Lok Sabha Question No. 135 (STARRED), answered on 2019-02-12
Subject: Calculation of MSP
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: BALABHADRA MAJHI

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

## LOK  SABHA STARRED QUESTION NO. 135

TO BE ANSWERED ON THE 12 TH  FEBRUARY, 2019

## CALCULATION OF MSP

## *135.    SHRI BALABHADRA MAJHI:

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

- (a) the criteria adopted for calculating the input cost in agriculture in the country;
- (b) the clause adopted for calculation of the MSP;
- (c) the details of MSP of various farm produce during the last year; and
- (d) whether it is in conformity with the MS Swaminathan Committee's recommendation for giving 1.5 times input cost to the farmers and if so, the details thereof?

## ANSWER

MINISTER OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंी

- (a) to  (d):

(SHRI RADHA MOHAN SINGH) A statement is laid on the Table of the House.

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF  LOK  SABHA STARRED QUESTION NO. 135    DUE FOR REPLY ON 12 TH  FEBRUARY, 2019.

- (a): The Government of India  is  implementing  a  scheme  'Comprehensive  Scheme for Studying the Cost of Cultivation of Principal Crops in India' (CS Scheme), through grants-inaid to 16 Agricultural Universities/ Institutions in 20 States. Under this scheme input-wise and total  cost  of  cultivation/production estimates are generated in respect of 25 selected crops namely paddy, wheat, jowar, bajra, maize, ragi, barley,  moong, urad,  arhar,  gram,  masur, groundnut,  rapeseed  and  mustard,    nigerseed,  safflower,  soyabean,  sunflower,  sesamum, cotton, jute,  sugarcane, onion, potato,  and coconut. These crops are selected for a block period of three years.

The  sampling  design  of  the  scheme  is  a  three  stage  stratified  random  sampling design with tehsil as the first stage unit, village/cluster of villages as the second-stage unit and operational holdings as the third and ultimate stage unit.

The  Scheme  envisages  collection  of  representative  data  on  inputs  and  outputs  in physical and monetary terms on a comparable and comprehensive basis following uniform methodology which is designed by an Expert Committee and is reviewed from time to time. The field data is collected based on the Cost Accounting Method by 16 General/Agricultural Universities/ Institutions (Implementing Agencies) spread over 20 states. Under the scheme, daily entries of debit/credit for the expenditure/income are made in order to assess the total cost /benefit incurred/accrued to each farmer covered under the scheme.

The input cost estimates generated under CS Scheme include all paid-out cost, i.e., cost incurred in cash and kind, like value of hired human labour, hired and owned bullock and machine labour, value of seeds, insecticides, pesticides, manure, fertilizer, irrigation charges, land  revenue,  cesses  &  other  taxes,  interest  on  working  capital,  miscellaneous  expenses, rent paid for leased land; and imputed value of family labour.

-2-

Based  on  the  crop-wise  and  state-wise  cost  estimates  generated  under  the  CS Scheme,  CACP  projects  crop-wise  all  India  weighted  average  cost  of  production  for  the ensuing season to arrive at the recommendations of Minimum Support Price (MSP) of major agriculture commodities.

(b)  &  (c):          The  Government  of  India  declares  the  MSPs  of  mandated agricultural crops, including kharif and rabi crops, based on the price policy recommendations of Commission for  Agricultural  Costs & Prices (CACP), after ascertaining the views of State Governments and Central Ministries/Departments concerned and other relevant factors. While recommending  MSPs  for  crops,  CACP  keeps  in  mind  the  cost  of  production  and  other important factors, such as demand and supply situation, trends in domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors and  the  likely  impact  of  MSP  on  consumers  and  overall  economy  along  with  rational utilization  of  scarce  natural  resources  like  land  and  water.  The  methodology  adopted  by CACP is based on the recommendations of different expert committees on the 'methodology of cost of production'. Based on the latest three years actual cost estimates provided by the Directorate  of  Economics  &  Statistics,  Ministry  of  Agriculture  and  Farmers Welfare,  CACP undertakes  crop-wise,  state-wise  cost  projection  exercise  for  the  ensuing  season  under certain implicit assumptions by utilizing statistical techniques. These projected estimates of cost of production are factored into the formulation of price policy recommendations by the CACP. The detail of MSP of various agricultural crops during last year is given at Annexure I. (d):  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

Contd…3/-

then  Government,  this  recommendation  of  providing  50  per  cent  return  over  cost  of production was not included. Dr. 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.

Government has increased the MSPs for all notified Kharif & Rabi Crops and other commercial crops for the season 2018-19 with a return of atleast 50 percent over the all-India weighted average cost of production. Cost of production varies in different States on account of difference in the yield of crops and owing to the levels of irrigation, resource endowment, farm mechanisation, land holding size etc. As such, returns over cost of production may vary across States for MSP crops.

Annexure referred to in reply to part (b) & (c) of Lok Sabha Starred Question No. 135 due for reply on 12.02.2019.

## Minimum Support Prices (MSPs) of major agricultural crops during last year:

Rs. /quintal

| Sl. No.   | Commodity                         | Variety     | 2018-19   |
|-----------|-----------------------------------|-------------|-----------|
|           | KHARIF CROPS                      |             |           |
| 1         | PADDY                             | Common      | 1750      |
|           |                                   | Grade 'A'   | 1770      |
| 2         | JOWAR                             | Hybrid      | 2430      |
|           |                                   | Maldandi    | 2450      |
| 3         | BAJRA                             |             | 1950      |
| 4         | MAIZE                             |             | 1700      |
| 5         | RAGI                              |             | 2897      |
| 6         | ARHAR(Tur)                        |             | 5675      |
| 7         | MOONG                             |             | 6975      |
| 8         | URAD                              |             | 5600      |
| 9         | COTTON                            | Medium      |           |
|           |                                   | Staple      | 5150      |
|           |                                   | Long Staple | 5450      |
| 10        | GROUNDNUT IN SHELL                |             | 4890      |
| 11        | SUNFLOWER SEED                    |             | 5388      |
| 12        | SOYABEEN                          |             | 3399      |
| 13        | SESAMUM                           |             | 6249      |
| 14        | NIGERSEED                         |             | 5877      |
|           | RABI CROPS                        |             |           |
| 15        | WHEAT                             |             | 1840      |
| 16        | BARLEY                            |             | 1440      |
| 17        | GRAM                              |             | 4620      |
| 18        | MASUR (LENTIL)                    |             | 4475      |
| 19        | RAPESEED/MUSTARD                  |             | 4200      |
| 20        | SAFFLOWER                         |             | 4945      |
| 21        | TORIA                             |             | 4190      |
|           | OTHER CROPS                       |             |           |
| 22        | COPRA                             | Milling     | 7511      |
|           | (Calender Year)                   | Ball        | 7750      |
| 23        | DE-HUSKED COCONUT (Calender Year) |             | 2030      |
| 24        | JUTE                              |             | 3700      |
| 25        | SUGARCANE$                        |             | 275       |

- $ Fair and remunerative price.
* Including Bonus of Rs. 100 per quintal.
- ** Including Bonus of Rs. 75 per quintal .
- ^ Including Bonus of Rs. 200 per quintal.
- ^^ Including Bonus of Rs. 425 per quintal.
- @ Including Bonus of Rs. 150 per quintal

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