Central government may announce increases in minimum support prices (MSP) for the summer crops in 2022-23 year soon, taking into consideration a sharp rise in costs of farming inputs. The MSP increases this year could roughly be in the range of 5-20%, the highest since 2018-19 when a new policy of 50% profits over computed cost of production led to MSP hikes for kharif crops in the range of 4.1-28.1%.
According to sources, the sharpest MSP hikes this year have been recommended by the Commission of Agriculture Costs and Prices for oil seeds like soyabean and groundnut. Among pulses, tur and moong may also see sharp hikes in support prices, as the imports of these items raised last year amid a domestic supply crisis. The government also estimates that higher domestic production of other oil seeds will help reduce palm oil imports.
Food inflation came in above the overall retail price inflation for April and May, 2022. It was 8.1% in April, while the CPI inflation was 7.79%. The cost of production for MSP will be include all paid-out costs directly accepted by the farmer in cash and kind on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel and irrigation and an imputed value of unpaid family labour.
In the race to get on top of rising food inflation, the government recently allowed tariff-free imports of crude soyabean and sunflower oils for next two years. The tax waiver is also subject to an annual cap of 2 million tonne for each , which will more than suffice to meet the needs of domestic refiners and ease supplies in the domestic market.