In developing countries, where agriculture is very important, the Agricultural prices occupy a lead position in the price structure. The study of price behaviour is a crucial requisite of any sound price policy. Agricultural Price Policy and price support system have come under academic scrutiny due to the recent changes towards liberalization of the Indian economy (Sudhakar & Wale, 2017). As agriculture becomes more market oriented and marketable surplus increases, changes in relative prices of different farm products affect the acreage that .a farmer would like to put under each crop which in turn would also affect the level of production .of different enterprises. Any agricultural policy analysis needs to deal with the problems or factors influencing demand of the agricultural output. The very important decisions in agricultural production such as how do farmers .decide what to produce and how much to produce? What policy instruments and other factors .influence their decisions regarding acreage allocation .under different crops must be understood so as to construct a sound and successful .agricultural policy. The conclusion of supply in agriculture are likely to be made on the knowledge relating to technical co-efficient, prices of inputs and output. The MSP is fixed by government before sowing season, but awareness level among farmer is very low. Hence this study focuses on the method of estimating MSP based on 2018 Budget proposed by the government whiz “at least 50 per cent more than the weighted average cost of the production. A portal would be developed to create awareness among the farmers. (Jain et al. 2018).

How to cite this article: Ritu, Mehta, V.P., Malik, D.P., Kumar, R. and Nisha (2020). Impact of agricultural price policy on major food crops in Haryana. Economic Affairs, 65(2): 267-274.

Source of Support: None; Conflict of Interest: None

Minimum Support Price (MSP) is a fundamental component of Agricultural Price Policy of India. It targets to corroborate support price to farmers and reasonable prices to consumers through Public Distribution System (PDS) (Parikh & Singh 2007). The price support system was conceptualized during pre-green revolution .period as an governmental mechanism for incentivizing farmers to acclimatize new technologies.(Planning Commission 2005; Deshpande 2008). Later, Agriculture Price Commission (APC) was established in the year 1965, based on Jha committee recommendations to recommend support prices for crops after considering the cost of cultivation (Kadasiddappa et al. 2013). It was reflected in the revised terms of reference of Agricultural Prices Commission (which was later renamed as Commission for Agricultural Costs and Prices) with a shift from maximizing the production to developing a production pattern regular with the overall needs of the economy (Acharya, 1997). The Commission for Agricultural Costs and Prices (CACP) recommends Minimum Support Price (MSP) for.26 agriculture crops i.e. cereals (paddy, wheat and ragi), coarse cereals (barley, jowar, bajra and maize),.pulses (gram, arhar/tur, moong, urad and lentil), oilseeds.(groundnut, rapeseed/mustard,.toria, soyabean, sunflower seed, sesame,. safflower seed and niger seed), raw cotton, raw jute, copra, de-husked coconut, sugarcane, VFC tobacco. Broad objectives of the Agriculture Price Commission (APC).are to ensure remunerative prices to farmers and affordable prices to consumers and promote sustainable use of all resources towards socially desirable crop mix (Parikh & Singh 2007). The worse situation of the price policy as far as concerned with the area allocation under gram crop because the area has been decreasing in spite of providing more prices for the crop (Godara & Poonia, 2013).

Price incentives in the form of minimum support prices helped India to increase food production during green revolution period. Minimum Support Prices (MSP) also aims at procuring food grains from food surplus states for distribution through Public Distribution System and maintaining buffer stock and thus fulfil the demand supply gap (Jha & Srinivasan 2006; Chand 2008). Price incentives in the form of MSP are credited for the increase in area under wheat and rice in the green revolution states like Haryana and Punjab. Also, the Agricultural price policy is considered to have favoured food crops more than the other crops. As a result, a large mass of good quality and was shifted from oilseeds, pulses and other important crops to paddy and wheat crops, creating a serious imbalance in the demand and supply of many other agricultural commodities.(Chand, 2008). In other regions of the country due to small marketable surpluses, the Agricultural price policy .is considered to be ineffective as the government has less interest in procurement operations. So, it is argued that the market prices for wheat and paddy crop rule lower than the Minimum Support Price (MSP) in these are as during post-harvest period and shoot up during the lean periods, which is usually not the case in the surplus producing regions (ADRT, 2003). In recent years, the Minimum Support Price (MSP) policy has been criticized by both farmers and proponents of free trade. The heavy subsidisation of agricultural exports by developed countries due to WTO obligations, the situation is fast changing. Since international agricultural prices have become lower than the Indian agricultural prices, farmers in the state have been put to a serious disadvantage (Debashis Sarkar, 2011).

The gap analysis in which deviations of FHPs from MSPs of food crops results in positive deviations (FHP ruled higher than MSP) in most of cases in Haryana during 2007-18. In Haryana, higher demand due to more procurement for central part than supplies does not allow the market prices to fall below MSP. Market prices for bajra and barley rule lower than the MSP in some years during post harvest period and shoot up during the lean periods. The government intervention was very strong and did not allow the FHPs to move away from MSPs in a significant manner despite large marketed surplus. The increase in MSP over the previous year brought additional area under food crops, but the impact was nominal. From the results we conclude that impact of MSP on area is higher but there is lower impact of MSP on productivity of food crops. A higher rate of increase in the MSP of paddy over the previous year increased the area significantly under this crop. It may be concluded on the bases of above discussion that for bringing about the technological revolution, the price policy is a necessary condition but not a sufficient one. In Haryana, a large chunk of good quality land was shifted from pulses, oilseeds to paddy and wheat crops creating a serious imbalance in the demand and supply of several other agricultural commodities.

Introduction of Direct Payment Deficiency System (DPDS) for paying MSP guarantee for the farmers has to be initiated. Under this system, the farmers will directly get the amount, which is the difference between the Minimum Support Price (MSP) and the market price, when the market price falls below the MSP. The government of India may adopt the recommendation given by the National Commission for Farmers (NCF) that MSP should be at least 50 per cent more than the weighted average of cost of production. New technological mission on food crops should be started to promote the growth of food crops. In Haryana, procurement is effective only in rice and wheat crops. Policy should made availability of procurement machinery for all the food crops. Policy should provide proper warehouse facilities for increasing farmers income. The Cabinet Committee on Economic Affairs should increase in the Minimum Support Prices (MSPs) for all Kharif crops and to incentivise cultivation of pulses and oilseeds, Government should announced a more bonus on these crops, payable over and above the approved MSP. Swaminathan commission suggested to give farmers a minimum support price at 50 per cent profit above the cost of production classified as C2 by the Commission for Agricultural Costs and Prices (CACP).