Indian Kharif Crop Prices Stay Above MSP Amid Production Concerns and Weather Impacts

Prices of most kharif crops in India, with exceptions like groundnut, are currently trading above the minimum support price (MSP) fixed by the government. The shift is primarily driven by trade concerns that overall agricultural production could be lower following drought conditions and untimely rain linked to El Niño and recent cyclones in the South.

Agriculture sector stakeholders report record price levels for several commodities, including rice and maize. Rajesh Jain Paharia, a Delhi-based exporter, noted that prices of rabi crops such as gram and wheat are also ruling above their MSP levels. According to trade policy analyst S Chandrasekaran, current APMC yard prices are serving as a natural hedge against climate impacts that have reduced crop yields.

Former agriculture secretary Siraj Hussain stated that mandi prices remain slightly higher than the MSP for various crops due to production shortfalls. However, Rampal Jat, President of the Kisan Mahapanchayat in Jaipur, pointed out that regional and varietal differences still exist. He noted that the best variety of moong (green gram) and bajra (pearl millet) are trading below MSP in local markets, highlighting that price variations are natural across a diverse agricultural landscape like India.

The Ministry of Agriculture is currently assessing kharif crop production figures. The climate impact has notably affected specific crop yields. B Krishnamurthy, managing director of Four P International Pvt Ltd, stated that expectations for a record 15 lakh tonnes of urad (black matpe) have been scaled down to 8-9 lakh tonnes following untimely rain in Uttar Pradesh, Madhya Pradesh, and Rajasthan.

The livestock and poultry sectors are feeling the direct impact of the price increases. Sumit Sureka, Chairman of the CLFMA of India, reported that maize prices have jumped by 30 to 40 percent over a 4-5 week period due to domestic crop shortfalls, reaching historic highs. Procurement prices for feedmakers in West Bengal have touched approximately Rs 31,000 to Rs 32,000 per tonne, creating a sharp rise in the cost of production for the poultry industry.

In the cotton sector, sourcing agent Ramanuj Das Boob in Raichur noted that lower yields have prompted farmers, ginners, and traders to hold back produce in anticipation of higher prices. Prevailing domestic cotton prices are currently aligned with global rates from origins like Brazil.

Regarding future price trajectories, Hussain expects urad and tur prices to remain elevated despite zero import duty, while paddy prices may decrease as peak arrivals continue across various states. Conversely, Jain highlighted that geopolitical issues affecting imports and driving up freight costs remain a factor keeping prices above MSP levels.

Experts indicate that higher market prices will reduce the government's procurement pressure for pulses and oilseeds, as farmers prefer open market sales. However, analysts note that elevated food prices will contribute to food inflation pressures while offering localized economic support to rural areas where crop yields remained stable.

"The current market dynamics where agricultural commodity prices are ruling above the minimum support price highlight the profound impact of climate variables like El Niño on supply chains. While this trend provides immediate price realization for some farmers, it introduces severe cost pressures for input-dependent downstream industries such as poultry and livestock feed. Business leaders and policymakers must closely monitor these supply-demand imbalances, as agricultural yield fluctuations directly influence broader food inflation trends and operational costs across the rural economy." — Dr. Shishir Gupta, Founder & CEO, StartupLanes