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Implementing Minimum Support Price Scheme in West Bengal – Effectiveness and Policy Needs

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Title Implementing Minimum Support Price Scheme in West Bengal – Effectiveness and Policy Needs
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Creator Subhasis Mandal
 
Subject Price policy, minimum support price, West Bengal
 
Description Not Available
West Bengal is a leading state in terms of agricultural production of major crops such as paddy (15 % of national production), potato (19%), jute & mesta (74%), fish (15%), vegetables (16%), fruits (4%), lentil (6%), rapeseed & mustard (7%) and flowers (12%). Despite high production, the income of agricultural households is one of the lowest in the country, Rs. 3980 as compared to national average of Rs. 6426 per month per households (NSSO, 2016). Key impediment to increase the farmers’ income is attributed to the small (14%) & marginal (82%) land holdings, who are operating less than a hectare (0.77 ha). Small-holders are producing low marketable surplus, hence low return to their farming business. Minimum support price (MSP) is an instrument to ensure remunerative price and to engage farmers into their farming business gainfully. In this paper, the effectiveness of the MSP to ensure farmers’ income is analysed through comparative analysis of (MSP), farm harvest prices (FHP) and cost of production (COP) of major cash crops grown in West Bengal. The role of MSP is to ensure the farmers remunerative price and that should be above the COP. In case of paddy, the FHP has remained below the COP during all the years 2004-05 to 2014-15. Also the MSPs (paddy) in different years were below the COP for the state. So, MSP was less likely to ensure the remunerative price for paddy in the state. Despite lower FHP as compared to COP for paddy in the state, rice has remained the major crops over the period of time. Because paddy has larger value to the farmers other than merely earning profit, like its contribution to household level food security, adaptability to different stressed conditions and low-risk as compared to other crops. To ensure MSP, during the current year (2017-18) the govt of West Bengal has initiated very active e-paddy procurement and this institutional arrangement has been quite successful to provide assured MSP with Rs.1550 plus Rs. 20 per quintal in addition for those who will sell directly to the Centralised procurement Centres (CPC). So far the state has procured around 2 million tonnes paddy directly from the farmers through its 325 CPCs. Direct purchase from the farmers and e-linking the stocks to rice mill has made the public distribution system in the state quite successful. In case of jute the FHPs were above the COPs in different years and also the MSP was partially effective to ensure the remunerative price. No MSP is declared for potato but almost all the years the FHPs have remained above COP, indicating potato to be most remunerative crop in the state, without any MSP support. In the distressed year (eg, falling price in 2015), market intervention scheme for potato was implemented to safeguard farmers. Analysis on FHP, COP and MSP indicated that the announcement of MSP for various crops (currently for 23 crops) merely cannot safeguard the farmers from incurring losses unless appropriate institutional arrangements are made by the respective state govt. towards procurement as has been made for paddy. Such institutional mechanisms like e-paddy procurement or market intervention schemes are also needed for other crops like lentil, gram, rapeseed& mustard to increase farmers’ income in the state.
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Date 2018-11-12T11:31:43Z
2018-11-12T11:31:43Z
2018-03-01
 
Type Other
 
Identifier Not Available
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http://krishi.icar.gov.in/jspui/handle/123456789/10552
 
Language English
 
Relation Not Available;
 
Publisher IFPRI New Delhi