Lok Sabha Question No. 1206 (UNSTARRED), answered on 2021-02-09
Subject: Fixation of MSP
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: K. Subbarayan

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

## LOK SABHA UNSTARRED QUESTION NO.1206

TO BE ANSWERED ON THE 9 TH  FEBRUARY, 2021

## FIXATION OF MSP

## 1206.    SHRI SUBBARAYAN K.:

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

- (a) the main recommendations made by the Swaminathan Commission;
- (b) the extent to which these have been accepted and implemented by the Government ;
- (c) whether  it  is  a  fact  that  the  Commission  for  Agriculture  Cost  and  Prices  (CACP) estimates the cost of production of various crops using three definitions;
- (d) if so, the details of definitions; and
- (e) the definition accepted by the Government to fix the Minimum Support Price (MSP) and the one accepted and recommended by the Swaminathan Commission for fixing the MSP?

## ANSWER

## MINISTER OF AGRICULTURE AND FARMERS WELFARE

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

- (a) & (b): National Commission on Farmers (NCF) was set up in February, 2004.  Based on the 'Draft National Policy for Farmers', submitted by the Swaminathan Commission, which contained major recommendations of the Commission, the Government approved the 'National Policy for Farmers in 2007' (NPF 2007), which aimed to improve economic viability of farming and increase net income of farmers.

An  Inter-Ministerial  Committee  was  constituted  in  2016  for  speedy  implementation  of these recommendations and also for devising strategy for doubling of the income of farmers.

An  Inter-Ministerial  Committee  (IMC) identified  201  Action  Points  from  NPF,  2007, where necessary action had to be taken. Out of 201 number of action points identified, 200 numbers have already been implemented as of date.

- (c) & (d): There are three cost of Cultivation (CoC) and cost of production (CoP) namely A2, A2+FL and C2 which are as under:

1.          A2  is  paid  out  cost  which  is  sum  of  values  of  total  human  labour  (excluding Family Labour), Total bullock labour, Total machine  labour cost, Seed  cost, Insecticides Cost, Fertilisers and manure cost, Irrigation charges, Interest on working capital, Miscellaneous charges, Payment to contractor, Depreciation on implements & farm buildings, Rent paid for leased-in land, Land revenue, cesses & other taxes.

2.         A2 +FL is sum of cost A2 and Family Labour.
3.         C2 = A2 +FL + Rental value of owned land + Interest on own Fixed Capital.

(e): The  National  Commission  on  Farmers  (NCF)  had  recommended  that  the  Minimum Support Price (MSP) should be at least 50% more than average cost of production. However, this  recommendation  was  not  included  by  the  Government  then  in  the  National  Policy  for Farmers finalized  in  2007.  But  the  Government  has  increased  the  Minimum  Support  Prices (MSP) for all notified Kharif and Rabi crops and other commercial crops for 2018-19 Season with a return of at least 50% over cost of production. This decision of the Government was a historic one as it redeemed the promise of fixing the MSPs at a level of at least 50 % return over the cost of production as announced in the Union Budget 2018-19.

CACP is mandated to recommend Minimum Support Price (MSP) for 22 agricultural commodities.  While  recommending  MSPs  the Commission  considers  important factors like cost of production, overall demand-supply situation, price trends in domestic and global  prices,  inter-crop  price  parity,  terms  of  trade  between  agriculture  and  non-agriculture sectors, likely impact of the price policy on the rest of the economy, rational utilization of land, water and other production resources and a minimum of 50 percent as the margin over the cost of production.

*****