On October 3, the government announced the minimum support prices (MSP) for Rabi crops that will be sown between October and December. While the MSP for wheat has been raised by 6.1%, that of safflower has seen an increase of 20.6%, the highest. These crops will be harvested next year and enter the market from April 2019 onwards. We will know the impact of higher Rabi MSPs only then.
On July 4, the government announced MSPs for Kharif crops, ensuring 50% return over paid out cost of cultivation for all crops. The MSPs for ragi, jowar, bajra and maize were increased by about 52%, 43%, 37% and 19% respectively. These crops are being harvested now and large quantities will start arriving in mandis in the next two-three weeks.
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In 2017-18, India produced 113 million metric tonnes (MMT) of rice while production of coarse grains (also called millets) was 47 MMT. Maize (29 MMT), bajra (9 MMT), jowar (5 MMT) and ragi (2 MMT) are the major millets grown in the country. These are mostly grown in rain-fed areas and they consume 20% to 40% less water than rice. Nutritionally, they are superior to wheat and rice as their amino acids are more balanced and they have crude fibre and minerals such as iron, zinc, and phosphorous. The production of maize has more than doubled since 2004-05, with Bihar emerging as a significant cultivator of Maize in Rabi (see graph).
However, the procurement of millets has never been undertaken with the same vigour as rice or wheat. Till 2014, some states procured them and any losses incurred in procurement operations were reimbursed by the Centre thorough Food Corporation of India (FCI). In order to contain fiscal deficit and ballooning food subsidy, the Centre, in 2014, decided that states should obtain prior approval for procurement of coarse grains at MSP and the procured quantity should be distributed within the state under PDS or other welfare schemes, like mid-day meal. A decision was also taken to restrict the subsidy to the quantity of coarse grains procured and distributed by the state under PDS/OWS. Since ration card holders prefer wheat and rice to coarse grains, the states are not too keen on procurement of millets and farmers are forced to sell much below MSP.
As a result, the procurement of maize has come down from 10.93 lakh tonnes in 2013-14 to 48,000 tonnes in 2017-18. The procurement of other coarse grains has generally remained insignificant.
PM AASHA scheme
In September 2018, the government announced an umbrella scheme, PM AASHA, so farmers can get MSP. There are three schemes under this. Price Support Scheme (PSS) is for procurement of pulses, oilseeds and copra. Price Deficiency Payment Scheme (PDPS) is for oilseeds. The pilot of Private Procurement & Stockist Scheme (PPPS) is also restricted to oilseeds in selected districts. Thus, millets are not covered in any of the AASHA schemes and physical procurement is the only option available to them.
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Even though Kharif arrivals are yet to peak, the prices are already 30-40% below MSP in major mandis. Bajra, jowar and ragi are being used in food processing industry, but it is not at the scale at which maize is used. Maize is a commercial crop and it is bought by manufacturers of poultry feed, starch, glucose, maltodextrin and ethanol and yet the maize prices remained below MSP of Rs 1,425 per quintal in almost the entire 2017-18 agricultural year.
The MSP of maize has now been raised to Rs 1,700 per quintal but the market price is just about Rs 1,200-1,400 per quintal in major mandis in Karnataka. When mandi arrivals increase, the prices are likely to go down even further as there is little possibility of maize exports due to low global prices. China has imposed 25% duty on maize imports from the US and there is a chance that India can find a market there. India has been a minor player in exporting processed products of maize and there is a need to incentivise this. If farmers used negotiable warehouse receipts (NWR) for maize, they could take advantage of higher prices. But the government has not done enough to popularise NWRs.
- China has imposed 25% duty on maize imports from the US and there is a chance that India can find a market there.
India is celebrating 2018 as national year of millets. The Food and Agriculture Organisation has declared 2023 as international year of millets. But, there has hardly been any effort by the government to communicate the nutritional properties of millets and popularise their use in Indian diets. Two decades ago, National Egg Coordination Committee had promoted consumption of eggs and as they say, rest is history. The government cannot procure entire production of millets in the country and the only way to ensure profitability for millet farmers is to promote domestic consumption. Jowar, bajra and ragi, used in food processing industry, can also help the farmers realise better price.
Siraj Hussain is a visiting senior fellow, ICRIER.