MINISTER OF AGRICULTURE AND FARMERS WELFARE
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(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. 397 DUE FOR REPLY ON 8TH JANUARY, 2019.
(a) & (b): National Commission on Farmers (NCF) headed by Dr. M.S. Swaminathan had recommended that the Minimum Support Price (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 returns over cost of production was not included. The report of the NCF, 2006 had discussed different dimensions of cost for determining MSPs, but while finalizing National Policy on Farmers in 2007, the then Government had not accepted the other dimensions and followed the established method of the Commission for Agricultural Costs & Prices (CACP).
Government fixes MSPs of 22 mandated agricultural crops including paddy and Fair and Remunerative Price (FRP) for sugarcane on the basis of recommendations of CACP, after considering the views of State Governments and Central Ministries/Departments concerned and other relevant factors. In addition, MSP for Toria and De-Husked coconut is also fixed on the basis of MSPs of Rapeseed/Mustard and Copra respectively.
While recommending MSPs, CACP considers the cost of production and host of factors such as demand-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 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 in cash and kind 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.
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The Union Budget for 2018-19 had announced the pre-determined principle to keep MSP at levels of one and half times the cost of production. Accordingly, Government has increased the MSPs for all notified Kharif, Rabi and other commercial crops with a return of atleast 50 per cent of cost of production for the agricultural year 2018-19 including paddy. This decision of the Government was a historic one as it fulfills the commitment to the farmers to provide 50 per cent return over all-India weighted average cost of production for the first time for all mandated crops.
(c): Price policy in conjunction with other agricultural policies has increased production of rice, whereas the area sown remained more or less stagnant over the years. Production of rice has increased substantially at all India level from 106.65 million tonnes in 2013-14 to 112.91 million tonnes(as per Fourth Advance Estimates) in 2017-18. The state-wise production of rice for the 2017-18 is given at Annex-1.
(d): The prices of agricultural produce are determined by supply and demand conditions in the market on a day-to-day basis. The prices of agricultural produce tend to fall immediately after harvest due to increase in market arrival of new crops in a lumpy manner. The MSP and wholesale prices of kharif crops for the month of October, 2018 is given at Annex-2.
(e): Details of percentage increase in MSP from 2014-15 to 2018-19 are given at Annex-3.
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