Govt sets support price for paddyFor the first time in nearly two decades, the govt has set minimum support price of common paddy at Rs2,230 per quintal and of ‘mota dhan’ at Rs2,070 per quintal
The government has set the minimum support price (MSP) of paddy for the first time in nearly two decades. The scheme, which gives farmers a price guarantee for their summer harvests, was approved by the Cabinet recently.
The MSP of common paddy has been fixed at Rs2,230 per quintal and of ‘mota dhan’ at Rs2,070 per quintal. This means the government guarantees to buy paddy from farmers at these prices regardless of the market rate. The MSP is reviewed every year based on the cost of production of farmers.
Surya Prasad Shrestha, spokesperson for the Supplies Ministry, said that the policy was aimed at ensuring that farmers get reasonable prices for their crops in the event of any sharp fall in farm prices.
“The price was recommended by the Ministry of Agricultural Development,” Shrestha said. “In case of a sharp fall in prices, state-owned Nepal Food Corporation will buy the crops at the MSP.”
The policy ensures that market prices will not go below the MSP in case of a drop in prices following a bumper harvest. Moreover, it discourages middlemen who normally determine market prices.
According to the ministry, the government will procure at least 2 percent of the total paddy production under the scheme. The Finance Ministry has allocated Rs3 billion for this purpose. The MSP is normally announced during the planting season or a month before the harvest on the basis of the recommendations of the Ministry of Agricultural Development to enable farmers to decide early to plant paddy.
Presenting the budget for this fiscal year, the government had announced that it would fix reference prices, or MSP, of key agricultural products to encourage farmers.
In past years, proposals to fix the MSP had been sent to the Finance Ministry, but they were rejected. In 2012, the government announced it would resume the policy of fixing the minimum price following complaints that middlemen were determining the market rate.
India started the scheme in 1966-67 by setting the MSP of wheat to save farmers from dropping profits following a jump in harvests amid the Green Revolution. Since then, the MSP regime has been extended to many crops.
In Nepal, the MSP of paddy and wheat used to be announced until 1999, when the provision was fully abandoned, according to reports.
Even when the MSP was announced, it wasn’t of much help to farmers. It was set well below the projected market price so that the government would not have to buy crops if prices should tumble.
Moreover, the MSP announcement would not be made in time for the farmers to make their production plans before the beginning of the planting season, reports said.