Price Policy for Rabi Crops: The Marketing Season 2017-18
This report, by the Commission for Agricultural Costs and Prices (CACP), provides price recommendations and non-price measures for mandated rabi crops such as wheat, barley, gram, lentil, rapeseed, mustard and safflower for the marketing season 2017-18.
Set up in 1965, the CACP was originally called the Agricultural Prices Commission but was given its present name in 1985. It prescribes the minimum support price (MSP) for 23 agricultural commodities to the government. These include 7 cereals, 5 pulses, 7 oilseeds and 4 commercial crops. CACP is attached to the Ministry of Agriculture and Farmers Welfare, Government of India.
While formulating the price policy, the CACP took several factors into account, such as the cost of production, the overall demand-supply situation, domestic and international prices, inter-crop price parity, terms of trade, the efficient use of resources, and the impact of MSP on the general price level.
The Commission also provides a list of recommendations to protect the interests of both producers and consumers, to encourage farmers to adopt new technologies, to stabilise prices, and to promote sustainability and competitiveness in agriculture.
The report furnishes most of its data in tables, graphs and charts.
The report says that while the share of agriculture in India’s GDP declined to about 15 per cent, it still employed close to half of the total workforce.
The total production of food grains in 2015-16 remained almost stable at 252.2 million tons; it was 252 million tons in 2014-15. This was due to insufficient rainfall in 2014-15 and 2015-16. The production of rabi food grains, however, increased by 3.5 per cent between 2014-15 and 2015-16.
Among the major rabi crops, the production of wheat increased from 86.53 million tons in 2014-15 to 94 million tons in 2015-16. In the same period, the production of rabi cereals and pulses increased by of 3.7 per cent and 1.3 per cent, respectively.
The total agri-imports rose steeply between 2013-14 and 2015-16, from Rs. 123,800 crores to Rs. 163,000 crores. The import of pulses more than doubled in the same period, from Rs. 12,400 crores to Rs. 25,600 crores, and edible oils imports rose significantly from Rs. 56,800 crores to Rs. 68,600 crores. The rise in imports was due to a widening gap between stagnant domestic production and rising consumption.
The total stock of food grains declined from over 80 million tons in 2012-2013 to 54.85 million tons in 2016-17. The total wheat procurement in 2016-17 was 22.9 million tons, notably lower than that in 2015-16 (27.9 million tons). Uttar Pradesh, Madhya Pradesh and Rajasthan also witnessed a significant decline in wheat procurement in 2016-17.
Consumer food price inflation reached a two-year high at 7.55 in May 2016 due to the rise in the prices of pulses, sugar, vegetables and spices.
The CACP recommended that the government should encourage farmers to grow short-duration pulses and oilseeds on rainfed rice fallows. This would not only restore the soil’s health but also increase the production of pulses, which was required to bridge the demand-supply gap.
To stabilise prices and make the country self-sufficient in pulses, the CACP suggested long-term measures such as developing short-duration and pest-resistant varieties, expanding the area under cultivation, effective procurement, the creation of buffer stock, and setting up milling plants and processing units.
It also suggested that farmers be encouraged to do bed planting of wheat over the conventional flat planting. Adopting this technique would reduce the seed, water and fertiliser requirement and produce a higher yield.
In order to make crop insurance simpler and cheaper for farmers, the government approved a central sector scheme called the Pradhan Mantri Fasal Bima Yojana, which covered sowing/ planting risks, post-harvest losses and local calamities. According to the CACP, the success of this scheme would depend on a network of weather stations, the estimation of crops losses, and the budgetary provisions for ‘premium subsidy’ by the states.
The government launched e-National Agriculture Market (e-NAM), an online trading portal for agricultural commodities, in April 2016 in order for a more direct interface between farmers and buyers, and reduce the number of intermediaries. The CACP said that it would be difficult to physically integrate markets through e-NAM without imposing common taxes/levies at an all-India level and ensuring the free inter-state movement of commodities.
To ensure transparency in MSP operations, the states should switch to the e-payment system. This would ensure that payments are credited directly to the bank accounts of farmers. However, the states must complete the digitisation of the farmers’ list and seed bank account details for direct fund transfers.
Due to the low production of wheat in 2014-15, its stock-to-use ratio (SUR) fell from 27.1 per cent in 2012-13 to 14.8 per cent in 2015-16. However, in 2016-17, it rose to 19.6 per cent, indicating a comfortable stock and price situation. In the case of pulses, the SUR declined from 8.8 per cent in 2012-13 to 2.9 per cent in 2016-17, indicating a stock crunch and a high price situation.
India’s production of oilseeds was much less than the world average and had remained stagnant for many years. To boost productivity, the government must make certified seeds available to farmers.
Focus and Factoids by Sushmita Iyer.
Commission for Agricultural Costs and Prices
The members of the Commission were:Prof. Vijay Paul Sharma
Dr. Suresh Pal
Dr. Shailja Sharma
Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture and Farmers Welfare, Government of India, New Delhi