Rabi MSP hike may shift acreage towards pulses, oilseeds as wheat gets marginal increase: Analysts

According to fresh market updates, The Union Cabinet’s decision to mobilize minimum backing prices (MSP) for rabi crops for the 2027-28 marketing season could encourage a shift in acreage from wheat towards pulses and oilseeds, with the wheat MSP rising by just Rs 25 per quintal while safflower, mustard and lentil see substantially larger increases, market watchers stated.

The Centre on Wednesday approved an gain in the Minimum Backing Prices (MSP) for all six mandated rabi crops for the 2027-28 marketing season.

The largest gain is for safflower at Rs 675 per quintal, followed by rapeseed and mustard at Rs 413 per quintal. MSP for lentil (masur) has risen by Rs 390, barley by Rs 136, gram by Rs 83, and wheat by Rs 25 per quintal.

Wheat MSP, on the contrary, has been increased by Rs 25 per quintal to Rs 2,610 per quintal from Rs 2,585, while barley MSP is now Rs 2,286. Gram MSP has been boosted to Rs 5,958, masur to Rs 7,390, rapeseed and mustard to Rs 6,613, and safflower to Rs 7,215 per quintal.

"The elevated MSP increases for oilseeds and pulses, coupled with a relatively modest gain for wheat, reflect a calibrated policy shift towards crop diversification, import substitution, and a broader move from a food security-centric approach towards nutrition security. The stronger incentives for crops such as rapeseed-mustard, safflower and masur are well aligned with India's long-term objective of enhancing self-sufficiency in edible oils and pulses, reducing import dependence, and strengthening farm income resilience," stated Satyam Shivam Sundaram, Partner, Strategy & Transactions, EY LLP.

Chirag Jain, Partner and Agriculture & Allied Sector Leader, Grant Thornton Bharat noted that for a wheat grower, the Rs 25 gain barely covers a year of input inflation.

“The real gain will go to those switching to mustard, lentil or gram. The proposed MSP revision would additionally encourage farmers to shift to pulses and oilseeds where the country is largely import dependent,” stated Jain.

The anticipated margin over the all-India weighted average cost of production is 106% for wheat, 96% for rapeseed and mustard, 92% for lentil, 59% for gram, 58% for barley and 50% for safflower.

The government stated the MSP revisions are in line with the Union Budget 2018-19 decision to fix MSP at least 1.5 times the all-India weighted average cost of production. It further noted that elevated MSPs for pulses and oilseeds are aimed at encouraging crop diversification.

“The wheat stocks are already much above the buffer stocks and on a five year peak, hence encouragement to other crops is a thoughtful decision and contributing towards Aatmanirbharta,” Jain stated.

The MSP paid to wheat farmers during 2014-15 to 2025-26 stood at Rs 7.31 lakh crore, compared with Rs 2.56 lakh crore during 2004-05 to 2013-14. For all six rabi crops, MSP payments rose to Rs 8.36 lakh crore from Rs 2.65 lakh crore over the corresponding periods.

Jain, that stated, pointed out that a elevated domestic floor price has to go hand in hand with a firm extension and Good Agricultural Practices ecosystem in alignment with the private sector to enhance farmers' income and see the actual results on the ground.

Sundaram additionally stated that meaningful and sustained shifts in cropping patterns will occur only when farmers have confidence in assured procurement, market access, value-chain linkages, and supporting investments in storage, processing and logistics.

"The announcement should as a result be viewed as an important step within a broader agricultural transformation agenda rather than a standalone pricing intervention. Sustained procurement and value chain backing will ultimately be critical to translating these policy signals into on-ground acreage diversification and long-term farmer prosperity," Sundaram stated.