1. AGRICULTURE PRICING
POLICY
BY: GROUP 2

2. CONTENTS
• Trends
• Why the need?
• APP: what, when, by whom
• Importance of price policy
• Aim of APP
• Instruments
• Evaluation: Advantages
Disadvantages
• Evaluation of agricultural pricing policy
• Suggestions for improvement
• Current scenario

3. TRENDS
• With 1952-53 as base, agricultural price
index increased from 110 in 1950-51 to
123.8 in 1960-61.
• With 1970-71 as base, the index increased
from 100.4 in 1971-72 to 236.5 in 1981-82
• With 1993-94 as base, the agricultural price
index rose from 116 in 1994-95 to 186.7 in
2004-05

4. WHY THE NEED?
• Violent fluctuations in price
• For providing enough incentive to the
farmers for motivating them to use modern
and production oriented investment and
technology
• Severe famines

6. AGRICULTURE PRICING POLICY
WHAT WHEN BY
WHOM

7. • Agricultural Prices Commission established
in 1968.
• Thrust of the policy in 1965:evolve a
balanced and an integrated structure to
meet the overall needs of the economy.
• Headed by professor M.L. Dantwala
APP is the tool for influencing the prices of
agricultural product. It is an incentive to the
producer to produce a particular product
according the desired quantity.

8. IMPORTANCE OF PRICING
POLICY
• Agricultural products’ prices fluctuate
quicker as compared to industrial goods.
• Affects people engaged in other sectors as
well.
• Also affects the trade of other goods.

9. AIM OF APP
• To induce the desired output of different
crops according to growth targets.
• To induce an increase in aggregate
agricultural output through large input used
and adoption of high yielding seed, fertilizer
and water responsive technology.
• To induce farmers to part with a large
proportion of food grains production as a
marketed surplus.

10. INSTRUMENTS
1. MINIMUMSUPPORT PRICE
• Announced by the government in the beginning of
the sowing season
• Guarantee price of their produce from the
government
• Major objectives:
support farmers from distress sales
procure food grains for public distribution
• Government agencies purchase the output at the
MSP in case the market price falls below the MSP

11. 2.MARKET INTERVENTIONSCHEME
• Procurement of perishable and horticultural
commodities if market price falls
• Implemented when at least 10%increase in
production or 10% decrease in the ruling rates
over the previous normal year
• Procurement made by NAFED(National
Agricultural Cooperative Marketing Federation
of India limited)

12. 3.PUBLICDISTRIBUTION SYSTEM
• Important element of Food Security
• Management of supplies of essential
commodities(wheat,rice,kerosene,sugar) and
maintenance of their uninterrupted flow at
affordable prices
• Beneficiaries: BPL,APL households, Antyodaya
Card Holders
• Preventing hoarding and black marketing of
essential commodities

13. 4.PRICE SUPPORT SCHEME
• implemented for oil seeds and pulses through
NAFED :nodal procurement agency for
oilseeds and pulses, apart from Cotton
Corporation of India
• NAFED purchases oil seeds and pulses from
farmers when there prices fall below MSP

14. EVALUATION
ADVANTAGES
1.Incentive to increase production
• The MSP of food grains fixed by the
government increase from Rs.388.26 per
quintal in 2003-04 to Rs.829.94 in 2012-13
2.Benefit to consumer
3.Benefit to industries
• Sugar ,cotton textiles, vegetable oil
4.Price stability

15. DISADVANTAGES
1.Inadequate coverage
• No benefit to farmers except in case of rice
and wheat
• Neglected cash crops , pulses and oil seeds
2.Little impact on small and marginal farmers
• Marketable surplus comes mainly from big
farmers

16. 3. Rise in inflation
• Pressure from big farmer’s lobby raises
procurement prices
• Increase in agricultural prices increases the
price of other products i.e. Industrial products,
services etc
4.Ineffctive PDS
• Urban biased and pro rich
• Lack of storing space brings financial losses
• Corruption and lack of proper knowledge

17. EVOLUTION OF APP IN
INDIA

18. SUGGESTIONS FOR
IMPROVEMENT
1.Extention of price policy
• Commodities like potato, onion and other important
vegetables and fruits may also be covered in
addition to the 24 commodities covered at present
2.Improvement in agricultural marketing
• Farmers should be set free from middlemen and
intermediaries
3.Improvement of PDS
• Fair price shops should be made more efficient and
transparent; operations streamlined

19. CURRENT SCENARIO
a)MSPs currently announced for 424 commodities
including 7 cereals(paddy, wheat, barley, jowar, bajra,
maize and ragi );5 pulses( gram, arhar / tur, moong ,
urad and lentil);8 oil seeds(ground nut, rape seed ,
mustard , toria , soya bean , sunflower seed , sesamum ,
safflower seed , niger seed);copra raw cotton raw jute
and virginia flu cured(VFC) tobacco.
b)Inflation in food-around 8%p.a.,fruit and vegetable
inflation-16%
• Since a large part of food inflation in recent years has
been on account of high fruit and vegetable inflation ,this
may continue to be a cause for concern. It’s more so
because of the untimely rain.

20. c)Prices of cash crops such as wheat lower by
2%compared with prices last year. on a y-o-
y(year on year) basis , most cash crop have
seen a sharp fall in prices in domestic
market: tea(-8%),cotton(-28%),safflower(-
20%), soyabean (-13%),guar(-
16%),rubber(-15%)
d)Minimum Support Price

21. COMMODI
TY
VARIETY MSP2014-
15(RS PER
QUINTAL)
MSP 2015-
16(RS PER
QUINTAL)
INCREASE
OVER
PRIVIOUS
YEAR(RS PER
QUINTAL)
KHARIF CROPS
Paddy common 1360 1410 50
Grade ’A’ 1400 1450 50
Bajra 1250 1275 25
Maize 1310 1325 15
Ragi 1550 1650 100
Cotton Medium
staple
3750 3800 50
Long
staple
4050 4100 50
Arhar(tur) 4350 4625(inclu
de Rs 200
bonus)
275
Moong 4600 4850(inclu
de Rs200
bonus)
250

22. COMMODITY VARIETY MSP2014-
15(Rs PER
QUINTAL)
MSP2015-
16(RsPER
QUINTAL)
INCREASE
OVER
PREVIOUS
YEAR(Rs PER
QUINTAL)
RABI CROPS(To be marketed in 2016-17)
Wheat 1450 1525 75
Barley 1150 1225 75
Gram 3175 3425 250
Masur 3075 3325 250
Mustard 3100 3350 250
Safflower 3050 3300 250