The government’s failure to announce the minimum support price (MSP) of paddy this year has forced a large number of farmers to sell their crops at lower rates fixed by traders.

Some paddy growers have been debating whether to sell their harvests now or wait for the government to fix the floor prices. State-owned Nepal Food Corporation (NFC) has been buying ‘mota dhan’ at Rs2,000 per quintal, but farmers said it had been buying only small quantities of their paddy harvest.

Moreover, this rate, which the corporation fixed a month ago, is lower than the price recommended by the Ministry of Agricultural Development.

Traders in Rajapur, Patabhar, Manpurtapara and other areas have been buying ‘mota dhan’ for Rs2,000-2,050 per quintal. They said they were paying Rs2,360 per quintal for ‘common paddy’.

Last year, the corporation fixed the rate of ‘mota dhan’ at Rs2,100 per quintal and common paddy at Rs2,400 per quintal.

This year, the Ministry of Agricultural Development had recommended the MSP of common types of paddy at Rs2,438 per quintal, up from Rs2,230 last year.  Similarly, the recommended floor price of ‘mota dhan’ is Rs2,247 per quintal against Rs2,070 last year.

The advisory panel led by Agriculture Secretary Suroj Pokhrel approved the new MSP on September 10. The recommendation was sent to the Supplies Ministry, the executing body, on September 13. In the second week of November, the Supplies Ministry tabled a proposal to fix the rate at the Cabinet, but it was sent back with the explanation that prices could not be announced during election season.

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. Although NFC has fixed the price of ‘mota dhan’, it has not announced the rates for common paddy.  “We have been waiting for a decision from the upper level,” said Bhoj Raj Pandey, chief of NFC’s office in Rajapur. “We need a directive from headquarters to fix the rates.”

The NFC office in Rajapur said that it had aimed to procure 30,000 quintals of paddy this year. “However, if the rates are not determined in time, farmers will sell all their harvests to traders,” said NFC officials. Since the announcement of the minimum rates of ‘mota dhan’, the corporation has so far procured 1,400 quintals in Kailali and Rajapur.

Last year, the Cabinet had asked the Supplies Ministry to purchase paddy after assessing the market price through NFC against the recommendation made by the Agriculture Ministry. However, the Supplies Ministry directed NFC to procure paddy by setting its own rates. It was found that NFC had procured paddy for less than the MSP.

Lawmakers at that time had charged the government’s policy of being ‘absurd’ because the MSP was announced in mid-November despite the fact that many farmers would have harvested and sold their paddy crops by October-end.

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

In 2012, the government announced it would resume the policy of fixing the minimum price following complaints that middlemen had been determining the market rate. The MSP used to be announced for paddy and wheat until 1999. The practice was fully abandoned after the government launched the 20-year Agriculture Perspective Plan.

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 if prices should tumble.