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Agriculture price policy
- 1. AGRICULTURE PRICING POLICY Prepared by: gourav garg M.A economics
- 2. AGRICULTURE PRICING POLICY •Agriculture pricing policy is the tool for influencing the prices of agriculture products. It is an incentive to the producer to produce a particular product according the desired quantity.
- 3. FACTORS AFFECTING AGRICULTUREPRICING POLICY • Cost of production • Changes in input prices • Input/output price parity • Trends in market pricing • Inter crop price parity • Demand and supply situation • Effect on industrial cost structure • Effect on general price level • Effect on cost of living • International market price situation • Parity between prices paid and prices received by farmers (terms of trade)
- 4. MAIN OBJECTIVES OFAGRICULTURE PRICING POLICY • Raising the productivity of inputs • Raising value added per hectare • Protecting the interest of poor farmers • Modernising agriculture sector • Checking environment degradation • Agriculture research and training • Removing bureaucratic obstacles • Improving agriculture marketing
- 5. MAIN ELEMENTS OFAGRICULTURE PRICE POLICY 1. Fixation of product prices • “Negative” price policy . For accelerating the economic growth negative agriculture price policy practised by a large no. Of countries in their early stages of their development • Main objective of policy is to keep prices of food and raw material relatively low (when compared with the prices of industrial products) So as to facilitate the growth of the industrial and territory sector through increased profits and savings of these sectors
- 6. •“Positive” price policy .In contrast with the Negative policy,a number of developing countries today follow what may be termed as the “positive” price policy which assures the farmer,a fair Price for his procedure.such a policy is considered necessary because of the realisation that unless the agriculture sector attains some critical minimum rate of growth,it would not be possible to attain the general target of economic growth and development.
- 7. 2. PRICE POLICYFOR AGRICULTURAL INPUTS • Agriculture price policy does not cover only the fixation of price of agriculture crops.its other aspects is concerned with the prices of agriculture input.our focus in the discussion in preceding paragraph has been on the prices Of agricultural crops. There,we have argued in favour of a ‘positive’ price for the agricultural products in order to encourage the adoption of improved technology and the conseqent growth of agricultural output. • Some people argue that the Same objective can be better achieved through subsidising the farmer in the purchase of inputs rather than through guarantees of minimum prices of agriculture commodities.
- 8. 3. CONSUMER PROTECTIONAND AGRICULTURAL PRICE POLICY • This is the third aspect of agricultural price policy. This aspect of price policy is particularly complicated as it necessarily involves balancing of conflicting interests of million of poor consumer,on the one hand, and of the farmers,on the other.The issue can also be looked as one of reconciling the interest of the village and city. While we have discussed the significance of rising the prices of Agricultural output as an inducement to agricultural growth,we should also recognise that agriculture produces consumer goods whose purchase cover the bulk of the expenditure of low income people. If prices of food articles are allowed to increase, the low income people are hit hard.
- 9. 4. ANCILLARY POLICIES •Firstly it is important that sufficient resources in terms of men and materials,be allocated to domestic research efforts so as to generate New crops Verities implements which forms the basis for yield increasing, cost-reducing techniques changes in agriculture • Inputs must be made readily available to the farmers. This implies that timely steps to produce certain crucial inputs at home or to import the Same, must be taken • Thirdly, steps must be taken to ensure a smooth functioning of the system of agriculture marketing in case, the marketing system is inefficient due to any reason, there will be large difference between the prices which the government assures and what the farmers ultimately get
- 10. INSTRUMENTS OF AGRICULTUREPRICE POLICY 1.Minimum support price . It starts from 1970s. minimum support price is a form of market intervention by the government of India to ensure agricultural produces against any sharp fall in farm prices It is announced in the beginning of the sowing season Government agencies purchase the output at the MSP in case the market price falls below the MSP Major objective: support farmers from distress sales Procure food grains for public distribution
- 14. 2. MARKET INTERVENTIONSCHEME • Procurement of parishable and horticulture 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 agriculture cooperative marketing federation of India limited)
- 15. 3. PUBLIC DISTRIBUTIONSYSTEM • Important element of food security • Management of supplies of essential commodities and maintenance of their uninterrupted flow at affordable prices • Beneficiary: BPL,APL households, antyodaya card holder • Preventing hoarding and black marketing of essential commodities
- 16. 4. PRICE SUPPORTSCHEME • Implemented for oil seeds and pulses through NAFED: nodal procurement agency for oil seeds and pulses, apart from cotton corporation of India • NAFED purchase oils Seeds and pulses from farmers when there price fall below MSP
- 17. • EVALUATION OFAGRICULTURE PRICE POLICY • Conflicting considerations in price fixation • Lack of data • No fixation of ceiling prices • Partial impacts of price policy on Agricultural development • Politicisation of price policy • Reduced emphasis on non price factors • No minimum support price for fruit and vegetables
- 18. • Excessive amountof input subsidies • Excessive food subsidies • Defective public distribution system • Fixing of uniform prices for country as a whole
- 19. • SUGGESTIONS FORREORIENTATION OF AGRICULTURE PRICE POLICY • Systematic attempts to orient agricultural planning towards effective use of resources endowments • A much expanded employment-cum investment programme for conservation and upgration of land and water resources • Greater priority for dry land agriculture • A substantial set-up in the proportion of total planned resources earmarked. For agriculture/rural sectors • Time bond targets for provision of rural infrastructures • Comparitive advantage of growth climatic areas of the country • Policy regarding growth of inputs and extention services and marketing