Lok Sabha Question No. 635 (UNSTARRED), answered on 2018-02-06
Subject: Criteria for MSP for Agricultural Crops
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: CHANDRA PRAKASH JOSHI

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO.635

TO BE ANSWERED ON THE  6 TH  FEBRUARY, 2018

## CRITERIA FOR MSP FOR AGRICULTURAL CROPS

635.   SHRI CHANDRA PRAKASH JOSHI:

Will  the  Minister  of  AGRICULTURE  AND  FARMERS  WELFARE      ‡ãðŠãäÓã एवं  कसान कयाण ½ãâ¨ããè be pleased to state:

- (a) the  details  of  the  Rabi  crops  selected  so  far  by  the  Government  under  the Minimum Support Price (MSP) along with the criteria for fixing MSP by the Government;
- (b) whether the existing criteria for fixation of MSP are not providing adequate relief to the farmers, if so, the details thereof;
- (c) whether the Government has constituted any committee to rectify the flaws in the existing criteria of fixing of MSP; and
- (d) if  so,  whether  the  Committee  has  submitted  its  report  and  if  so,  the  details thereof?

## ANSWER

MINISTER OF  STATE IN THE  MINISTRY OF  AGRICULTURE AND  FARMERS  WELFARE

‡ãðŠãäÓã एवं कसान कयाण ½ãâ¨ããÊã¾ã ½ãñâ Àã·¾ã ½ãâ¨ããè ( SHRI GAJENDRA SINGH SHEKHAWAT)

- (a) & (b): The Government fixes Minimum Support Prices (MSPs) for 6 rabi crops viz. Wheat, Barley, Gram, Masur (lentil), Rapeseed/Mustard and Safflower on the basis of the recommendations of the Commission for Agricultural Costs & Prices (CACP),after obtaining the views of State Governments and Central Ministries/Departments concerned and other relevant factors. In addition, MSP of Toria for rabi season is fixed on the basis of MSP of Rapeseed/Mustard.

While recommending MSPs, CACP takes into account the cost of production, overall demand-supply, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, the likely effect on the rest of the economy, besides ensuring rational utilization of production resources like land and water.  CACP  also  holds  consultations  with  different  stake  holders  including  farmers' representatives.

Contd…2/-

-2-

The  MSPs of  rabi  crops  for  2017-18  fixed  by  the  Government  on  the  basis  of recommendation  of  CACP  provides  adequate  return  over  weighted  average  cost  of production (A2+FL) for most crops. The return over cost of production(A2+FL) of MSP fixed by Government for rabi crops for 2017-18 has been in excess of 50% with return of  112.4% for wheat, 88.4% for rapeseed/mustard, 79.6% for masur, 78.8% for gram and  66.9%  for  barley.  The  Union  Budget  for  2018-19  has  announced  the  predetermined principle to keep MSP at levels of one and half times the weighted average cost of production for Kharif crops also.

(c) & (d): From time to time, expert committees were constituted by Government to review  the  methodology  and  system  of  calculation  of  the  MSPs.  A  Committee constituted  in  2013  by  the  Government  under  the  Chairmanship  of  Prof.  Ramesh Chand, the then Director, National Institute of Agricultural Economics and Policy (NIAP) and present Member of NITI Aayog with a view to examine the methodological issues in fixing  MSP  had  submitted  its  Report.  The  major  recommendations  of  the  Committee are:

- i) The value of the labour of the head of the family be imputed at skilled labour rates  and  the  entire  paid  out  costs  including  family  labour  i.e.  A2+FL  be increased by 10% to account for risk related to farming and managerial charges of farmers;
2. ii)  the  interest  on  working  capital  be  computed  for  the  full  period  of  the  crop season at 12.5 per cent per annum;
3. iii)  The  rental  value  of  the  owned  land  be  imputed  on  the  basis  of  actual  rates prevailing in the area, for similar land, without any ceiling as per state laws;

iv)  The  post  harvest  costs  incurred  like  cleaning,  grading,  packaging  and transportation  etc.  be  estimated  and  reported  to  CACP  separately  for  its consideration in making MSP recommendations.

*******