INFO GATEWAY to the Department of Agriculture & Cooperation, Ministry of Agriculture, Govt. of India

FARM PRODUCE PRICE POLICY

The main objectives of the Government's price policy for agricultural produce aims at ensuring remunerative prices to the growers for their produce with a view to encouraging higher investment and production. Towards this end, minimum support prices for major agricultural products are announced each year which are fixed after taking into account the recommendations of the Commission for Agricultural Costs and Prices (CACP). The CACP, while recommending prices takes into account all important factors, viz:

1. Cost of Production
2. Changes in Input Prices
3. Input/Output Price Parity
4. Trends in Market Prices
5. Inter-crop Price Parity
6. Demand and Supply Situation
7. Effect on Industrial Cost Structure
8. Effect on General Price Level
9. Effect on Cost of Living
10.International Market Price Situation
11.Parity between Prices Paid and Prices Received by farmers (Terms of Trade).

Of all the factors, cost of production is the most tangible factor and it takes into account all operational and fixed demands. Government organizes Price Support Scheme (PSS) of the commodities, through various public and cooperative agencies such as FCI, CCI, JCI, NAFED, Tobacco Board, etc., for which the MSPs are fixed. For commodities not covered under PSS, Government also arranges for market intervention on specific request from the States for specific quantity at a mutually agreed price. The losses, if any, are borne by the Centre and State on 50:50 basis. The price policy paid rich dividends. The Government have raised substantially the MSPs in recent years as may be seen from the statement enclosed.