Falling Crop Prices Below MSP After Easing Food Inflation
Why in the news
After long worry over food prices, the concern has flipped: despite a strong monsoon and higher sowing, many crops fetch less than their MSPs, so farmer viability now needs attention.
Key facts
- Food inflation: negative for four consecutive months ending September 2025; average rise was 8.5% a year from July 2023 to December 2024.
- Wheat: 320.3 lakh tonnes on 1 October 2025, highest in four years.
- Rice: agency stocks were 4.4 times the PDS plus strategic reserve need.
- Soyabean: about ₹4,100/quintal in Latur against MSP ₹5,328; meal export price fell from about $490 to $398 per tonne (Sept 2024 to Sept 2025).
Possible policy turn
- Shift from pro-consumer to pro-farmer stance.
- Options: restore import duties on cotton and peas; step up MSP procurement.
About food inflation
- Rise in prices of cereals, pulses, vegetables, fruits, milk, meat and edible oils over time.
- Tracked within CPI (Combined, Rural, Urban); NSO publishes it monthly.
- Formula: change in food price index / previous index x 100.
- Causes: supply (drought, floods, input costs, storage losses), demand (rising incomes, festivals, exports) and policy (export bans, MSP hikes, stock limits, import curbs).
Concerns
- Rural distress and weaker rural spending.
- Easing inflation helps consumers, but low prices create structural risk for agriculture.
- Two goals now clash; targeted MSP support, export regulation and crop diversification are suggested.
- Global harvests (Brazil, USA, Argentina) pull down soyabean prices.
Exam angle
- Agency: NSO compiles CPI.
- Terms: MSP, buffer stock, PDS.