Lok Sabha Question No. 1184 (UNSTARRED), answered on 2015-07-28
Subject: Prices of Agricultural Produce
Ministry: AGRICULTURE
Asked by: SUNIL KUMAR SINGH

O.I.H

GOVERNMENT OF INDIA

MINISTRY OF AGRICULTURE

DEPARTMENT OF AGRICULTURE & COOPERATION

**LOK  SABHA**

**UNSTARRED QUESTION NO. 1184**

TO BE ANSWERED ON THE 28 TH JULY, 2015

**PRICES OF AGRICULTURAL PRODUCE**

1184. 	 SHRI SUNIL KUMAR SINGH:

Will the Minister of AGRICULTURE 	      कृषि मंत्री

be pleased to state:

(a) 	the details of the estimates reflected in the 'Agricultural Outlook Report' issued by Food and Agricultural Organisation (FAO) of the United Nations;

(b) 	whether as per the said report the prices of agricultural grains shall not increase much in the next ten years;

(c)	 if so, the reasons therefor; and

(d) 	the efforts made by the Government to provide fair prices of agricultural grains to the farmers?

### 1 ANSWER

MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE

कृषि मंत्रालय में राज्य मंत्री     (SHRI MOHANBHAI  KUNDARIA)

(a) to (c): 	The Agricultural Outlook 2015-2024 is a collaborative report of the Organization for Economic Cooperation and Development (OECO) and the Food and Agricultural Organization (FAO) of the United Nations. The report provides an annual assessment of prospects of national, regional and global agricultural commodity markets for the coming decade. Main estimates for commodities covered in the report are annexed.

The outlook is based on plausible scenario based on specific assumptions regarding the macroeconomic conditions, agriculture and trade policy settings, weather conditions, long-term productivity, and international market conditions. As per the Report, with these assumptions, the prices for food grains, in real terms, at the global level are expected to decrease over the next ten years.

The main reasons for likely decrease in prices are:-

a) 	Pressure on prices from strong harvest over the last two years;

b) 	Subdued demand due to per capita consumption of staple commodities approaching saturation in many emerging economies and by a generally sluggish recovery of the global economy;

Contd….2/-

-2-

c) 	Increased consumption of animal protein relative to starches in developing countries owing to rising per capita incomes and urbanization; and,

d) 	Downward pressure on prices due to lower oil prices.

(d): 	The price policy of agricultural commodities aims at ensuring remunerative prices to the farmers for their produce, in order to encourage higher investment and production. Towards this end, the Government announces in each season Minimum Support Prices (MSPs) for major agricultural commodities and organizes purchase operations through public and cooperative agencies. The designated central, states and cooperative nodal agencies intervene in the market for undertaking procurement operations with the objective that the market prices do not fall below the MSPs fixed by the Government.

Government announces MSP of various agricultural commodities on the basis of recommendations of Commission for Agricultural Costs & Prices (CACP), the views of the State Governments and Central Ministries as well as such other relevant factors considered important for fixation of Support Price.

**Annexure**

**Annexure in reference to Reply to (a) to (c) of the Lok Sabha Unstarred Question No. 1184 due for reply on 28.07.2015**

The main estimates for commodities covered in the report are as follows:-

**Cereals:** High stocks and decreasing production costs are driving nominal cereals prices further down in the short term, while sustained demand and rising production costs should increase nominal prices again in the medium term.

**Oilseeds:** Strong demand for protein meal will drive further expansion of oilseeds production. This will result in a high contribution of the meal component to the overall oilseed return and further favour expansion of soybean production, especially in Brazil.

**Sugar:** Higher sugar demand In developing countries should help prices recover from low levels, leading to further investment in the sector. The market will depend on the profitability of sugar versus ethanol in Brazil, the leading producer, and will remain volatile as a result of the sugar production cycle in some key Asian sugar-producing countries

**Meat:** Output is expected to respond to an improvement in margins, with lower feed grain prices set to restore profitability to a sector that has been operating in an environment of particularly high and volatile feed costs for most of the past decade.

**Fisheries:** Worldwide fisheries production is projected to expand by almost 20% by 2024. Aquaculture is expected to surpass total capture fisheries in 2023.

**Dairy:** Exports of dairy products are projected to further concentrate in the four prime origins:   New Zealand, the European Union, the United States and Australia, where opportunities for domestic demand growth are limited.

**Cotton:** Prices will be suppressed in the short term by drawdown of large stocks in China, but will recover and stay relatively stable for remainder of the outlook period. By 2024, both real and nominal prices are expected to remain below the levels reached in 2012-14.

**Biofuels** : 	Ethanol and biodiesel use is expected to grow at a slower pace over the next decade. The level of production is projected to be dependent on policies in major producing countries. At lower oil prices, trade of biofuels should remain small when expressed as a share of global production.

*******************