP is finalized on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP), which is determined considering important factors like cost of production, overall demand-supply conditions, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, the likely effect on the rest of economy, besides ensuring rational utilization of land, water and other production resources and a minimum of 50% as the margin over cost of production.
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