Lok Sabha Question No. 185 (STARRED), answered on 2018-07-31
Subject: Formula for MSP
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: KINJARAPU RAM MOHAN NAIDU, VENKATESWARA RAO MAGANTTI

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

## LOK  SABHA STARRED QUESTION NO. 185

TO BE ANSWERED ON THE 31 ST  JULY, 2018

## FORMULA FOR MSP

- *185.  SHRI RAM MOHAN NAIDU KINJARAPU: SHRI MAGANTTI VENKATESWARA RAO (BABU):

Will  the  Minister  of  AGRICULTURE  AND  FARMERS  WELFARE कृ षि एवं ककसान कल्याण ½ãâ¨ããè be pleased to state:

- (a): the formula adopted for determining the Minimum Support Price (MSP for paddy announced by the Government recently;
- (b): whether the latest MSP for paddy and other crops matches with the price formula of C2 plus 50 per cent as recommended by the Swaminathan Commission on Farmers and if so, the details thereof; and
- (c): the measures taken by the Government over the last four years in ensuring MSP equal to C2 plus 50 per cent?

## ANSWER

MINISTER OF AGRICULTURE AND FARMERS WELFARE

- कृ षि एवं ककसान कल्याण ½ãâ¨ããè (SHRI RADHA MOHAN SINGH) (a) to (c): A statement is laid on the Table of the House.

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (c)  OF  LOK  SABHA STARRED QUESTION NO.  185   DUE FOR REPLY ON 31 ST  JULY, 2018.

(a): Government  fixes  minimum  support  prices  (MSPs)  of  22  mandated  agricultural crops (14 kharif crops which includes paddy, 6 rabi crops and 2 other commercial crops) and fair & remunerative price (FRP) for sugarcane on the basis of recommendations of the Commission for Agricultural  Costs  &  Prices  (CACP).  In  addition,  MSP  for  toria  and  dehusked  coconut  is  also  fixed  on  the  basis  of  MSPs  of  rapeseed/mustard  and  Copra respectively. While recommending MSPs, the CACP considers  important factors like cost of production, overall demand-supply conditions, domestic and international prices, intercrop  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 productive resources like land and water.

Government has announced the Minimum Support Prices (MSPs) for kharif crops 2018-19 on 4 th July 2018.  This decision of the Government of India is a historic one as it redeems the promise of the pre-determined principle of fixing the MSPs at a level of at least 150 per cent of the cost of production announced by the Union Budget for 2018-19. The  Commission  for  Agricultural  Costs  and  Prices  (CACP)  recommended  MSPs  for  all kharif crops broadly in line with the announced principle.

The  Government  announced  the  MSP  of  kharif  crops  for  2018-19  season  is  in accordance with the established practice. MSP of paddy (common) has been increased by Rs. 200 and fixed at Rs 1750 per quintal and Paddy (Grade A) has been increased by Rs 180 and fixed  at  Rs  1770  per  quintal  for  2018-19  season.  Details  of  crop  wise  cost  of production (cost), MSPs and return over cost for the years 2017-18 & 2018-19 for all kharif crops is at Annexure I.

-2-

(b):          National  Commission  on  Farmers  (NCF)  headed  by  Dr.  M.S.  Swaminathan  has recommended  that  the  MSP  should  be  at  least  50  percent  more  than  the  weighted average  cost  of  production.  However,  when  the  National  Policy  for  Farmers,  2007  was finalized by the then Government, this recommendation of providing 50% returns over cost of production was not included. Dr. (Shri) M. S. Swaminathan in his Report on NCF had discussed  different  dimensions  of  fixing  MSPs,  but  while  finalizing  National  Policy  on Farmers, the then Government had accepted the current established methods.

Cost  of  production  is  one  of  the  important  factors  in  the  determination  of  MSPs. While recommending its Price policy, the CACP considers  all costs in a comprehensive manner. The costs include all paid out costs such as those incurred on account of hired human  labour,  bullock  labour/machine  labour,  rent  paid  for  leased  in  land,  expenses incurred  in  cash  and  kind  on  the  use  of  material  inputs  like  seeds,  fertilizers,  manures, irrigation  charges,  depreciation  on  implements  and  farm  buildings,  interest  on  working capital,  diesel/electricity  for  operation  of  pump  sets  etc,  miscellaneous  expenses  and imputed value of family labour. Hence the costs considered are very comprehensive and based on the methodology recommended by Expert Committees from time to time.

(c):       While cost of cultivation of crops tends to go up year-on-year on account of rise in prices of inputs used, cost of production may go up or down depending on the all India yield  levels.  The  details  of  increase  in  MSP  and  all  India  weighted  average  cost  of production of Kharif crops from 2014-15 to 2018-19 is given at Annexure II and Annexure III respectively. It is seen that increase in MSP has been much higher than the increase in cost of production in 2018-19.

Annexure referred to in reply to part (a) of Lok Sabha Starred Question No.185 due for reply on 31.07.2018.

## Cost*, Minimum Support Prices (MSPs) and Return over Cost

(Rs/quintal)

|         | Commodity              | 2017-18   | 2017-18   | 2017-18           | 2018-19   | 2018-19   | 2018-19           |
|---------|------------------------|-----------|-----------|-------------------|-----------|-----------|-------------------|
| Sl. No. | KHARIF CROPS           | Cost      | MSP       | %Return over cost | Cost      | MSP       | %Return over Cost |
| 1       | PADDY(Common)          | 1117      | 1550      | 38.76             | 1166      | 1750      | 50.09             |
|         | (Grade A) ^            |           | 1590      |                   |           | 1770      |                   |
| 2       | JOWAR (Hybrid)         | 1556      | 1700      | 9.25              | 1619      | 2430      | 50.09             |
|         | (Maldandi) ^           |           | 1725      |                   |           | 2450      |                   |
| 3       | BAJRA                  | 949       | 1425      | 50.16             | 990       | 1950      | 96.97             |
| 4       | MAIZE                  | 1044      | 1425      | 36.49             | 1131      | 1700      | 50.31             |
| 5       | RAGI                   | 1861      | 1900      | 2.10              | 1931      | 2897      | 50.01             |
| 6       | ARHAR(Tur)             | 3318      | 5450      | 64.26             | 3432      | 5675      | 65.36             |
| 7       | MOONG                  | 4286      | 5575      | 30.07             | 4650      | 6975      | 50.00             |
| 8       | URAD                   | 3265      | 5400      | 65.39             | 3438      | 5600      | 62.89             |
| 9       | COTTON (Medium Staple) | 3276      | 4020      | 22.71             | 3433      | 5150      | 50.01             |
|         | (Long Staple) ^        |           | 4320      |                   |           | 5450      |                   |
| 10      | GROUNDNUT IN SHELL     | 3159      | 4450      | 40.87             | 3260      | 4890      | 50.00             |
| 11      | SUNFLOWER SEED         | 3481      | 4100      | 17.78             | 3592      | 5388      | 50.01             |
| 12      | SOYABEEN               | 2121      | 3050      | 43.80             | 2266      | 3399      | 50.01             |
| 13      | SESAMUM                | 4067      | 5300      | 30.32             | 4166      | 6249      | 50.01             |
| 14      | NIGERSEED              | 3912      | 4050      | 3.53              | 3918      | 5877      | 50.01             |

* Includes  all  paid  out  costs  such  as  those  incurred  on  account  of  hired  human  labour,  bullock labour/machine  labour,  rent  paid  for  leased  in  land,  expenses  incurred  on  use  of  material  inputs  like seeds, fertilizers, manures, irrigation charges, depreciation on implements and farm buildings, interest on working capital, diesel/electricity for operation of pump sets etc, miscellaneous expenses & imputed value of family labour.

^ Cost is not separately compiled for Paddy (Grade A), Jowar (Maldandi) & Cotton (long staple).

## Annexure referred to in reply to part (c) of Lok Sabha Starred Question No.185 due for reply on 31.07.2018.

## Absolute increase in Minimum Support Prices (MSPs) of Kharif crops:

(Rs/quintal)

| Sl. No.   | Commodity          | Variety       | 2014-15   | 2015-16   | 2016-17   | 2017-18   | 2018-19   |
|-----------|--------------------|---------------|-----------|-----------|-----------|-----------|-----------|
|           | KHARIF CROPS       |               |           |           |           |           |           |
| 1         | PADDY              | Common        | 50        | 50        | 60        | 80        | 200       |
|           |                    | Grade 'A'     | 55        | 50        | 60        | 80        | 180       |
| 2         | JOWAR              | Hybrid        | 30        | 40        | 55        | 75        | 730       |
|           |                    | Maldandi      | 30        | 40        | 60        | 75        | 725       |
| 3         | BAJRA              |               | 0         | 25        | 55        | 95        | 525       |
| 4         | MAIZE              |               | 0         | 15        | 40        | 60        | 275       |
| 5         | RAGI               |               | 50        | 100       | 75        | 175       | 997       |
| 6         | ARHAR(Tur)         |               | 50        | 275       | 425       | 400       | 225       |
| 7         | MOONG              |               | 100       | 250       | 375       | 350       | 1400      |
| 8         | URAD               |               | 50        | 275       | 375       | 400       | 200       |
| 9         | COTTON             | Medium Staple | 50        | 50        | 60        | 160       | 1130      |
|           |                    | Long Staple   | 50        | 50        | 60        | 160       | 1130      |
| 10        | GROUNDNUT IN SHELL |               | 0         | 30        | 190       | 230       | 440       |
| 11        | SUNFLOWER SEED     |               | 50        | 50        | 150       | 150       | 1288      |
| 12        | SOYABEEN           | Yellow        | 0         | 40        | 175       | 275       | 349       |
| 13        | SESAMUM            |               | 100       | 100       | 300       | 300       | 949       |
| 14        | NIGERSEED          |               | 100       | 50        | 175       | 225       | 1827      |

- *****

Annexure- III

## Annexure referred to in reply to part (c) of Lok Sabha Starred Question No.185 due for reply on 31.07.2018.

## Absolute increase in cost of production of Kharif crops

(Rs/quintal)

| Sl. No.   | Year                   | 2014-15   | 2015-16   | 2016-17   | 2017-18   | 2018-19   |
|-----------|------------------------|-----------|-----------|-----------|-----------|-----------|
|           | KHARIF CROPS           |           |           |           |           |           |
| 1         | PADDY(Common)          | 17        | 42        | 25        | 72        | 49        |
| 2         | JOWAR (Hybrid)         | 101       | 97        | 34        | 55        | 63        |
| 3         | BAJRA                  | 64        | 61        | 32        | 24        | 41        |
| 4         | RAGI                   | 136       | 214       | 45        | 128       | 70        |
| 5         | MAIZE                  | 54        | 27        | 25        | 78        | 87        |
| 6         | ARHAR(Tur)             | 15        | 132       | 4         | 77        | 114       |
| 7         | MOONG                  | 115       | 103       | 72        | 221       | 364       |
| 8         | URAD                   | 81        | 230       | 129       | -319      | 173       |
| 9         | GROUNDNUT IN SHELL     | 512       | 82        | 57        | -212      | 101       |
| 10        | SUNFLOWER SEED         | 129       | 153       | 197       | 2         | 111       |
| 11        | SOYABEAN               | 37        | 41        | 82        | 269       | 145       |
| 12        | SESAMUM                | 846       | 367       | 56        | -121      | 99        |
| 13        | NIGERSEED              | 805       | 62        | 220       | 546       | 6         |
| 14        | COTTON (Medium Staple) | 25        | 243       | 136       | 387       | 157       |

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