THANJAVUR: Citing a recent letter sent by the Union Finance ministry to Kerala asking the state government to consider discontinuing the practice of paying incentive to farmers over and above the Minimum Support Price (MSP), for procurement of paddy, the Tamil Nadu farmers association said farmers are not getting remunerative prices as the input costs have increased.
In the letter to the Chief Secretary of Kerala dated January 9, 2026, the Secretary (Expenditure) of Union Finance Ministry pointed out that in recent years bumper production of wheat and paddy has resulted in stocks exceeding the requirement of Public Distribution System (PDS) and other contingency needs. The increasing surplus every year, creating a significant and recurring burden on the exchequer, the letter stated.
The letter further noted that incentives given by state governments will result in increase in the sowing area and subsequently increase production. Pointing out that the wheat and paddy are comparatively water and fertilizer incentive crops, their disproportionate cultivation will result in adverse situations including increased depletion of groundwater, soil degradation.
Pointing out that inadequate domestic production of oil seeds and pulses led to higher imports, the secretary asked Kerala to consider discontinuing the incentive for wheat and paddy. The secretary also asked authorities to shift the incentive to promote pulses, oil seeds and millets in line with national priorities like nutritional security.
Citing the letter, P S Masilamani, the state general secretary of TN farmers association, said farmers are not getting remunerative prices even as the input costs keep increasing. "Hence, the Union Government should retract its advisory," Masilamani said.
Further, he said the MSP currently is not fixed under the formula of C2+50% in which C2, the total production cost including all paid-out expenses for inputs like seeds, fertilizers, imputed value of family labour, imputed rent on owned land, interest on fixed capital and rent for owned machinery as recommended by National Commission on Farmers . But till now the old method A2+FL+ 50% is being followed. Where A2 includes only paid out costs, imputed value of family labour and excludes rent on owned land and the interest on fixed capital.
D Ravindran, president of TN farmers association, said agriculture is a state subject as per Constitution and the Union Government should not tell States not to give incentive. "It is wrong on the part of the Union Government", he said adding as per C2+50% formula the MSP should be fixed between '3,000 to '3,300. However the Union Government has fixed only '2,389 as MSP for A grade paddy, he pointed out. "The Union Government's letter is against the interests of farmers. States must continue giving incentive", he added
In Tamil Nadu, the Tamil Nadu Civil Supplies Corporation (TNCSC) procures Grade A paddy at ` 2,545 per quintal (MSP of Rs 2,389 and govt incentive of `156). The common variety is procured at `2,500 per quintal (MSP `2,369 and incentive of `131).