Minimum Support Prices (MSP): Detail Explanation

Recently, the Minimum Support Prices (MSP) for all required rabi crops for the marketing season 2023–2024 were raised with the approval of the Cabinet Committee on Economic Affairs, which is chaired by the Prime Minister.

Major Points

• MSP increase for the wheat crop: Rs 110 per quintal (5.46%) more.
• Other rabi crops, including rapeseed, mustard, safflower, gramme, and lentil (masur), have increased by 2.01 to 9.09 per cent.
• The maximum increase in MSP: Masur lentils have received the highest increase in MSP, approved at Rs 500 per quintal, in absolute terms.
• Rapeseed and mustard are next (rs 400 per quintal), then safflower ( rs209 per quintal), gram ( rs105 per quintal), and barley (rs400 per quintal) (Rs 100 per quintal).
• Increase in wheat MSP: When compared to last year, the increase in wheat MSP is greater both in absolute and percentage terms.
• The MSP for wheat has increased by Rs 110 per quintal, the most since 2017–2018, when an equal increase was made from Rs 1,625 to Rs 1,735.
• In accordance with the Union Budget for 2018–19, it was announced that the MSP would be set at a level that was at least 1.5 times the weighted average cost of production for all of India, with the goal of providing farmers with a fairly equitable wage.

A rise in Wheat MSP is Required

• Given the decreased production and procurement during the recently concluded rabi season, the increase in the wheat MSP assumes significance.
• The estimated 2021–22 wheat production is 106.84 million tonnes, which is less than the year's target of 110 million tonnes and the 109.59 million tonnes actually produced in 2020–21.
• While there was a slight decrease in production in 2021–2022, there was a sharp decrease in the amount of wheat purchased for the Central pool.
• In recent months, the retail and wholesale costs of wheat and "atta" (wheat flour) have both increased significantly.

Minimum support price (MSP)

• Means: If the market price falls below the MSP for a crop, the government is required to purchase the crop from farmers.
• MSPs set a floor for market prices and guarantee farmers a set "minimum" wage in order to cover their cultivation costs (and a portion of their profit).
• The government encourages the growth of specific crops in order to prevent a shortage of India's staple foods.
• MSPs establish the benchmark for farm prices for both the crops that serve as substitutes as well as the commodities for which they are announced.
• The government sets minimum support prices for 23 crops during each cropping season.
• 7 varieties of cereal (paddy, wheat, maize, bajra, jowar, ragi and barley)
• 5 different types of pulses (Chana, arhar/tur, urad, moong, and masoor).
• 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower, nigerseed)
• 4 industrial crops (cotton, sugarcane, copra, raw jute)

What if the market's prices are too low?

• This frequently occurs when there is a bumper crop that year or when the global price of a specific commodity is quite low.
• Farmers in India, already among the poorest people in the nation, would find it difficult to make ends meet in such a situation.
• Aside from their own problems, if farmers stop farming due to low prices, it could even jeopardise the nation's food security.

The government issues MSPs each year as a way to foresee such a situation.

Who makes the decisions regarding the MSP, and how?

• The Union government makes the announcement of the MSPs, so that decision belongs to the government.
• But the Commission for Agricultural Costs and Prices' recommendations are what the government relies on most when making decisions (CACP).

The CACP considers the following aspects when making MSP recommendations:

• A commodity's supply and demand
• The price of producing it
• Trends in market prices (both domestic and international)
• Parity in inter-crop prices
• The price difference between farm inputs and farm outputs, or the terms of trade between agriculture and non-agriculture, must be at least 50% higher than the cost of production.
• the most likely effects of an MSP on that product's customers.

Costs of Production in Three Forms

• For every crop, the CACP projects three different types of production costs, both at state- and India-wide average levels.
• 'A2': Pays for all direct expenditures made by the farmer for things like seeds, fertiliser, pesticides, hired labour, leased land, fuel, irrigation, and so forth.
• "C2": It is a more comprehensive cost that, in addition to A2+FL, takes into account rentals, interest is forgone on owned land, and fixed capital assets.
• When recommending MSP, CACP takes into account both A2+FL and C2 costs.

Importance of MSP

• Better price for their crops: Farmers will receive a better price for their crops thanks to the increase in the MSP, and procurement will also take place.
• Promotion of oilseed production: As farmers receive a guaranteed price for their crops, they will be more inclined to grow oilseeds and move away from grain production.
• Crop Diversification: The MSP increases for pulses, oilseeds, and coarse cereals are slightly higher, which aids in the goal of crop diversification.
• Differential compensation and protection for farmers: This promotes crop diversification in terms of land use. It shields farmers from unwarranted price fluctuations brought on by price variations at the international level. MSP serves as a shock absorber, allowing for the handling of any abrupt drops in market prices for commodities.
• Redress the imbalance between supply and demand: Efforts were made to realign the MSPs in favour of coarse grains, pulses, and oilseeds. To balance out the supply and demand, it encouraged farmers to plant these crops on larger plots of land and to use the best farming practices and technologies.
• Increased emphasis on nutrient-rich crops is intended to encourage their production in regions where growing rice or wheat would have a negative impact on the groundwater table over the long term.
• Consumer needs: MSP makes sure that the agricultural output of the nation adapts to the shifting needs of its consumers. Ex: To increase pulse sowing, the government increased the MSP for pulses.
• Food Crops: The MSP encourages the growth of one particular food crop that is in short supply.
• The MSP increases farm profits, which in turn motivates farmers to spend more on inputs, technology, etc. in the forward chain.

The difficulties with MSP

• Farmers' protest: On the outskirts of Delhi, farm unions have been demonstrating for more than six months in favour of legislation that would guarantee MSP to all farmers for all crops as well as the repeal of three divisive farm reform laws.
• MSP and Inflation: Inflation should be considered when announcing the MSP. But frequently, the price is not raised to that level. For instance, the MSP for maize this time has not even taken into account inflation and how it will benefit farmers! Inflation can also be caused by the MSPs' frequent increases.
• High input costs: The small farmers' meagre income has been squeezed and they have been forced into debt as a result of input costs rising faster than sales prices.
• Absence of Mechanism: There is no mechanism that ensures that each farmer will receive at least the MSP as the market floor price. Therefore, proper mechanisms must be fixed for all future times.
• Export Restrictions: Even after producing surplus grains, a significant amount of these grains spoil every year. This is because grain stocks with the FCI—which are heavily subsidised due to MSP—cannot be exported due to restrictions under WTO norms.
• Limited Knowledge: Farmers, particularly small and marginalised ones, are less aware of the date and time that MSPs are announced. They end up being excluded from the entire virtuous cycle as a result.

Way Forward

• Perhaps the only industry where both production and price risks are likely to occur is agriculture. It might be more beneficial to think about "the best" ways to make MSP work for farmers.

• The public procurement of staple cereals must continue, but direct income transfers must be given to farmers of non-staple food crops.

Read Also: Japan seeks GI Tag For Nihonshu

India’s First Aluminum Freight Rake

India's first freight rail rakes made entirely of aluminium were recently introduced by the Union Minister for Railways.

Details about the news

• These freight rail rakes are made entirely of aluminium, according to Hindalco.
• The development of the aluminium rakes aims to modernise freight transportation and enable significant carbon savings for Indian Railways.
• The Bhubaneswar station has flagged off 61-wagon rakes.
• The rakes are 180 tonnes lighter than steel rakes currently in use.
• They have a 5–10% greater payload capacity.
• They use less energy and cause relatively little damage to the rails and rolling stock.

Importance:

Reducing carbon emissions

• The bottom discharge coal-specific aluminium freight waggon is tipped to significantly reduce carbon emissions. These waggons reduce CO2 emissions by 14,500 tonnes.
• 8–10 tonnes of CO2 are saved over the course of the wagon's lifetime for every 100 kg of weight reduction. For just one rake, this equates to a CO2 reduction of more than 14,500 tonnes.
• The payload-to-tare weight ratio of these all-aluminium rakes is 19% higher, which will significantly improve the logistics and operational effectiveness of the Railways.
• They are corrosion-resistant and use less energy.
• They are completely recyclable and won't lose any of their quality even after 30 years.

Boost for sector growth:

• The energy-efficient and environmentally friendly Railways are predicted to significantly increase their volume share from the current 18%, driving the freight sector in India to grow at a rate of more than 7% CAGR to 15 billion tonnes by 2050.
• The importance of using aluminium: In the United States, Europe, and Japan, aluminium trains are the most popular.
• This is a result of features like its svelte, aerodynamic designs.
• They can tilt while moving quickly without deviating from the path.
• As a result of its improved crashworthiness or superior crash absorption capability, aluminium is the material of choice for metro trains all over the world due to its durability and, most importantly, passenger safety.
• The plans of Indian Railways to build Vande Bharat trains with aluminium bodies have already been made public.

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Carbon Dating

A Varanasi district court recently denied a request to carbon date a disputed structure that was allegedly discovered on the grounds of the Gyanvapi Mosque.

How does carbon dating work?

• Carbon dating is a popular technique for figuring out how old organic materials—i.e., things that were once alive—are.

• Carbon exists in a variety of forms in all living things.
• The carbon-14 (C-14) dating method is based on the fact that C-14 is radioactive and decays at a predictable rate.
• The carbon isotope C-14 has an atomic mass of 14.
• C-12 is the most prevalent form of carbon in the atmosphere.
• There is also a tiny amount of C-14.
• In the atmosphere, the ratio of C-12 to C-14 is almost constant and well-known.
• The age of non-living objects, like rocks, cannot be ascertained using the carbon dating method.
• Additionally, carbon dating cannot determine the age of objects older than 40,000–50,000 years.
• This is due to the fact that the amount of C-14 becomes incredibly small and nearly undetectable after 8–10 cycles of half-lives.

Uses:

• It has been shown to be an effective method for dating fossils and archaeological artifacts that range in age from 500 to 50,000 years.

• Geologists, anthropologists, archaeologists, and researchers in related fields frequently employ this technique.

How Carbon Dating Works:

• Due to the fact that plants and animals obtain their carbon from the atmosphere, they also acquire C-12 and C-14 in a roughly equivalent ratio to what is present in the atmosphere.

• Animals primarily obtain carbon through food, whereas plants do so through photosynthesis.
• Their interactions with the atmosphere cease when they pass away.
• The radioactive element C-14 has a half-life of approximately 5,730 years, whereas C-12 is stable.
• After an animal or plant dies, the ratio of C-12 to C-14 in its remains changes, and this measurement can be used to estimate when the organism died.

What about alternative dating techniques to carbon dating?

Methods for radiometric dating

This technique bases its dating on the decay of any additional radioactive elements that may be present in the sample. Some varieties of this approach:

• Potassium-Argon Dating: As potassium's radioactive isotope decays into argon, its ratios can be used to determine a rock's age.
• Uranium-Thorium-Lead Dating: The radioactive isotopes of uranium and thorium all decay into the stable lead atom. You can measure the ratios of these components in the material and use that information to infer its age.

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Japan seeks GI tag for Nihonshu

• Nihonshu/Japanese sake, an alcoholic beverage, has been submitted for a Geographical Indication (GI) tag by the Japanese Embassy in New Delhi.
• This is the first product from Japan to submit an application for a tag at the Chennai Geographical Indication Registry.

Regarding Nihonshu

• This fermenting rice-based beverage is regarded as a rare and priceless commodity.

• Nihonshu is typically consumed on special occasions like holidays, weddings, and funerals, but it is also ingested every day.
• As a result, it is fundamental to Japanese culture and lifestyle.
• The second largest brewed liquor (such as beer) market in Japan is the sake market, which is almost exclusively nihonshu.

About GI Tag

• It is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
• In order to function as a GI, a sign must identify a product as originating in a given place.
• In addition, the qualities, characteristics or reputation of the product should be essentially due to the place of origin.
• Since the qualities depend on the geographical place of production, there is a clear link between the product and its original place of production.

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