Experience of price support operations for agriculture produce in different states of India with focus on Gujarat

The present study is an attempt to analyse the coverage of price support operations for various agricultural produce in different states of India with focus on experiences of farmers in Gujarat. The study is based on both secondary and primary level statistics. The primary data were collected from the 800 selected households from eight agro-climatic zones of Gujarat. Price support for farmers has been an important instrument of agricultural development and food policy since the mid-1960s. This policy has helped in achieving food security by improving production, employment and incomes of the farmers. The quantity of commodities purchased from farmers by mandated agencies depended on the objective and target fixed for purchase to fulfill the defined objectives. However, there is a broad recognition that rapid increase in the MSPs for rice and wheat was a major contributor to problems of mounting buffer stocks. Therefore, policy has come under serious attack in recent past for recommending higher support prices than warranted by the costs of production (CoP) and supposed distortion of the market, leading to food deprivation. It is also blamed frequently for the spikes in prices of food items that reached their peaks in 2009. Besides criticism, Central agency also often incurs loss in their operation of PSS and MIS and the amount of expenditure incurred in the above schemes suggest that Union and State Government spend considerable amount of public money in undertaking the above scheme; yet plight of growers of many of the agriculture commodities continues. Also, the market price of many agricultural commodities continues to rule below the Government announced support price of commodity. The wide gap between price received by producer and price paid by consumer of commodity is another important concern of marketing of agriculture commodities in the country. Effectiveness of Price Support operations can be better understood by comparing market prices and the MSP. The data indicate that all India average market price of paddy remained marginally below the MSP during the last five marketing seasons from KMS 2017-18 to KMS 2021-22. Punjab was the only State where market prices remained above MSP throughout the period and the lowest number of reporting days recorded due to high procurement. Major reasons for low price realisation by farmers are the absence of a competitive market structure and opacity in the price discovery system. Also, the discovered price is often not the ideal one and may not fully cover costs if it rules below the MSP. The trend of average market price of tur during KMS 2017-18 to KMS 2021-22 shows that increase in pulses production and imports resulted in decline of market prices. Market price of tur fell below the MSP and continued to remained below MSP in the succeeding years. In case of groundnut, market prices of groundnut were below MSP for most of the days in Rajasthan, Gujarat and Andhra Pradesh. Field survey results observed that though the MSP was declared, procurement was not either undertaken by the stipulated agencies or was taken at odd time that to at far offplaces. Due to which large number of farmers have to sold their output lower than the MSP price. Therefore, announcing a hike in MSP alone will not guarantee any profit for cultivators, unless post-harvesting arrangements such as procurement centres, storage facilities, transport, etc, are established.