Lok Sabha Question No. 82 (STARRED), answered on 2018-07-24
Subject: Minimum Support Price
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: KUNWAR PUSHPENDRA SINGH CHANDEL, ANANDRAO  ADSUL

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

## LOK  SABHA STARRED QUESTION NO. 82

TO BE ANSWERED ON THE 24 TH  JULY, 2018

## MINIMUM SUPPORT PRICE

- *82. SHRI KUNWAR PUSHPENDRA SINGH CHANDEL: SHRI ANANDRAO ADSUL:

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

- (a) whether the Government is considering to fix the Minimum Support Price (MSP) at 1.5 times of the input costs for crops to compensate farmers and tackle distress in rural areas and if so, the details thereof including the crops covered under the proposal;
- (b) the details of the source of fund to meet MSP cost along with the total number of farmers who are likely to be benefited under the proposal;
- (c) whether  the  Government  has  worked  out  the  exact  mechanism  under  which  the Government plans  to  spend  up  to  Rs.  15,000  crore  for  agriculture  and  if  so,  the  details thereof;
- (d) whether there were negative margins on jowar (-18%), sunflower (-13%), groundnut (-4%), ragi (-20%), moong (-7%) and urad (-4%) during 2016-17 and if so, the facts thereof; and
- (e) the steps taken or proposed to be taken by the Government to ensure that farmers will get 150 per cent of the input costs for all crops?

## ANSWER

## MINISTER OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण ½ãâ¨ããè (SHRI RADHA MOHAN SINGH) (a) to (e): A statement is laid on the Table of the House.

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  LOK  SABHA STARRED QUESTION NO. 82     DUE FOR REPLY ON 24 TH  JULY, 2018.

(a): Government announces minimum support prices (MSPs) for 22 mandated crops and fair and remunerative price (FRP) for sugarcane on the basis of recommendations of the Commission for Agricultural Costs & Prices (CACP), after considering the views of State Governments and Central Ministries/Departments concerned and other relevant factors. The mandated crops are 14 crops of the kharif season viz. paddy, jowar, bajra, maize,  ragi,  arhar,  moong,  urad,  groundnut-in-shell,  soyabean,  sunflower,  sesamum, nigerseed and cotton; 6 rabi crops viz. wheat, barley, gram, masur(lentil), rapeseed/mustard and safflower and two other commercial crops viz. jute and copra. In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.

Government has announced its historic decision to fix MSP at a level of at least 150  per  cent  of  the  cost  of  production  for  kharif  crops  2018-19  which  redeems  the promise made in the Union Budget for 2018-19. The MSPs fixed by Government, cost and returns over all-India weighted average cost of production of crops for 2017-18 and 2018-19 is at Annexure.

(b) & (c): As per the existing arrangements, procurement is made of the crops for which  MSPs  are  announced  through  Central  and  State  agencies.    In  so  far  as cereals/nutri cereals are concerned, they are procured through FCI and decentralized procurement system mainly for distribution under the public distribution system (PDS), for welfare schemes and buffer stocking for food security.  The difference between the economic cost of the cereals procured and their central issue prices under PDS is the subsidy outgo which is borne on the Budget.  The financial implication on account of higher MSP for paddy for 2018-19 is given in the following table 1.

Table 1: Financial implication of procurement of paddy/rice

|         | Procurement (Lakh MT)   |   Total cost (Rs. crore) | Additional cost over previous year (Rs.crore)   |
|---------|-------------------------|--------------------------|-------------------------------------------------|
| 2016-17 | 381.06                  |                   106363 | -                                               |
| 2017-18 | 385*                    |                   103945 | -2418                                           |
| 2018-19 | 385*                    |                   116113 | 12167                                           |

Besides,  Government  procures  pulses,  oilseeds  and  cotton  under  Price  Support Scheme.   The  extent  of  procurement  and  the  costs  of  procurement  are  given  in  the table below.

Table 2: Procurement of pulses and oilseeds

## (Qty. in MT/Value in Rs. Lakh)

| Commodity   | 2016-17     | 2016-17          | 2017-18      | 2017-18          | 2018-19 *    | 2018-19 *        |
|-------------|-------------|------------------|--------------|------------------|--------------|------------------|
|             | Qty.        | Procurement cost | Qty.         | Procurement cost | Qty.         | Procurement cost |
| Pulses      | 8,268       | 4,320            | 16,81,498.49 | 8,94,172.54      | 31,82,826.03 | 14,28,190.77     |
| Oilseeds    | 2,15,842.66 | 90,854           | 11,81,461.80 | 5,12,172.42      | 8,66,656.44  | 3,46,582.61      |

Source: NAFED

*As on 19.7.2018

Apart  from  this  Jute  Corporation  of  India  and  NAFED  procure  jute  and  copra, respectively based on assessed requirements.  Government provides guarantee based on which the procurement agencies conduct their operations and the losses incurred by them in the process is borne on the Budget.

No assessment has been made of the number of farmers likely to be benefited in the  forthcoming  marketing  season  on  account  of  the  Kharif  Price  Policy  for  2018-19 season.    However,  details  of  farmers  benefitted  from  procurement  of  paddy,  wheat, pulses and oilseeds by Government agencies at MSP for the last three years is given in the following table.

Table3: Number of farmers benefited from procurement by

-3Government Agencies at MSP

|          |   2016-17 |   2017-18 | 2018-19   |
|----------|-----------|-----------|-----------|
| Paddy    |   7423783 |   6785739 | -         |
| Wheat    |   2046766 |   3187229 | 3977029   |
| Pulses   |      7540 |   1223646 | 1568938   |
| Oilseeds |    112030 |    620125 | 364737    |

Source:  Department of Food & Public Distribution

(d) & (e): Government  has  increased  the  MSPs  of  Kharif  &  Rabi  crops  for  2016-17 Seasons on the basis of recommendations of CACP. The MSPs fixed by the Government for  kharif  crops  provide  reasonable  return  over  weighted  average  cost  of  production  for most  crops.    CACP  while  recommending  MSPs  considers  a  host  of  factors  including weighted average cost of production of crops at an all India basis.  The costs considered are  comprehensive  and  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  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. However, as nutri-cereals and certain other  Kharif crops are grown mainly in rainfed areas, yields tend to fluctuate inter-regionally and inter-temporally due to agro-climatic conditions. Hence, as per the projections made in the Price Policy for Kharif crops for 2016-17 of the CACP,  some  of  these  crops  in  some  states  got  somewhat  low  returns.  Only  Ragi  had negative  return  in  2016-17.    But  as  per  the  Report  of  CACP,  the  recommended  MSP covered the cost of production in Karnataka which accounted for 72% of the production in the country. The return over all-India weighted average cost of production for MSPs fixed by Government for kharif crops from 2016-17 to 2018-19 is given in the following table:

Table 4: Return over Cost of Production (in %)

| Crops              |   2016-17 |   2017-18 |   2018-19 |
|--------------------|-----------|-----------|-----------|
| Jowar              |      8.26 |      9.25 |     50.09 |
| Ragi               |     -0.46 |      2.1  |     50.01 |
| Moong              |     28.54 |     30.07 |     50    |
| Urad               |     39.51 |     65.39 |     62.89 |
| Sunflower          |     13.54 |     17.78 |     50.01 |
| Groundnut in Shell |     25.19 |     40.87 |     50    |

On 04.07.2018, Government has taken the decision to fix MSPs of all Kharif Crops for 2018-19 season at a level of atleast 150 percent of the cost of production. By ensuring a return of 50 per cent over all India weighted average cost of production, farmers in states/ regions with relative lower returns would also be able to have higher margins than earlier. The Budget for 2018-19 has also announced that NITI Aayog, in consultation with Central and State Governments, will put in place a fool-proof mechanism so that farmers may get adequate  price  for  their  produce.  NITI  Aayog  had  held  consultations  on  9 th March,  2018 with  State  Governments  and  Central  Government  Departments  concerned  to  ensure farmers  will  get  a  price  at  least  equivalent  to  the  announced  MSP.  Three  options  were discussed: Market Assurance Scheme, which entails procurement by States and compensation of losses; Price Deficiency Payment Scheme, whereby, if the sale price is below  the  modal  price  farmers  may  be  compensated  the  difference  between  MSP  and actual/modal  price  subject  to  certain  conditions  and  ceiling;  Private  Procurement  and Stockist  Scheme,  whereby  procurement  is  made  by  private  entrepreneurs  at  MSP  and Government providing some policy and tax incentives and a commission to such private entities.The  procurement  operations  may  be  decided  on  the  basis  of  transparent  criteria and bidding for the empanelment of private players by the State Government. It was also emphasized that all States should undertake market reform by modifying their APMC acts in  the  line  of  the  Model  Agricultural  Produce  and  Livestock  Marketing  (Promotion  and Facilitation) Act, 2017.

## Annexure

## Annexure referred to in reply to part (a)  of Lok Sabha starred Question No. 82 due for reply on 24.07.2018.

## Cost, minimum support prices (MSP) and return over cost

## (Rs/quintal)

| Commodity   | Commodity              | 2017-18   | 2017-18   | 2017-18           | 2018-19   | 2018-19   | 2018-19            |
|-------------|------------------------|-----------|-----------|-------------------|-----------|-----------|--------------------|
| Sl. No.     | KHARIF CROPS           | Cost      | MSP       | %Return over cost | Cost      | MSP*      | % Return over cost |
| 1           | PADDY(Common)          | 1117      | 1550      | 38.76             | 1166      | 1750      | 50.09              |
|             | (Grade A) ^            |           | 1590      |                   |           | 1770      |                    |
| 2           | JOWAR (Hybrid)         | 1556      | 1700      | 9.25              | 1619      | 2430      | 50.09              |
|             | (Maldandi) ^           |           | 1725      |                   |           | 2450      |                    |
| 3           | BAJRA                  | 949       | 1425      | 50.16             | 990       | 1950      | 96.97              |
| 4           | MAIZE                  | 1044      | 1425      | 36.49             | 1131      | 1700      | 50.31              |
| 5           | RAGI                   | 1861      | 1900      | 2.10              | 1931      | 2897      | 50.01              |
| 6           | ARHAR(Tur)             | 3318      | 5450      | 64.26             | 3432      | 5675      | 65.36              |
| 7           | MOONG                  | 4286      | 5575      | 30.07             | 4650      | 6975      | 50.00              |
| 8           | URAD                   | 3265      | 5400      | 65.39             | 3438      | 5600      | 62.89              |
| 9           | COTTON (Medium Staple) | 3276      | 4020      | 22.71             | 3433      | 5150      | 50.01              |
| ^           | (Long Staple)          |           | 4320      |                   |           | 5450      |                    |
| 10          | GROUNDNUT IN SHELL     | 3159      | 4450      | 40.87             | 3260      | 4890      | 50.00              |
| 11          | SUNFLOWER SEED         | 3481      | 4100      | 17.78             | 3592      | 5388      | 50.01              |
| 12          | SOYABEEN               | 2121      | 3050      | 43.80             | 2266      | 3399      | 50.01              |
| 13          | SESAMUM                | 4067      | 5300      | 30.32             | 4166      | 6249      | 50.01              |
| 14          | NIGERSEED              | 3912      | 4050      | 3.53              | 3918      | 5877      | 50.01              |
|             | RABI CROPS             |           |           |                   |           |           |                    |
| 1           | WHEAT                  | 817       | 1735      | 112.4             | -         | -         | -                  |
| 2           | BARLEY                 | 845       | 1410      | 66.9              | -         | -         | -                  |
| 3           | GRAM                   | 2461      | 4400      | 78.8              | -         | -         | -                  |
| 4           | MASUR (LENTIL)         | 2366      | 4250      | 79.6              | -         | -         | -                  |
| 5           | RAPESEED/MUSTARD       | 2123      | 4000      | 88.4              | -         | -         | -                  |
| 6           | SAFFLOWER              | 3125      | 4100      | 31.2              | -         | -         | -                  |
|             | OTHER CROPS            |           |           |                   |           |           |                    |
| 1           | JUTE                   | 2160      | 3500      | 62.04             | 2267      | 3700      | 63.21              |
| 2           | COPRA                  | 4758      | 6500      | 36.61             | 5007      | 7511      | 50.00              |

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