Quote by Pushan Sharma, Director- Research, Crisil Intelligence on MSP announcement
City Air News
May 29, 2025 10:38
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The Cabinet Committee on Economic Affairs announced the minimum support prices (MSPs) for the kharif marketing season 2025-26, with hikes ranging from 1% to 14%.
However, the hike in MSP needs to be read in context of the extent of procurement that takes place for each crop at the MSP. In case of paddy ~45% of the production is procured at MSP, 25-30% in cotton, and 3-4% in pulses. These are the only crops that see meaningful procurement during the Kharif season. Procurement is largely concentrated in a few states, including Punjab, Haryana, and Telangana for paddy, Telangana and Maharashtra for cotton, and Maharashtra and Karnataka for pulses.
The MSP for Paddy in KMS 2025-26 witnessed a jump of 3%, which is moderate compared to the average 5% hike in the last five years. This can be attributed to a comfortable stock position with FCI, 20% higher than last year and 27% above the five-year average as of May 1, 2025.
While Cotton saw 525 lakh quintals procured up to March 31, 2025, which is nearly 3 times higher than previous season. With an 8% MSP hike announced for KMS 2025-26, and with mandi prices anticipated to be lower over the MSP, it signals better prospects for cotton procurement this season as well.
Key millets saw MSP hikes in the range of 6-14% which is likely to encourage sowing, but with minimal procurement, benefit may not be passed on to the farmers. To ensure better realization millets can be procured and incorporated into the interventions like public distribution system and mid-day meals in selected states.
That said, the prices for crops post-harvest in October remain a key monitorable and will depend on how south-west monsoon pans out. While monsoon prospects are good its spatial and temporal distribution remains a critical aspect to monitor.
