ENSURING REMUNERATIVE PRICES TO FARMERS CHALLENGES AND THE WAY FORWARD
-Surabhi Mittal, P K Joshi, Avinash Kishore and Suresh Pal
Doubling farmers’ income by 2022 is a paradigm shift in transforming policies and programs from production to income. Ensuring remunerative prices to the farmers is one of the several pathways to achieve the objective. In the Union Budget 2018, the Government of India (GoI) accepted the long-awaited demand of the farmers regarding the new minimum support price (MSP) at 1.5 times more than the cost of production. It appears that Cost A2 + FL, which covers the cost of production, interest on working capital, and imputed value of unpaid family labor is the cost of production that the government will be considering. The government has also announced the development of mechanisms to ensure that farmers receive at least MSPs of their produce.
The ‘New MSP’ is 1.5 times the cost of production, interest on working capital, and imputed value of family labor. There are apprehensions that this will have strong budgetary implications on the overall economy due to increased food subsidy bill. Some fear that this will also have inflationary pressure on food commodities. There is counter argument that the New MSP will raise farmers’ incomes, increase demand for non-farm commodities to boost economic growth, and improve marketing efficiencies. Empirical analysis can only provide the implications of the ‘New MSP’.
International Food Policy Research Institute (IFPRI), jointly with the National Academy of Agricultural Sciences (NAAS), and the ICAR- National Institute of Agricultural Economics and Policy Research (ICAR-NIAP), has organised a Policy Dialogue on “Innovations in Ensuring Remunerative Prices (MSP) to Farmers: Challenges and Strategies” on Friday, March 23, 2018 at the NASC Complex, Pusa, New Delhi. The policy dialogue deliberated on various issues related to MSPs and alternative ways of ensuring remunerative prices to the farmers. Here's the report that has been prepared based on the discussions during the policy dialogue.
