Harvest has started but govt still discussing MSP

  • minimum support price

Nov 2, 2017-

Paddy farmers feel let down as the government has again failed to announce the minimum support price (MSP) even though the harvest season has begun.

A high-level advisory body of the Ministry of Agricultural Development had recommended a 9 percent hike in the paddy MSP for this season. 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, but there are no signs of the MSP being announced any time soon even though the paddy harvest season has already began. 

The MSP is a form of market intervention by the government to protect agricultural producers against any sharp fall in farm prices. Normally, it is announced in time for farmers to make their production plans before the beginning of the planting season. The recommended MSP for common types of paddy for this year is Rs2,438 per quintal, up from Rs2,230 per quintal last year, said Shankar Sapkota, deputy spokesperson for the Agriculture Ministry.   

Similarly, the recommended floor price for ‘mota dhan’ is Rs2,247 per quintal against Rs2,070 per quintal last year. The MSP is computed based on farmers’ cost of production, transportation costs and producers’ profit. “Farmers have been given a 20 percent profit,” said Sapkota. He added that the new MSP was sent to the Supplies Ministry well in time. “We are not aware of any development and whether it has been implemented or not.” 

This is the second time in nearly two decades that the government has set the MSP, which is the rate at which the government guarantees to buy farmers’ harvests to protect them from being wiped out if market prices should plunge.

However, Supplies Ministry Spokesperson Mukunda Prasad Poudel said they only received the MSP from the Agriculture Ministry two days ago. “After doing a review, we will discuss the issue with the Finance Ministry before tabling it in the Cabinet,” he said. 

The MSP recommendation will likely have to make the rounds of various ministries. Poudel said they still had to discuss the issue with the Agriculture Ministry and then ask the Finance Ministry for funding to execute the policy. The government has to procure a certain amount of the total paddy production under the scheme.

Based on the ongoing development, it appears that the new MSP is unlikely to be implemented any time soon. The budget for the current fiscal year has also announced encouraging farmers with timely announcement of the MSP. However, this has not happened. 

Last year, the Cabinet had asked the Supplies Ministry to purchase paddy after assessing the market price through Nepal Food Corporation (NFC) against the recommendation made by the Agriculture Ministry. 

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. Moreover, it was found that NFC had procured paddy for less than the MSP.

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.

A number of officials said that the government had been delaying the announcement for fear that it might have to bear a huge financial burden if market prices were to slip below the MSP.

In 2012, the government had announced it would resume the policy of fixing the minimum price following complaints that middlemen had been determining the market rate. The MSP measure is in line with the recommendation of the government and the directive of former prime minister Baburam Bhattarai.

It has been reported that Nepal does not have an effective MSP. 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, 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 if prices should tumble.

Moreover, reports said that even when support prices were announced, it was not done before the beginning of the planting season so it did not help farmers to make production decisions

Published: 02-11-2017 08:19

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