Sharp and frequent increases in MSP can feed inflation too.
It is believed that it was MSP increases on paddy and wheat that fuelled high food inflation in the years to 2013.
Government procurement at MSP is benefiting the large traders than farmers.
Small farmers typically do not have enough marketable surpluses.
Their crop is usually sold to traders at low post-harvest prices in the village itself or the nearest mandi.
According to recent research, farmers may typically get as little as 25% of the price that consumers finally pay.
The input costs have been rising faster than sale prices, squeezing the meagre income of the small farmers and driving them into debt.
MSP is attractive towards wheat and rice which is produced by large farmers. Small farmers who mostly dependent on vegetables, pulses, coarse grains are at disadvantage.
The payments are delayed when the farmers are in immediate need of cash.
In some states, the awareness about the time of their announcement is very low.
The reason for not selling at MSP was that the purchase centres were located at distance which required high transportation costs.
