Lok Sabha Question No. 1906 (UNSTARRED), answered on 2020-03-03
Subject: Calculation of MSP
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Devji Mansingram Patel, Sudhakar Tukaram Shrangre, Pratima Bhoumik

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

## LOK  SABHA UNSTARRED QUESTION NO. 1906

TO BE ANSWERED ON THE 3 RD  MARCH, 2020

## CALCULATION OF MSP

1906.  SHRI DEVJI M. PATEL: SHRI SUDHAKAR TUKARAM SHRANGARE: MS. PRATIMA BHOUMIK:

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

- (a) whether in view of the reply to unstarred question number 1440 dated 11.02.2020, it is true  that  the  MSP  has  been  increased  in  proportion  to  the  input  costs  of  the  crops  by considering A2FL under the existing cost fixation process while the farmers organisations are demanding that  input  cost  should  be  calculated  on  the  basis  of  C-2  cost  formula  with  an additional benefit of 50 per cent thereon;
- (b) if  so,  whether  the  Government  proposes  to  fix  the  MSP  on  the  basis  of  C-2  cost formula; and
- (c) the scheme of the Government to ensure that all the farmers get benefits of the MSP?

## ANSWER

MINISTER OF AGRICULTURE AND FARMERS WELFARE

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

(a)  & (b): Government fixes Minimum Support Price (MSP) on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP).

The Union Budget for 2018-19 had announced the pre-determined principle to keep MSP at levels of one and half times of the cost of production. Accordingly, Government has increased the MSP for all mandated Kharif, Rabi and other commercial crops with a return of atleast 50 per cent of cost of production for the agricultural year 2018-19 and 2019-20.

From time to time, some farmers and farmers' organizations have been agitating and making  certain  demands  like  increase  in  MSP  for  agricultural  crops  on  the  basis  of  C2 system.

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 which is based on the methodology recommended by Expert Committees from time to time.

CACP considers both A2+FL and C2 costs while recommending MSP. CACP reckons only A2+FL cost for return. However, C2 costs are used by CACP primarily as benchmark reference costs (opportunity costs) to see if the MSPs recommended by them at least cover these costs in some of the major producing States.

(c): Government's price policy is to ensure remunerative prices to farmers by offering to procure  their  produce  at  MSP.  However,  farmers  are  free  to  sell  their  produce  to  the Government procurement agencies at MSP  or in the open market whichever is advantageous to them.

Apart from increasing MSP,  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 (eNAM),  enacting  the  Model  Agricultural  Produce  and  Livestock  Marketing  (Promotion  & Facilitation) Act, 2017 and promoting Farmer Producer Organizations (FPOs).

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

The recently launched Umbrella Scheme 'Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA)' provides for a holistic arrangement for assurance of a remunerative price for farmers. This Umbrella Scheme comprises Price Support Scheme (PSS) for pulses, oilseeds  and  copra,  Price  Deficiency  Payment  Scheme  (PDPS)  and  Pilot  of  Private Procurement & Stockist Scheme (PPSS) for oilseeds to ensure MSP to the farmers.

MSP operations  are  given  wide  publicity  through  pamphlets,  banners,  sign  boards, radio, TV and advertisements through print & electronic media. In addition to that farmers are made aware of  the  quality  specifications  and  purchase  system  to  facilitate  the  farmers  to bring their produce conforming to the specifications.

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