Lok Sabha Question No. 2653 (UNSTARRED), answered on 2019-07-09
Subject: MSP for Wheat and Paddy
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Bhartruhari Mahtab, Rahul Ramesh Shewale

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

## LOK  SABHA

## UNSTARRED QUESTION NO.2653

TO BE ANSWERED ON THE 9 TH   JULY, 2019

## MSP FOR WHEAT AND PADDY

## 2653.     SHRI  BHARTRUHARI MAHTAB: SHRI RAHUL RAMESH SHEWALE:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) whether Minimum Support Prices (MSP)  for  wheat  and  paddy  have  been announced for  2018-19  and  if  so,  the  details  thereof  including  the  details  of  the  increase  in    Minimum Support  Prices  (MSP)  for wheat and paddy for 2018-19;
- (b) whether the hike in MSP of wheat and paddy has been done on the basis of rise in input costs like fertilizers, pesticides, seeds, agricultural wages etc. and inflation, if  so,  the  details thereof  and  if  not,  the reasons therefor along with the reaction of the Government thereto;
- (c) the  recommendations  of  the Commission  for Agricultural  Costs  and Prices (CACP) in this regard;
- (d) whether the hike over last year's prices for wheat and paddy is very minimal and there has been disappointment among farmers, if so, the details thereof;
- (e) the number of complaints received by the Government for inadequate increase in MSP of  wheat  and  paddy  for  2018-19  along  with  action  taken/being  taken  by  the  Government  on such complaints so far;
- (f) whether Government is aware that all agricultural input costs like fertilizers, pesticides, seeds,  agricultural    wages  etc.  have    gone    up    by    many    folds,    if    so,    the  reasons    for unproportionate  increase  in MSP for wheat and paddy; and
- (g) the steps taken/being taken by the Government  to  address  the  issue  of inadequate increase in MSP of wheat and paddy and to ensure remunerative price to farmers along with achievements thereof?

## ANSWER

## MINISTER  OF AGRICULTURE AND FARMERS WELFARE

## कृ ष एवं कसान कयाण मंी (SHRI NARENDRA SINGH TOMAR)

- (a) to (c):    The Union Budget for 2018-19 had announced the pre-determined principle to keep Minimum Support Price (MSP) at a level of atleast one and half times of the cost of production (CoP). Accordingly, Government has increased MSPs for all mandated crops including wheat and paddy with a return of at least 50 percent over all India weighted average cost of production for the season 2018-19.   Cost, MSP and  return over CoP of wheat and paddy for the years 2018-19 and 2019-20  is given below:

Cost, MSP and  return over CoP of wheat and paddy (Rs./quintal)

|           | 2018-19   | 2018-19   | 2018-19         | 2019-20   | 2019-20   | 2019-20          |
|-----------|-----------|-----------|-----------------|-----------|-----------|------------------|
| Commodity | Cost      | MSP       | %Return overCoP | Cost      | MSP       | %Return over CoP |
| Wheat     | 866       | 1840      | 112.5           | -         | -         | -                |
| Paddy     | 1166      | 1750      | 50.1            | 1208      | 1815      | 50.2             |

For the agricultural season 2018-19, MSP of wheat has been increased by Rs 105 per quintal, paddy (common) and paddy (grade A) has been increased by Rs 200 per quintal and Rs 180 per quintal respectively. During 2019-20, Government has announced MSPs of 14 kharif crops including paddy which increased by Rs.65 per quintal.

While recommending MSPs, Commission for Agricultural Costs and Prices (CACP) considers important factors like cost of production, overall demand-supply situation of various crops in domestic and world markets, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sector, likely effect of price policy on  rest  of  the  economy  and  a  minimum  of  atleast  50  per  cent  as  the  margin  over  cost  of production.

The CACP considers all costs in a comprehensive manner in its recommendations on price policy, which 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 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.

(d)  &  (e):      In  2018-19,  there  was  a  major  increase  in  MSP  including  paddy  on  account  of implementation  of  the  principle  of  fixing  MSP  at  a  level  of  one  and  half  times  of  the  cost  of production. This continues to be followed in the current year (2019-20) as well.

Government  receives  representation  from  time  to  time  on  various  issues  concerning agriculture sector including raising MSPs to reflect the state specific cost of cultivation and yield. MSP is determined for the country as a whole and not region or state-specific. State specific parameters  are  kept  in  view  by  the  CACP  while  formulating  price  policy  for  agricultural commodities.  Since the CoP varies in different  States  on  account  of  differences  in  levels  of irrigation, resource endowment, farm mechanization, land holding size etc., CACP uses all-India weighted  average  cost  of  production  while  making  its  recommendations.    However,  CACP ensures that all paid out costs including family labour are covered in the MSPs recommended by them. The objective is to promote regionally differentiated production strategy and encourage an efficient state of agricultural production in the country.

(f): CACP uses all-India weighted average cost of production while making its recommendations and recommends uniform MSP which is applicable to all states. This cost of production  is  all  comprehensive  cost  as  projected  by  the  CACP  after  factoring  inflation  of agricultural inputs. The MSP so fixed provides atleast 50 per cent return over all India weighted average cost of production for all mandated crops including paddy and wheat.

(g): Apart  from  increasing  MSPs,  so  as  to  provide  atleast  50  per  cent  return  over  cost, Government has taken several steps to provide remunerative prices to farmers for their produce which include undertaking procurement through designated procurement agencies, implementing e-National Agriculture Market (e-NAM), enacting the Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017 and promoting Farmer Producer Organizations (FPOs).

The Government is working on a market architecture, so as to ensure that farmers get remunerative prices on their produce.  These include setting up of Gramin Agricultural Markets (GrAMs)  so  as  to  promote  22,000  number  of  retail  markets  in  close  proximity  of  farm  gate; competitive and transparent wholesale trade at APMC through e-NAM; and a robust and profarmer export policy.

The new Umbrella Scheme Pradhan Mantri  Annadata  Aay  SanraksHan  Abhiyan' (PMAASHA)  announced  by  the  government  is  also  a  progressive  step  in  this  direction.  The Umbrella  Scheme  consists  of  three  sub-schemes  i.e.  Price  Support  Scheme  (PSS),  Price Deficiency Payment Scheme (PDPS) and Private Procurement & Stockist Scheme (PPSS) on a pilot basis.

Interim  Union  Budget  2019  had  announced  a  historic  programme  namely  'Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN)'. Under this programme, landholding farmer families will be provided direct income support at the rate of Rs. 6,000 per year. The PM-KISAN scheme aims  to  supplement  the  financial  needs  of  the  farmers  in  procuring  various  inputs  to  ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the end of the each crop cycle.

********