NABARD Chairman KV Shaji speaking at the BusinessLine Agri Summit 2025 in New Delhi on Friday. Photo Courtesy: Bijoy Ghosh
Highlighting the three imperatives of agricultural development – economic, climate and social – NABARD Chairman KV Shaji on Friday said the minimum support price (MSP) system can be changed if some structural changes are implemented. He suggested market-determined prices as an alternative, provided the farmers’ risks were covered.
addressing business Line Speaking at the Agri and Commodity Summit 2026 in New Delhi, Shaji said: “At the moment, the problem is that the minimum support price, which is set by the government, is a burden on the exchequer. So, we need to move from this to a market-driven support price.”
Explaining further, Shaji said that commodity derivatives can help in this effort. “We are working with NCDEX to develop such derivatives. We are now doing a pilot program where farmer producer organizations (FPOs) are encouraged to enter into put options to sell their produce so that they can take advantage of wherever the prices move,” he said. A put option is a derivative contract that requires farmers to pay a small fee to lock in the price; Whatever the upside, they can retain. If there is any downside, he said, the only loss to the farmer is the fee paid by him.
Highlighting that NABARD has a major ongoing project – Graduation of Rural Income Projects with the extreme poor – he said the government wants to find permanent solutions for their upliftment by integrating them into mobile financial systems. He said, in terms of value chain assessment, several gaps need to be bridged, the commodity market gap being one of them.
He also said that NABARD is working with cooperatives on improving warehouses, enhancing facilities as part of the world’s largest grain storage infrastructure program announced by the Prime Minister. In partnership with the Department of Cooperation, NABARD is building about 500 cooperative storage structures, which will be linked to the platforms.
“We are working with NCDEX on how to link these storage structures to the derivatives market so that farmers have proper physical structures to help them get better income,” he said.
In that context, MSP can be replaced by market-determined prices, he said, adding that some kind of formalization structure is needed.
structural change
They identified five important structural changes that must occur, one of which is the formal recognition of women as farmers. “For this, land ownership is very important. The government is encouraging it, for which several initiatives have been taken so that women have farms. Even if they are not earning, their activities can be mapped appropriately through digital means and interactive processes,” he said.
Commenting on agricultural credit, he said the government’s Agristack initiative will help connect farmers with various activities. However, he also highlighted that NABARD is making efforts to create awareness among cooperative and regional rural banks to distribute loans to a large number of women farmers.
Noting that women comprise about 50 percent of the rural workforce in the agricultural sector, she said that for historical reasons women are not landowners and have been excluded from meaningful economic activities.
Emphasizing that NABARD is supporting Self Help Groups (SHGs), which were started in the early 1990s, were basically informal institutions without any registration or legal identity, he said that currently 17 crore rural families are covered under SHGs, of which about 95 per cent are women.
Shaji also said that 1.45 crore SHGs are linked to savings, of which 83 lakh are linked to credit, with outstanding bank loans of about Rs 3 lakh crore.
Emphasizing that Farmer Producer Organizations (FPOs) are rural enterprises, NABARD Chairman said that women FPOs, which are more close-knit, are building on the successes achieved through SHGs.
On the imperative of climate resilience, she said that since a large part of India’s cultivable area is rain-fed (48 per cent), women, being the leading managers of water resources, manage mixed cropping systems including allied activities integrated with agriculture.
Published on February 27, 2026
