Government hikes MSP on six crops including wheat, but what does that mean for you?

An extended monsoon in India has hit crops across states and may aggravate food inflation, but farmers are already left vulnerable as a fallout of erratic climate. One of the major demands reiterated during farmers’ protests is that of a legal guarantee of minimum support price (MSP) to protect their interests. But as of now, the government has stepped in to increase MSP on winter crops such as wheat, barley, masoor, and mustard among others.

Which crops are covered?

The MSP for wheat, which is in short supply in states such as Uttar Pradesh and Bihar, has been increased by Rs 110 per quintal, taking it to Rs 2125.

For gram it’s up by Rs 105 to reach Rs 5335 a quintal.

For barley and dal the hike has been Rs 100 and Rs 500 per quintal respectively.

Seeds used for extracting oil including sunflower and mustard have seen a rise in minimum rates by Rs 209 and Rs 400 respectively.

What is MSP and why does it matter?

MSP is a rate for crops set by the government, and the prices paid to farmers can’t be lowered beyond that point. The idea behind it is to provide a safety net for farmers against uncertainties of nature and in the market. MSP was introduced during the green revolution, to incentivise farmers for growing food crops, which demanded a lot of labour and weren’t fetching high returns. The encouragement provided by MSP was a major factor driving India from food scarcity to make it a food-surplus nation.

Factors driving the current hike

The current MSP hike for crops sown in winter and harvested in spring, has been introduced after it was raised on summer crops in June. It is a result of the Agriculture Ministry’s recommendation to increase the minimum rate for farmers by 9 per cent on six Rabi crops. In total about 23 food crops are covered by the government under MSP.

Another reason behind the MSP hike is the need to protect farmers from rising input costs, which are driven by global oil and natural gas rates that make fertilisers costlier. The move could also boost consumer sentiment, hence increasing demand for products in rural India. The MSP also helps in keeping food production high to meet consumer demand, which ensures that the flour, dal and oil in your kitchen remain affordable.