The government has raised the minimum support price for paddy by 8 percent for the harvest of the current fiscal year.

The Ministry of Agriculture and Livestock Development said that the Cabinet on November 3 approved the minimum support price (MSP) recommended by the advisory body of the agriculture ministry.

The MSP for common paddy has been raised to Rs3,128 per quintal from Rs2,902. Similarly, the floor price for ‘mota dhan’ has been increased to Rs2,967 per quintal from Rs2,752.

The MSP is the lowest legal price that can be paid for farmers’ harvests.

The government does not fix the floor price of fine paddy.

A minimum support price is an intervention by the government to protect farmers against sudden slumps in the market price. It is the rate at which the government buys farm produce when there are no other buyers in the market.

Normally, it is announced in time for farmers to make their production plans before the beginning of the planting season. The government has to buy a certain amount of the total paddy harvest under the scheme.

The agriculture ministry said in a statement that the government has allocated Rs330 million to buy paddy through agriculture cooperatives for the current fiscal year. It said that the ministry will soon issue a notice to procure paddy from the farmers.

Last fiscal year, the government procured 9,000 tonnes of paddy. “This fiscal year, the government has allocated a budget to buy 300,000 tonnes of paddy,” the ministry said.

In 2017-2018, although the advisory body of the ministry had recommended the MSP, it was never implemented as the proposal of the supplies ministry was sent back by the Cabinet citing the provincial and federal elections.

In 2016-17, the MSP was announced in mid-November. Members of parliamentary committees had then said that the government’s policy was ‘absurd’ because the MSP was announced in mid-November when many farmers would have already harvested and sold their harvests by October-end.

Lawmakers said that the MSP was supposed to be an incentive for farmers to boost output, but the floor price fixed by the government had ‘discouraged’ them instead.

In 2012, the government announced the resumption of the policy of fixing the minimum price following complaints that middlemen had been determining the market rate.

Until 1999, the MSP for paddy and wheat would be announced regularly. The practice was fully abandoned that year after the government launched the 20-year Agriculture Perspective Plan, according to reports.

Even when the MSP was announced, it was not much relevant as it was set well below the projected market price to protect the government from having to buy farm products should prices tumble.

Moreover, reports said that even when support prices were announced, it was not done before the beginning of the planting season.