Government price policies for food grains in India

Posted by Prof. Archana Y C On 11/07/2023 06:00:25

Government price policies are more like Government’s intervention in declining prices for various agricultural food grains. This policies insures farmers against a steep decline in the prices of agricultural goods and help them prevent losses in the year of bumper production.

The main objectives of these policies are to,

  1. Support farmers from distress sales
  2. Increasing food security in the country
  3. To procure food grains from farmers for public production
  4. To increase the productivity of agricultural land by providing farmers with various inputs like seeds(High yielding varieties), fertilizers, pesticides, and other equipment required for agricultural operations.

Indian Government constituted a commission called Agricultural Price Commission (APC) in 1965 through which it introduced a number of price policies and a distribution system to supply food grains at subsidized rates. This body was reconstituted as Commission for Agricultural Costs and Prices (CACP) in March 1985 with new and broader terms.

A number of other institutions are also involved in the process of implementing these price policies like the Food Corporation of India (FCI) and the National Agricultural Co-operative Marketing Federation (NAFED).

Various price policies in India are:

  1. Minimum Support Prices(MSP): This is the minimum price set by the government for certain agricultural products, at which the products would directly be bought from the farmers if the open market prices are less than the cost incurred. This is set twice a year for 24 agricultural commodities.
  2. Procurement prices: Procurement prices of a commodity refer to the price at which government procures the commodity from producers or manufacturers for maintaining the buffer stock or the public distribution system. These prices are announced by CACP before the harvest season of the crop.
  3. Statutory Price Control and Rationing: Rationing is a measure for controlling the demand for consumers and keeping the rise in demand under check by allotting a limited quantity per capita per time period.
  4. Fair and Remunerative Price: These prices are specifically for sugarcane. It is set based on recommendations from an expert panel which took into account various factors including the interest of sugar mills, farmers, and the final consumer.
  5. Public Distribution System(PDS): Is evolved as a system of scarcity through the distribution of food grains at affordable prices. Over the years, PDS had become an important part of the Government’s policy for the management of the food economy in the country.

The price policies in India related to agricultural commodities have resulted in increased production of grains such as wheat and rice resulting in grain shortages and grain surpluses. At the same time, the implementation of these price policies was biased and resulted in a decreased focus on diversification, creating shortages in pulses and edible oils. The severity of these adverse impacts varies according to state, region, commodity, and farmer. India is highly skewed in the distribution of its agricultural resources. As per Ministry of Statistics data. Only 23% of farmers in the rural agricultural household in India are aware of these price policies. Therefore, GOI has to take different measures to reach all the farmers and make them aware of all these price policies to take advantage of them. 

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