Increase in MSP for raw jute: Boost to farmers' income and green economy

Cabinet Committee on Economic Affairs (CCEA)'s decision to increase the Minimum Support Price (MSP) for raw jute for the 2026-27 marketing season is being considered a significant step in the interest of farmers. This decision will not only ensure better income for jute producers but will also strengthen the natural fiber-based industry in the country.

Objective of the Decision

¨     The government's primary objective in increasing the MSP is to ensure jute farmers receive a fair price for their produce. Jute is primarily grown in states such as West Bengal, Assam, Bihar, Odisha, and Meghalaya, where a large number of farmers depend on it. The increase in MSP will provide these farmers protection from market price volatility.

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¨     The MSP of Raw Jute of TD-3 grade has been fixed at ₹5,925 per quintal for the 2026–27 season.

¨     TD-3 (Tossa Desi) is a specific quality grade defined by the Jute Corporation of India (JCI) based on several physical attributes.

¨     The revised MSP is ₹275 per quintal (or 4.9%) higher than the MSP for the 2025–26 marketing season (₹5650 per quintal).

¨     The MSP ensures a return of 61.8% over the all-India weighted average cost of production.

¨     The decision is in line with the principle announced in the Union Budget 2018–19 to fix MSP at a minimum of 1.5 times the all-India weighted average cost of production (A2+FL).

¨     Over the years, the government has increased the MSP of Raw jute from ₹2400/-per quintal in 2014-15 to ₹5,925/- per quintal in 2026-27, registering an increase of ₹3,525/- per quintal (2.5 times).

¨     The Jute Corporation of India (JCI) works as the central government’s nodal agency to undertake Price Support Operations.

MSP Regime of India

¨     MSP introduced in 1966-67 is a price fixed by the Government of India to protect the agricultural producers against any sharp fall in farm prices.

¨     MSPs are announced by the Cabinet Committee on Economic Affairs (CCEA) at the beginning of the sowing season for certain crops (currently 23) based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).

¨     The Government announces MSP for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.

The list of crops is as follows:

¨     Cereals (7) – paddy, wheat, maize, jowar (sorghum), bajra (pearl millet), barley and ragiPulses (5) – gram, tur, moong, urad, masur (lentil)

¨     Oilseeds (7) – groundnut, rapeseed-mustard (+ toria), soyabean, sesamum, sunflower, safflower, nigerseedCommercial crops (4) – copra (+ de-husked coconut), sugarcane, cotton and raw jute.

In formulating the recommendations for minimum support prices, the CACP takes into account various factors such as – cost of production (A2+FL method), demand and supply conditions, inter-crop price parity, effect on general price level, domestic and international prices, etc.

National Commission on Farmers: Swaminathan Committee

¨     It recommended that MSPs must be at least 50% more than the cost of production (C2). 

¨     It suggested the cost of production at three levels:

¨     A2: All the types of cash expenditure to generate the crop, like seeds, manure, chemicals, labour costs, fuel costs and irrigation costs.

¨     A2+FL: It includes A2 plus an imputed value of unpaid family labour.

¨     C2: Under C2, the estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.

¨     Presently, CACP uses the A2+FL method for calculating the cost of production.

Jute Crop & Jute Industry of India

¨     climates and requires about 50 cm of water for its growth.

¨     For better growth, a mean temperature between 15oC and 34oC is best suitable for the crop, and a mean relative humidity of 65% is required for Jute, also known as golden fibre, is a crop that grows well in humid tropical better growth.

¨     It can be raised on all kinds of soils from clay to sandy loam, but loamy alluvials are best suited.

¨     It is a cash crop, and it is sown from March to May and harvested from the end of June to September depending on the weather conditions.

¨     It is the second most important fibre crop in India after cotton in terms of cultivation and usage.

¨     India is the largest producer of Jute in the World, accounting for about 50% of the estimated world production. However, most of the Jute (about 90% of total production) is consumed domestically due to its vast domestic market demand.

¨     The major jute-producing states in India are West Bengal (the largest jute-producing state), Assam, Bihar, Odisha, and Andhra Pradesh.

¨     India exports jute and jute products mainly to the USA, the UK, Australia, Belgium, Egypt, Germany, Italy, Japan, Saudi Arabia, and Turkey.