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Government announced hike in MSP of kharif crops

CHANDIGARH: The hike in the minimum support price (MSP) of kharif crops announced by the Narendra Modi-led government is all set to impact international price of rice and cotton—items topping list of agricultural commodities exported from the country. The hike is expected to firm up cotton prices in India, largest exporter of natural fibre, and reflect in global market soon, feel traders.

To fulfill its commitment of supplementing farmers’ income and address rising distress among farmers, the government on Wednesday announced an increase in MSP of 14 crops sown in the summer season. Among these crops were paddy and cotton that saw a hike of 13 per cent and 28 per cent respectively.

MSP is a direct market intervention by the government to check distress sale by guaranteeing a fixed price in event of fall in price in open market. The prices are announced before each summer and winter cropping season.

The increase in common rice and grade-A quality of the cereal will impact international price before reflecting in the domestic prices, feel exporters.

“The MSP of paddy will show its impact on international price of non-basmati as well as basmati rice by the next month, when global export deals are struck,” said president All India Rice Exporters Association Vijay Sethia.

India accounts for almost one-third of the global rice trade and so far, it has exported around 14 million tonnes of rice in the current year. Although MSP covers just normal rice, it will push up price of basmati rice as well, exporters claim.

Sethia said that the higher assured price under MSP for paddy will encourage farmers to grow normal rice instead of basmati from next year in the country. “The price of basmati will have to increase or farmers will lose interest in growing the premium rice,” Sethia said.

India is leading global trader in rice with exports over 12 million tonnes including 4 million tonnes of basmati rice from the country. “With exports likely to dampen, the Cotton traders including multi-national firms are expected to remain active in domestic market,” an analyst said.

Despite the higher MSP, the government need to strengthen the procurement infrastructure in states like Bihar and Uttar Pradesh where grain purchase is dominated by private players and remuneration is much less than the assured price. “At present large quantity of food grain from UP and Bihar comes for public procurement in states like Haryana and Punjab,” a trader said.

The increase in MSP will increase acreage under paddy, a crop that require substantial quantity of groundwater for irrigation. “Over 3,000 litre water is required to produce one kilogram of normal rice while basmati require less water,” an agriculture scientist said.


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