Minimum Support Prices (MSP) and Its Influence on Cotton Farming in India

Abstract

The present study assessed the relationship of MSP and production of cotton and farmers’ awareness regarding MSP of cotton. Secondary data of National Sample Survey Office, Ministry of Agriculture and other sources were used for the study. The results showed that only 20.4 and 22.6 per cent of farmers in India are aware of MSP of cotton grown by them in kharif and post-kharif season, respectively. Thus, there is need to facilitate the awareness among the cotton growing farmers in all cotton growing states to avoid distress sale of their produce and assure better income. The growth in area and production and MSP of cotton was higher in period II (2005-06 to 2016-17) indicating the positive relationship. The announced MSP of cotton in the year 2017-18 kharif was lesser than projected C2 and C3 costs with negative managerial profit. Thus, there is need to revise of the cost concept considered for fixing of MSP. The key reason given by farmers for not selling the produce to procurement agency is that no procurement agency or local purchaser is available to procure and there is delay in payments. Thus, there is need to set up additional procurement centres in major cotton growing areas with better infrastructure and finance facilities.