Lok Sabha Question No. 94 (STARRED), answered on 2018-07-24
Subject: Production Cost of Crops
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: BODH SINGH BHAGAT

## GOVERNMENT OF INDIA

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

## LOK  SABHA STARRED QUESTION NO. 94

TO BE ANSWERED ON THE 24 TH  JULY, 2018

## PRODUCTION COST OF CROPS

- *94.     SHRI BODHSINGH BHAGAT:

Will  the  Minister  of  AGRICULTURE  AND  FARMERS  WELFARE कृ ष एवं कसान कयाण ½ãâ¨ããè be pleased to state:

- (a) the  details  of  the  norms  being  prescribed  by  the  Government  to  decide  the production cost at the time of fixing the Minimum Support Price (MSP) for Kharif and Rabi crops like paddy, wheat and soyabean for the year 2018-19;
- (b) whether the Government has announced to fix the new MSP at one and a half times of the production cost of Rabi and Kharif crops during the Budget Session of 2018-19;
- (c) if so, whether the production cost and MSP are likely to be fixed by the Government for Kharif and Rabi crops for the year 2018-19 accordingly; and
- (d) if so, the details thereof?

## ANSWER

## MINISTER OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण

- (a) to (d):

½ãâ¨ããè (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. 94  DUE FOR REPLY ON 24 TH  JULY, 2018.

(a): The  Government  of  India  declares  the  minimum  support  prices  (MSP)  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 considers  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 on the basis of 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 which is compiled under 'Comprehensive Scheme for studying the Costs of Cultivation of Principal Crops in India', CACP undertakes cost projection exercise crop-wise, statewise  for  the  ensuing  season  under  certain  implicit  assumptions  by  utilizing  statistical techniques.    These  projected  estimates  of  cost  of  production  are  considered  into formulation of price policy recommendations by the CACP. The production cost 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 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.

(b): The Government has announced its historic decision on July 4, 2018 to fix MSP as per its  pre-determined  principle  of  offering  to  farmers  a  threshold  level  of  MSP  of atleast  one  and  half  times  the  cost  of  production  for  all  mandated  kharif  crops redeeming the promise made in the Union Budget for 2018-19 in this regard.

(c) & (d): The  cost  of  production  of  kharif  crops  for  2018-19  season  has  been calculated by the CACP as per the norms mentioned above in part (a) and for the rabi crops  of  2018-19  season,  the  same  methodology  would  be  followed.    The  All-India weighted average cost of production, MSP and return over cost for the year 2017-18 and 2018-19 are given at Annexure-I.