MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND MINISTER OF STATE IN THE MINISTRY OF
CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (PROF. K.V. THOMAS)
(a) & (b): The Government’s Price policy (MSP) for agricultural commodities seeks to
ensure remunerative prices to the growers for their produce with a view to encourage higher
investment and production, and to safeguard the interest of consumers by making available
supplies at reasonable prices.
The MSPs for kharif crops have been fixed for 2010-11 season, inter-alia, taking into
account the recommendations of the Commission for Agricultural Costs and Prices (CACP), the
views of concerned State Governments and Central Ministries. The CACP, while formulating its
recommendations on price policy has considered, inter-alia, a number of factors which include
cost of production, changes in input prices, input/output price parity, trends in market prices,
demand and supply situation, inter-crop price parity, effect on industrial cost structure, effect
on general price level, effect on cost of living, suggestions received from farmers/others etc.
The increase in the cost of inputs, including diesel and petrol, is accounted for by the CACP
in the estimation of the cost of production by use of appropriate price index.
(c) to (e): Prices of agricultural commodities are primarily driven by the market forces
of demand and supply. MSPs are in the nature of minimum guaranteed price for the produce of
the farmers to safeguard their interest. Therefore, there can be variation between MSP and
market price. Farmers are free to sell their produce in the open market in case the market
prices rule above the MSP.
The Government extends price support to the farmers by organizing procurement operations
at MSP through public and cooperative agencies. The designated agencies intervene in the market
for undertaking procurement operations whenever the market prices fall below the MSPs fixed by
the Government.
