Minimum support price is a form of market intervention by the government to ensure that farmers get reasonable value for their produce in the event of any sharp fall in farm prices. It is normally announced during the planting season or a month before the harvest on the basis of recommendations of the ministry of agricultural development.
Under these policy pricing, the government announces a fixed price for certain crops before the swing season. if and when the market prices of those crops fall below fixed price due to various unwarranted reasons, government will purchase them at their respective minimum support price therefore guaranteeing a certain amount of money to the farmers.
Nepal introduced minimum support price in the 7th five year plan for Paddy and wheat . however, results were grim an ineffectual.So was eventually removed in the fiscal year 1997 \ 98.minister of agriculture and livestock development Ghanashyam Bursal has come up with five policy guidelines to bring visible change in agriculture. among which the 5th policy is to guarantee profit in agricultural business by setting the minimum support price with 25% profit margin for farmers.
The government of Nepal had started setting the minimum support price for Paddy since 2016 after suspending the practise for nearly two decades. Last year, the government had fixed the minimum support price for paddy in almost four months later As some farmers had already started to harvest their crops. this year, the government has announced the minimum support price for Paddy, increasing it by an average 8% as farmers prepared for this year plantation across the country.
This is the first time the government has announced the floor price in June before the completion of plantation although it has been setting the support price since 2016. The floor price was recommended by the Ministry of Agriculture and livestock development As for the government’s policy to announce minimum support price of key crops to protect farmers against certain slumps in market price.
This year, the minimum support price of common Paddy has been hiked to rupees 28.85Per kilogram,from Rs 26.73 per kg in last year. Similarly, the minimum support price for mota dhan(short grain)has been set at Rs 27.35 per ,up from Rs 25.32 kg last year.This means the government guarantees to buy Paddy from farmers at these prices regardless of market rate.
As of sharp fall in prices, state owned Nepal food Corporation will buy the crops at the minimum support price. This time around, the government Will need to address few key issues before implementing minimum support price policy to uplift farmers economy;
Hence, minimum support price not only provides stability hence, but also uplifts farmers economy, there by encouraging them to invest more in agriculture .so we can consider that MSP could potentially be one of the answer to Nepal’s agricultural woes if it is implemented well.However,it is important to address other domestic infrastructure and technical capacities before proceeding on this front.