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Not accepting the Centre’s help: MSP money sent to Odisha is being underutilised

By Manali Joshi

The Minimum Support Price (MSP) is a mechanism by which the government sets the prices at which farmers can expect to sell their produce. The Cabinet Committee of Economic Affairs announces the MSP for various crops at the beginning of each sowing season based on recommendations from the Commission for Agricultural Costs and Prices (CACP). The CACP takes into account supply and demand, the cost of production and price trends in the market while fixing the MSPs.

During adverse market conditions, when prices fall below the announced MSP, the government’s procurement agencies step in and buy up a crop in order to ‘support’ the price. This system is not only extremely important for farmers but also for Forest dependents as it helps them to secure income during intervals of high price volatility. MSPs have also been used as a tool by the government to incentivise farmers to grow crops that are in short supply.

The case of Odisha

Odisha is home to nearly 25 million tribal people who are dependent on forests, for their livelihood. The Odisha state agencies have been provided with a fund of Rs 49.91 crores to support the livelihood of its forest dwellers under the MSP scheme. However, the state has failed to utilise these funds for minor forest products, including turmeric, mahua seeds, and sal leaves. In fact, it has utilised only Rs 3.80 crores for the MSP scheme in the last four years and this was spent mostly on products that do not benefit a large number of people. According to statistics, the scheme has only benefited 4,906 people in the state during the last year.

Officials at the Tribal Development Cooperative Corporation of Odisha, who are responsible for the implementation of the scheme, blame the government saying that they have not been given adequate guidelines to test the prices of forest produce against a meaningful benchmark. On the other hand, many experts believe that as the states have autonomy to decide whether to implement the scheme or not, Odisha may not implement the scheme at all.

The Odisha Tribal Affairs Minister, Jual Oram, recently wrote to the Chief Minister, Naveen Patnaik, asking the government to refund the unutilised funds with accrued interest and an audit report. The scheme called “mechanism for marketing for minor forest produce (MFP) through minimum support price (MSP) and development of value chain for MFP,” is supposed to cover 24 types of forest produce. The evaluation report states that, although the income of the farm households that are affected by MSP are increasing, this increase is much negligible in comparison to the increased cost of agricultural labour.


The MSP is having an impact on the availability of key food crops and food inflation. MSP not only ensures a fair minimum price for the farmers but also helps them to increase their yields. Such a beneficial initiative by the central government should be strengthened rather than left underutilised by the state government.

Featured Image Source: Flickr

This post first appeared on The Indian Economist | For The Curious Mind, please read the originial post: here

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Not accepting the Centre’s help: MSP money sent to Odisha is being underutilised


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