The government has announced the minimum support price for paddy, increasing it by an average 8 percent as farmers prepare for this year's plantation across the country.

The Cabinet on Tuesday approved the new rate proposed by the Ministry of Industry, Commerce and Supplies for this season.

This is the first time the government has announced the floor price in June, although it has been setting the support price since 2016.

Normally, the government announces the minimum support price for paddy in time for farmers to make their production plans before the beginning of the planting season.

The support price fixed by the government means that farmers will get a reasonable price for their harvest even if there is a huge drop in prices.

The floor price was recommended by the Ministry of Agriculture and Livestock Development as per the government's policy to announce the minimum support price (MSP) of key crops to protect farmers against sudden slumps in the market price.

This year, the minimum support price of common paddy has been hiked to Rs28.85 per kg, from Rs26.73 per kg in last year.

Similarly, the minimum support price for ‘mota dhan’ (short grain) has been set at Rs27.35 per kg, up from Rs25.32 per kg last year.

The floor price is the lowest price that can be charged for a commodity.

The minimum support price is a measure taken by the government to protect farmers against sudden slumps in the market price. It is what the government will pay farmers for their crops when there are no other buyers in the market.

The measure is intended to encourage farmers to grow crops. The price is computed based on the cost of production, transportation charges and inflation.

In case the market price of paddy drops below the base rate fixed by the government, it must purchase it from farmers at the support price.

Last year, the government had fixed the minimum support price of paddy in October-end, almost four months later, as some farmers had already started to harvest their crops.

The government had started setting the minimum support price for paddy since 2016 after suspending the practice for nearly two decades.