Procurement prices low in Maharashtra since 1996; farmers bear the brunt

Sunflower, wheat and sorghum farmers in Maharashtra are able to recover only 45 to 70 per cent of their cost of production via the government’s minimum support price (MSP), says a study by the state’s Mahatma Phule Agriculture University, Rahuri.

Figures in the report show that the MSP declared by the Central government has been significantly lower than the cost of production in Maharashtra for around two decades. It says this MSP has consistently fallen short of the recommendations made by the state’s Agriculture Produce Pricing Committee.

The study found that between 1996 and 2013, the cost of production of crops like sunflower, green gram, wheat and sorghum in Maharashtra was 35 to 55 per cent higher than the MSP declared by the Centre.

D B Yadav, head of the Agricultural Economics Department of the university and lead author of the report, says that studies on individual crops (see table below) have shown that recovery of cost through MSP is very poor. Sunflower and safflower farmers have been recovering just 50 to 75 per cent of costs through MSP. While farmers cultivating pearl millet recovered 83 per cent of their cost in the year 2008-09, returns are as low as 47 to 68 per cent in most years. Crops like cotton, soybean, paddy, groundnut, pigeon pea and chickpea have not recovered more than 45 to 72 per cent of production cost through MSP.

Rise in MSP vs. Rise in cost of production

For many years, farmers have been attempting to draw the government’s attention to low MSP as the crucial reason behind the crisis in the farm economy. The data in this report presents consolidated evidence to support the farmers’ claims.

Wheat price inflation in recent times: Causes, lessons and new perspectives

Returns to farmers (Question asked in the Monsoon session of LS 2011)