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Rural cultivation incomes have come under sharp pressure as a decline in food prices during the CY25 Kharif season dragged down farmers' earnings across key crops, according to a report by Elara Securities.
The report said that during the Kharif season, harvested mainly in October and November, farmers faced weak price realisation, with mandi prices ruling well below the Minimum Support Prices (MSP) for most crops. This was driven by a combination of excess monsoons that caused crop damage, delayed harvesting leading to bunched arrivals in mandis, quality issues, and limited government intervention to support prices. It stated, "A collapse in food price drags down cultivation income. During the CY25 Kharif season (harvested primarily in October-November), farmers faced significant challenges, with price realization dropping well below minimum support prices (MSP) for most crops." The report highlighted that policy measures also added to the pressure on prices. Duty-free imports for key crops such as cotton, tur and urad, along with a reduction in basic customs duty on crude palm oil, soy oil and sunflower oil from 20 per cent to 10 per cent, acted as an incremental drag on mandi prices. In addition, prices of maize and soyabean weakened on expectations of imports from the US under the likely India-US trade deal. According to mandi price data cited in the report, as of November 2025, prices of black gram were 19 per cent below MSP, cotton prices were 8 per cent lower, soyabean prices were down 18 per cent, while maize prices were trading 27 per cent below MSP. The report said this represents the worst deflation in food crops seen in recent years. The report also presented a multi-year comparison of mandi prices relative to MSP, showing persistent weakness across several crops. In FY26, maize prices were at 73 per cent of MSP, soyabean at 82 per cent, black gram at 81 per cent, and bajra at 87 per cent. Cotton prices stood at 92 per cent of MSP, while paddy prices were around 96 per cent. Wheat, which had remained well above MSP in FY24 and FY25, moderated to about 105 per cent of MSP in FY26. The report's pan-India rural checks suggest that paddy crop yields have taken a hit of around 6-8 per cent this year due to adverse weather conditions. Combined with depressed mandi prices, the report estimates that realisation from the Kharif crop contracted by 8-10 per cent. The report noted that the dual impact of lower yields and weaker prices has significantly eroded rural cultivation incomes. This outlined that sustained pressure on farm earnings could weigh on rural consumption trends in the coming months. (ANI)
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