Lok Sabha Question No. 1492 (UNSTARRED), answered on 2020-02-11
Subject: Calculation of Input Cost
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Umesh G. Jadhav

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

## LOK  SABHA UNSTARRED QUESTION NO. 1492

TO BE ANSWERED ON THE 11 TH  FEBRUARY, 2020

## CALCULATION OF INPUT COST

1492.  DR. UMESH G. JADHAV:

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 Minimum Support Price (MSP);
- (c) the details of MSP for various farm produce during the last year; and
- (d) whether it is in conformity with the M.S. 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 (SHRI NARENDRA SINGH TOMAR)

- (a): The Cost of cultivation is calculated following an elaborate methodology laid down in the Scheme called 'Comprehensive Scheme for Studying Cost of Cultivation for Principal Crops in India'. The data is collected through 16 Cost of Cultivation Centres located in 16 Agricultural  Universities/General  Universities  and  Institutes.  Cost  data  is  collected  for  25 selected crops from 20 States. The crops covered are paddy, wheat, jowar, bajra, maize, ragi, barley, moong,  urad, arhar, gram, masur, groundnut, rapeseed  and  mustard, nigerseed, safflower, soybean, 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 Cost of Cultivation Centres  covering  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.

Based  on  the  crop-wise  and  state-wise  cost  estimates  generated  under  the  CS Scheme, Commission for  Agricultural  Costs  &  Prices  (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  MSP  of  mandated  agricultural  crops, including kharif and rabi crops, based on the price policy recommendations of 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  nonagricultural 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 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): The 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  per  cent  return  over  cost  of production was not included.

The Union Budget for 2018-19 had announced the pre-determined principle to keep MSPs at level of one and half times of the cost of production. Accordingly, Government had increased the MSPs for all mandated kharif, rabi crops and other commercial crops with a return  of  atleast  50  percent  over  the  all-India  weighted  average  cost  of  production  for  the season 2018-19. Government has recently increased the MSPs for all mandated kharif and rabi crops for 2019-20 season in line with the principle of providing atleast 50 percent return over all India weighted average cost of production. Crop-wise details of MSP, Cost and return over cost fixed for year 2018-19 and 2019-20 is given at Annexure II.

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 mechanization, land holding size etc. As such, returns over cost of production may vary across States for MSP crops.

Annexure I referred to in reply to part (b) & (c) of Lok Sabha Unstarred Question No. 1492 due for reply on 11.02.2020.

## Minimum Support Prices (MSPs) of major Agricultural crops

(Rs. per quintal)

| Sl. No.   | Commodity                          | Variety       | 2019-20   |
|-----------|------------------------------------|---------------|-----------|
|           | KHARIF CROPS                       |               |           |
| 1         | PADDY                              | Common        | 1815      |
|           |                                    | Grade A^      | 1835      |
| 2         | JOWAR                              | Hybrid        | 2550      |
|           |                                    | Maldandi^     | 2570      |
| 3         | BAJRA                              |               | 2000      |
| 4         | MAIZE                              |               | 1760      |
| 5         | RAGI                               |               | 3150      |
| 6         | ARHAR(Tur)                         |               | 5800      |
| 7         | MOONG                              |               | 7050      |
| 8         | URAD                               |               | 5700      |
| 9         | COTTON                             | Medium Staple | 5255      |
|           |                                    | Long Staple   | 5550      |
| 10        | GROUNDNUT IN SHELL                 |               | 5090      |
| 11        | SUNFLOWER SEED                     |               | 5650      |
| 12        | SOYABEEN                           |               | 3710      |
| 13        | SESAMUM                            |               | 6485      |
| 14        | NIGERSEED                          |               | 5940      |
|           | RABI CROPS                         |               |           |
| 15        | WHEAT                              |               | 1925      |
| 16        | BARLEY                             |               | 1525      |
| 17        | GRAM                               |               | 4875      |
| 18        | MASUR (LENTIL)                     |               | 4800      |
| 19        | RAPESEED/MUSTARD                   |               | 4425      |
| 20        | SAFFLOWER                          |               | 5215      |
| 21        | TORIA^                             |               | 4425      |
|           | OTHER CROPS                        |               |           |
| 22        | COPRA                              | Milling       | 9521      |
|           | (Calender Year)                    | Ball^         | 9920      |
| 23        | DE-HUSKED COCONUT^ (Calender Year) |               | 2571      |
| 24        | JUTE                               |               | 3950      |
| 25        | SUGARCANE                          |               | 275       |

Annexure II referred to in reply to part (d) of Lok Sabha Unstarred Question No. 1492 due for reply on 11.02.2020.

## Cost*, MSP and Return

(Rs per quintal)

|         | Commodity              | 2018-19   | 2018-19   | 2018-19            | 2019-20   | 2019-20   | 2019-20            |
|---------|------------------------|-----------|-----------|--------------------|-----------|-----------|--------------------|
| Sl. No. | KHARIF CROPS           | Cost*     | MSP       | % Return over Cost | Cost*     | MSP       | % Return over Cost |
| 1       | PADDY(Common)          | 1166      | 1750      | 50.1               | 1208      | 1815      | 50.2               |
|         | (Grade A)^             |           | 1770      |                    |           | 1835      |                    |
| 2       | JOWAR (Hybrid)         | 1619      | 2430      | 50.1               | 1698      | 2550      | 50.2               |
|         | (Maldandi) ^           |           | 2450      |                    |           | 2570      |                    |
| 3       | BAJRA                  | 990       | 1950      | 97.0               | 1083      | 2000      | 84.7               |
| 4       | MAIZE                  | 1131      | 1700      | 50.3               | 1171      | 1760      | 50.3               |
| 5       | RAGI                   | 1931      | 2897      | 50.0               | 2100      | 3150      | 50.0               |
| 6       | ARHAR(Tur)             | 3432      | 5675      | 65.4               | 3636      | 5800      | 59.5               |
| 7       | MOONG                  | 4650      | 6975      | 50.0               | 4699      | 7050      | 50.0               |
| 8       | URAD                   | 3438      | 5600      | 62.9               | 3477      | 5700      | 63.9               |
| 9       | COTTON (Medium Staple) | 3433      | 5150      | 50.0               | 3501      | 5255      | 50.1               |
|         | (Long Staple)^         |           | 5450      |                    |           | 5550      |                    |
| 10      | GROUNDNUT IN SHELL     | 3260      | 4890      | 50.0               | 3394      | 5090      | 50.0               |
| 11      | SUNFLOWER SEED         | 3592      | 5388      | 50.0               | 3767      | 5650      | 50.0               |
| 12      | SOYABEAN (Yellow)      | 2266      | 3399      | 50.0               | 2473      | 3710      | 50.0               |
| 13      | SESAMUM                | 4166      | 6249      | 50.0               | 4322      | 6485      | 50.0               |
| 14      | NIGERSEED              | 3918      | 5877      | 50.0               | 3960      | 5940      | 50.0               |
|         | RABI CROPS             |           |           |                    |           |           |                    |
| 1       | WHEAT                  | 866       | 1840      | 112.5              | 923       | 1925      | 108.6              |
| 2       | BARLEY                 | 860       | 1440      | 67.4               | 919       | 1525      | 65.9               |
| 3       | GRAM                   | 2637      | 4620      | 75.2               | 2801      | 4875      | 74.0               |
| 4       | MASUR (LENTIL)         | 2532      | 4475      | 76.7               | 2727      | 4800      | 76.0               |
| 5       | RAPESEED/MUSTARD       | 2212      | 4200      | 89.9               | 2323      | 4425      | 90.5               |
| 6       | SAFFLOWER              | 3294      | 4945      | 50.1               | 3470      | 5215      | 50.3               |
|         | OTHER CROPS            |           |           |                    |           |           |                    |
| 1       | COPRA (Milling)        | 5007      | 7511      | 50.0               | 6347      | 9521      | 50.0               |
|         | (Ball)^                |           | 7750      |                    |           | 9920      |                    |
| 2       | JUTE                   | 2267      | 3700      | 63.2               | 2535      | 3950      | 55.8               |
| 3       | SUGARCANE              | 155       | 275       | 77                 | 156       | 275       | 76                 |

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