CONCLUSIONS OF THE NATIONAL SEMINAR ON FIXATION
OF MINIMUM SUPPORT PRICES
Main conclusions of the National Seminar on Methodological
Issues in the Fixation of Minimum Support Prices organized by
Commission for Agricultural Costs & Prices on November 6-7,
2002 are as below:-
1. The Ministry of Agriculture
should be the main player in all policy initiatives/decisions
that affect the agricultural sector either directly or indirectly.
2. The CACP should play a
strategic role in suggesting appropriate policy changes in a holistic
manner for the agricultural sector as a whole and not just be
confined to make crop specific recommendations.
3. The CACP should act as
a think tank for the Ministry of Agriculture. It should work like
a Tariff Commission and suggest reforms in taxes, subsidy, credit,
marketing etc., especially in order to promote market led diversified
agriculture in the wake of globalization.
4. Minimum Support Prices
should be more in the nature of a floor price. However, MSP should
cover at least the operational expenses plus the cost of family
labour
5. The main objectives of
MSP should be the following:
(i) To protect the farmers
from facing undue hardship due to price fluctuation in the market
and ensure price stability;
(ii) to ensure food security
at both macro and micro levels;
(iii) to ensure fair and
equitable agricultural terms of trade;
(iv) to provide signals for
markets and market led agricultural diversification.
6. Region specific MSP would
be undesirable and also difficult to implement.
7. MSPs cannot be mechanically
linked with either costs of production or market prices. Sound,
albeit holistic economic analysis and professional judgment of
CACP would be extremely important, in fixing MSPs.
8. MSP should be declared
in time, i.e., before the sowing season.
9. Agricultural Price Policy
should give appropriate signals for sustainable use of land, water
and other natural resources.
10. There should be efforts
to improve the quality of data on costs of cultivation. Data should
be realistic and acceptable to the farming community.
11. There should be re-examination
of the methods followed in imputing the value of (a) family labour
(b) rental value of land and (c) interest on capital.
12. The CACP should examine
whether transportation costs, marketing costs and processing costs
be considered for the purpose of fixing MSP of various crops.
