Awareness about Minimum Support Price and its Impact on Diversification Decision of Farmers in India

Abstract

In this article, we have analysed farmers' awareness about Minimum Support Price (MSP) and its impact on diversification of crops grown in India. We used nationally representative data collected by National Sample Survey Office, 70th round data. The data revealed that only 23.72 and 20.04 per cent of farmers in the rural agricultural households in India are aware of MSP of crops grown by them in kharif and rabi season, respectively. From the results of probit model, it is inferred that MSP needs to be backed up by effective procurement coupled with awareness creation by extension system to enable more number of farmers to take benefit of this safety net. We have also explored the relationship between farmers' awareness about MSP and decision to go for crop specialization using Heckman selection model. The study shows that farmers' knowledge of MSP had not lead to specialization.In this article, we have analysed farmers' awareness about Minimum Support Price (MSP) and its impact on diversification of crops grown in India. We used nationally representative data collected by National Sample Survey Office, 70th round data. The data revealed that only 23.72 and 20.04 per cent of farmers in the rural agricultural households in India are aware of MSP of crops grown by them in kharif and rabi season, respectively. From the results of probit model, it is inferred that MSP needs to be backed up by effective procurement coupled with awareness creation by extension system to enable more number of farmers to take benefit of this safety net. We have also explored the relationship between farmers' awareness about MSP and decision to go for crop specialization using Heckman selection model. The study shows that farmers' knowledge of MSP had not lead to specialization.