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AGRICULTURAL PRICE POLICY -AGRICULTURAL ECONOMICS.pptx

The document discusses India's agricultural price policy, which aims to ensure food security by providing remunerative prices to farmers to enhance production, employment, and incomes. It highlights the evolution of this policy from pre-independence to post-independence, including institutions established to support it, such as the Agricultural Price Commission and the Food Corporation of India. The policy includes instruments like minimum support prices, procurement prices, a public distribution system, and buffer stocks to stabilize prices and support farmers.

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Food Security Insights•Food Production Insights•
PRESENTED BY, VISHALI NS AGRICULTURAL PRICE POLICY
AGRICULTURE PRICE POLICY…
INTRODUCTION • Agricultural Price Policy is one of the important instruments in achieving food security by improving production, employment and incomes of the farmers. • There is a need to provide remunerative prices for farmers in order to maintain food security and increase the incomes of farmers
EVOLUTION OF AGRICULTURAL PRICE POLICY • In the pre Independence era , the procurement and distribution of major food grains were started and statutory maximum prices were fixed, but were not strictly enforced. • In the post Independence era, the objective of the Government’s price policy for agri-produce is to set remunerative prices with a view to encourage higher investment and production.
INSTITUTIONS • The Government of India has set up some institutions are the Agricultural Price Commission was set up in 1965 which announced the minimum support prices and procurement prices for the agricultural products. • The Food Corporation of India was also set up in 1965 for making necessary procurement, storage and distribution of food grains. • The Commission was renamed in 1985 as the Commission for Agricultural Costs and Prices.
4 INSTRUMENTS OF APP • Minimum support price (MSP) • Procurement price • Public distribution system (PDS) • Buffer stock
MSP (PRICE POLICY OF KHARIF CROPS) ▪ The first and foremost mandate of CACP was to recommend Minimum Support Prices (MSP). ▪ These prices are generally announced well in advance of the sowing season. ▪ It is fixed based on the average cost of production.
OBJECTIVES • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. • In case the market price for the commodity falls below ,government agencies purchase the entire quantity offered by the farmers at the announced minimum price.
CROPS UNDER MSP ● Cereals (7)-paddy, wheat, barley, jowar, bajra, maize and ragi ● Pulses (5) - gram, arhar/tur, moong, urad and lentil ● Oilseeds (8) - groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed ● Raw cotton ● Raw jute ● Copra ● De-husked coconut ● Sugarcane (Fair and remunerative price) ● Virginia flu cured (VFC) tobacco Government announces minimum support prices (MSPs) for 22 mandated crops. The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops
CROPS MSP 2019 -2020 (Rs/q) MSP 2020-2021 (Rs/q) INCREASE IN MSP (Rs/q) COPRA 9521 9960 439 DEHUSKED COCONUT 2571 2700 129 JUTE 3950 4225 275
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PROCUREMENT PRICES • In a situation of shortage, sailable supplies of food grains in the free market would generally be available at very high prices. • Therefore, in view to achieve the objective of stabilizing prices on the part of the consumers, the Govt., may adopt the system of public distribution. • It can be in the form of rationing, fair price shops. • The best way to attain the stocks would be through the open market.
PUBLIC DISTRIBUTION SYSTEM
PDS • Public distribution is another major instrument of price policy. • It comprises of two types of rationing, viz., o Statutory rationing and o Informal rationing. •
TYPES OF RATIONING STATUTORY RATIONING • In the statutorily rationed areas, the open market is legally barred from functioning, the Government undertakes the responsibility of supplying specific rationed quantities to consumers. INFORMAL RATIONING • In the areas of informal rationing, the open market is allowed to function so that the consumers can supplement the ration obtained from fair price shops by purchase in the open market.
OBJECTIVES OF PDS • The fundamental objectives of the system are enlisted below: (i) To improve distribution of basic goods (ii) To control prices of essential commodities (iii) To meet consumption needs of masses (iv) To maintain good quality at low cost (v) To bring stability in prices • In accordance to this criteria, cereals, sugar, edible oils, tea, coffee etc. could be treated as precarious items for public distribution
BUFFER STOCKS
BUFFER STOCK • Buffer stocks refer to the buying and selling out stock with sole purpose of moderating the price fluctuations. • Under this policy Govt., builds stocks of food either through direct purchase from the domestic market or through imports from outside and release these stocks for sale when prices are going up.
CLASSIFICATION OF BUFFER STOCK • The govt., has to keep operational stock need for meeting the requirements of fair price shops. • Therefore, size of stock is determined by two considerations viz.; 1. To meet the current needs -seasonal fluctuations. 2. To maintain supply in the years of crop failure-annual fluctuations
OBJECTIVES OF BUFFER STOCKS • Stability in Income • Stability in Food Prices • Public Distribution System • To Ensure Remunerative Price to Farmers • Food Security
OBJECTIVES OF APP • To Ensure Relation between Prices of Food-grains and Agricultural Goods • To Watch Interests of Producers and Consumers: • Relation Between Prices of Crops • To Control Seasonal Fluctuations • Integrate the Price • Stabilise the General Price • Increase in Production
MAIN OBJECTIVES OF APP • Facilities for All-Round Development • Infrastructural Development • Revising and Strengthening Co-Operatives • Involvement of NGOs • Encouragement to the farmers.
FEATURES OF POLICY • Raising Capital Formation • Enhancing Public Investment • Raising the Flow of Credit • Improving Agricultural Marketing • Ensuring Remunerative Prices • Raising Agro-Exports • Land Reforms • Treating Agriculture at Par with Industry • Crop Insurance Scheme
TYPES OF PRICE POLICY • The prices favourable to the producers of agricultural products may work against the interest of the non-agricultural sector vice-versa. • The two types of price policy have been o ‘Negative’ price policy o ‘Positive’ price policies respectively.
Negative Price Policy: • The main objectives of such a policy was to keep the prices of food and raw materials relatively low (when compared with the prices of industrial products) so as to facilitate the growth of the industrial and tertiary sectors and to provide surpluses in the form of savings for these sectors. Positive Price Policy • The “positive” price policy which consists of light taxes on the agricultural sector and also assure the farmer of a fair price for his produce.
EFFECTS OF APP • Incentive to Increase Production • Increase in the level of income of Farmers • Price Stability • Change in Cropping Pattern • Benefit to Consumers • Benefit to Industrials
DRAWBACKS OF APP • Inadequate Coverage • Remunerative Price • Ineffective Public Distribution System • Difference in Prices • Unaccompanied by Effective Policy
CONCLUSION The Government’s Price Policy for agricultural produce seeks to ensure remunerative prices to growers for their produce with a view to encourage higher investment and production as well as safeguarding the interests of consumers by making available supplies at reasonable prices.
REFERENCE • Subba reddy ,S et al, (2018).Agricultural Economics. New Delhi.Oxford and IBH publishing Co.Pvt.Ltd. 588 • Acharya, S S and N I Agarwal .(2006).Agricultural Marketing in India.New Delhi: Delhi.Oxford and IBH publishing Co.Pvt.Ltd. 320 • Acharya ,S S.(1997). Agricultural price policy and Development Some facts and Emerging Issues: Indian journal of Agricultural Economics 52 (1):1-47 • Dev Mahendra and C Nuthalapati.(2010). Agricultural price policy, Farm profitability and food security: Economic & political weekly 45 (26):174- 182https://www.researchgate.net/publication/286701161_Agricultural_price_policy_farm_ profitability_and_food_security • Patil,Anna . 2011.Agricultural Prices and Policies . Agri Eco : 10(1).https://www.researchgate.net/publication/220028105_AGRICULTURAL_PRICES_AND_
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