Minimum Support Price for rice gave return of 50% over cost 13 times since 1996-97 -Roshan Kishore

-Hindustan Times

The union cabinet announced Minimum Support Prices (MSPs) for the 2018-19 Kharif marketing season on Wednesday. MSPs for all crops are at least 50% more than the projected A2+FL cost of production.

New Delhi: The union cabinet announced Minimum Support Prices (MSPs) for the 2018-19 Kharif marketing season on Wednesday. MSPs for all crops are at least 50% more than the projected A2+FL cost of production.

Broadly speaking the A2+FL measure takes into account the following: value of agricultural inputs such as seeds and fertilisers; hired human, animal and machine labour; land revenue and irrigation charges; depreciation of farm implements and buildings; interest on working capital; rent paid for leased in land; and imputed value of family labour. In a tweet, Prime Minister Narendra Modi described this move as a fulfilment of his government’s promise of providing cost plus half returns to farmers and termed the decision as historic.

Interestingly, this is not the first time an MSP that is 50% over the projected production cost is being offered.

Rice is the most important crop for procurement in the Kharif season. An HT analysis of MSP and A2+FL cost measures (actual and projected) for rice shows that MSPs giving 50% return over cost are not new. In fact, the MSP for rice has given a return of at least 50% over A2+FL 13 times since 1996-97. However, this is the first that rice MSPs will give a return of 50% over A2+FL under this government.

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