The year 2025 has been one of severe trials for India's agricultural sector, with farmers grappling with a twin crisis of devastating natural calamities and a sharp decline in the market prices of their produce. This combination has severely eroded rural incomes, testing the efficacy of government support mechanisms and raising alarms about the stability of the rural economy.
A Double Blow: Floods Followed by Price Crash
The distress began with an intense monsoon season. Rainfall during the 2025 southwest monsoon was 108% of the long-period average, causing catastrophic flooding in key agricultural states. Punjab saw almost 200,000 hectares of farmland inundated, while crops in Haryana and Maharashtra's Marathwada region were also heavily damaged. Farmers faced not just immediate crop loss and soil degradation but also a desperate need for adequate compensation and long-term rehabilitation support.
As if the weather's wrath was not enough, a more insidious problem emerged in the markets. The prices of several essential agricultural commodities slumped below the government's declared Minimum Support Price (MSP). This benchmark price is supposed to act as a safety net, with government agencies procuring produce at this rate to prevent distress sales. The breach of this critical floor has directly hit farmers' wallets.
The Stark Reality of Below-MSP Prices
Data from the Unified Portal for Agricultural Statistics paints a grim picture as of 9 December 2025. The gap between market prices and MSP is significant across multiple crops:
Oilseeds: Soybean traded at ₹4,255 per quintal against an MSP of ₹5,328; groundnut at ₹5,670 (MSP ₹7,263); and sunflower at ₹6,175 (MSP ₹7,721).
Pulses: Moong sold for ₹6,942 per quintal (MSP ₹8,768); lentil at ₹6,155 (MSP ₹7,000); and urad at ₹6,879 (MSP ₹7,800).
Even staple grains were not spared, with wheat priced at ₹2,535, slightly below its MSP of ₹2,585, and cotton trading at ₹7,200 against an MSP of ₹7,710.
This wholesale deflation in crop prices contributed to pulling India's consumer inflation down to a record low of 0.25% year-on-year in October 2025. While low inflation benefits the broader macroeconomy, it comes at a steep cost for the nearly 42% of India's population dependent on agriculture, a sector contributing 18% to the GDP.
Government Response and Expert Skepticism
Recognizing the crisis, the central government has activated several measures. Officials from the agriculture ministry, food and public distribution department, and Niti Aayog have discussed plans to increase procurement. Key initiatives include:
- The Mission for Aatmanirbharta in Pulses (FY26-FY31) with a ₹11,440 crore budget, ensuring 100% procurement of tur, urad, and masoor at MSP for four years.
- Continuation of the PM-AASHA scheme into FY26 to facilitate MSP-based procurement of oilseeds through agencies like NAFED and NCCF.
- A contingency plan to prevent distress sales, which may include supporting exports and covering part of the losses from the price slump.
However, agricultural experts and analysts believe these steps, while positive, are insufficient. Ramesh Chandra Lahoti, past president of the Federation of Karnataka Chambers of Commerce and Industry, warned, "The fall in mandi prices below MSP through 2025 signals a worrying trend for 2026." He pointed out that procurement remains uneven—robust for rice and wheat but weak for oilseeds and pulses—and is not broad-based enough to stabilize prices across all crops and regions.
Farm expert Professor Sudhir Panwar noted that for many farmers, MSP and government procurement have become largely symbolic. He cited data suggesting a major share of farmers' income now comes from labour, not cultivation. Policy expert Devinder Sharma highlighted a damning OECD analysis stating India is the only country among 54 major farm economies where farmers have incurred losses year after year since 2000, a trend he believes will not reverse in 2026.
Global Factors and the Road Ahead
The crisis has international dimensions as well. Suresh Rajagopalan, CEO of Samunnati Agri Innovations Lab, explained that a US-triggered global tariff war pushed commodity prices to multi-year lows. Additionally, free imports have created an oversupply in markets like cotton and pulses, with importers stocking up ahead of anticipated restrictions.
The outlook for 2026 remains precarious. Late rains may boost the upcoming rabi (winter-spring) crop output, which could further pressure prices, though higher yields might offer some income offset. Experts stress that meaningful market reforms, increased private investment in storage and processing, and the development of futures markets and cold chains are crucial to improving price discovery and giving farmers alternatives to distress sales.
The fundamental challenge for policymakers will be to balance the macroeconomic benefits of low food inflation with the urgent need to protect farmer incomes. Failure to do so risks weakening rural consumption, a vital engine for India's overall economic growth, signaling deepening distress in the heartland for the year to come.
