Price Support Research Articles

Minimum Support Price and the Changing Nature of Rural Economy and Its Implications on Agriculture in Haryana

Agriculture in India is undergoing a shift. It is due to a grim situation of increasing food production and rural economy linked with agriculture. On one side, agriculture production is led by 55% of cereal crops primarily based on minimum support prices (MSPs) by the Government of India. On the other side, horticulture accounts for only 16% of agriculture without many incentives. The cultivation cost is rising day by day. Unlike employee compensation, the market does not support farmers and their products. Despite rising production, sustainable agricultural growth is unlikely because of issues including groundwater depletion, climate change, and poor income. The MSP is driving the change in farmer’s lives in the changing nature of rural economy. However, the economic conditions of farmers have not changed much as the surveyed households (HHs) revealed based on MSP and its significance on economic condition of farmers. About 60% of farmers claimed that their income remained the same, 22% said that their condition got better, while about 14.43% of HHs claimed that their economic situation got worst. The study highlights that sustainable agriculture and changing nature of the rural economy will transform farmers’ conditions if they diversify the production of crops from cereals to non-cereal crops such as protein-based pulses or less water intensive crops such as millets.

Measuring the agricultural sustainability of India: An application of Pressure-State-Response (PSR) model

Analyzing agricultural sustainability is essential for designing and assessing rural development initiatives. However, accurately measuring agricultural sustainability is complicated since it involves so many different factors. This study provides a new suite of quantitative indicators for assessing agricultural sustainability at regional and district levels, involving environmental sustainability, social security, and economic security. Combining the Pressure-State-Response (PSR) model and indicator approach, this study creates a composite agricultural sustainability index for the 14 mainstream agro-climatic regions of India. The results of this study show that the Trans-Gengatic Plain Region (TGPR) ranks first in agricultural sustainability among India’s 14 mainstream agro-climatic regions, while the Eastern Himalayan Region (EHR) ranks last. Higher livestock ownership, cropping intensity, per capita income, irrigation intensity, share of institutional credit, food grain productivity, crop diversification, awareness of minimum support price, knowledge sharing with fellow farmers, and young and working population, as well as better transportation facilities and membership of agricultural credit societies are influencing indicators responsible for higher agricultural sustainability in TGPR compared with EHR. Although, the scores of environmental sustainability indicators of EHR are quite good, its scores of social and economic security indicators are fairly low, putting it at the bottom of the rank of agricultural sustainability index among the 14 mainstream agro-climatic regions in India. This demonstrates the need of understanding agricultural sustainability in relation to social and economic dimensions. In a nation as diverse and complicated as India, it is the social structure that determines the health of the economy and environment. Last but not least, the sustainability assessment methodology may be used in a variety of India’s agro-climatic regions.

Impact Execution of Minimum Support Prices and their Effects on Sustainable Agriculture Practices: A SEM Analysis

For many households to continue to have a means of subsistence, agriculture is essential, particularly in India. This paper examines the most significant aspects of the MSP and its impact on environmentally Sustainable Agricultural Practices (SAP). These 390 marginal farmers were selected in Rajasthan using a survey methodology that included well-organized and convenient sampling procedures. According to the findings, the producers appeared to have prior knowledge of the MSP. Several supply factors, such as Area under cultivation, Productivity of land, Processing cost, Transportation, Distribution, Taxes, fee, and Subsidies, were found to have a positive and substantial relationship with SAP. In a similar vein, SAP is positively correlated with production costs, input costs, market prices, demand and supply, inflation, and international pricing. Agricultural factors influence all these factors. To make agriculture in Rajasthan more sustainable, an original and forward-thinking conceptual paradigm was developed. This study expands upon the conventional applications of MSP and SAP, thereby adding to the existing corpus of knowledge.

Summer Mung (Vigna radiata L.) Promotion by Cluster Front Line Demonstration in Irrigated Agro-Ecosystem: A Case Study

Background: The marginalization of pulse crops in irrigated agro-ecosystem has been among the most negative facets of green revolution technologies. Integration of summer mung in the irrigated agro-ecosystems within rice-wheat and alternate systems is feasible and remunerative. This crop facilitates the crop intensification by adding a third crop to the crop sequence and there is a large area to intervene. This crop holds the key to increase the income of the farmers and to achieve self-sufficiency in pulse production. Methods: This study was carried out at farmers’ fields under irrigated farming situations during the period from 2017 to 2022 using cluster frontline demonstration (CFLD) as farmer participatory intervention. In total 425 demonstrations were conducted within rice-wheat and alternate systems on an area of 170 ha, covering 18 villages and 425 farmers. By comparing farmers’ practices in local checks with suggested technologies in demonstrations, a gap analysis was carried out and data on various technical and economic factors were recorded. Result: The CFLD programme mitigated the gaps and increased the adoption of summer mung from 4 per cent of the farmers in 2017 to 22 per cent in 2022. The yield increase in a demonstration over local check was by 17.6 per cent with favourable economics generating net additional returns of Rs. 5488 ha-1. The extension gap, technology gap and technology index recorded in the study were 1.44 q ha-1, 5.48 q ha-1 and 36.53 per cent. The market price was less than the minimum support price (MSP) in all the years of study. The summer mung intensifies the cropping systems as a third crop and its cultivation is remunerative and climate resilient.

The impacts of reforming agricultural policy support on cereal prices: a CGE modeling approach

PurposeThis paper investigates the effects of the total abolition of all forms of agricultural subsidies to producers and border tariffs on the prices of staple cereals.Design/methodology/approachThe authors use the GTAP global economy-wide model and focus on 27 countries and 8 regions. The GTAP database that is used contains information on budgetary transfers to producers and market price support such as domestic price support, tariffs, export subsidies, quotas on exports or imports and other border measures.FindingsThe removal of subsidies is estimated to significantly increase the prices of wheat and other cereal grains in Japan, paddy rice in Malaysia and Indonesia, processed rice in Malaysia and Indonesia and wheat in Brazil and India. When border tariffs are removed, cereal prices are projected to fall in several countries, but the decline is more pronounced for wheat in Kenya and Japan, other cereal grains in South Korea and all staples in Nepal.Research limitations/implicationsThe alternative scenarios on the removal of agricultural subsidies in all agricultural sectors and the elimination of border tariffs are purely speculative as the analysis ignores important political economy considerations of agricultural and food policy reforms.Practical implicationsThe findings from this study point to the importance of implementing additional policy measures to mitigate the possible negative effect of repurposing the support to agriculture and ensure the food security and welfare of those categories of buyers who heavily depend on the price of staple food for their livelihoods.Social implicationsThis study’s findings confirm that the elimination of agricultural subsidies would impact global food security directly by making staple food less affordable to the poorest and indirectly by decreasing the available household budget for other presumably more nutritious food groups. Consequently, it is expected that these price increases could make segments of the world population poorer, particularly the net-food buyers due to a decline in their real income.Originality/valueThe authors assess the impact of removing the subsidies on the economy in a comprehensive way, particularly given the recent policy focus on net zero emissions and Sustainable Development Goals that include healthy foods. The authors also consider the counter effects of tariff reduction on this, which is price-reducing.

Institutional Arrangements to Enforce the Minimum Support Price (MSP) Policy Effectively in India: A Case Study of Wheat and Paddy Production in Punjab

The paper tries to examine the institutional arrangements to enforce the minimum support price (MSP) in India with a special reference to a highly agricultural-producing state, which is also known as the food bowl of India. The current study is based on the Punjab state which is an agriculturally rich state, here, paddy and wheat farmers suffered low losses as compared to other crop cultivators, but they are not separate from losses. These institutional arrangements to enforce the MSP policy examined by studying cost of Production, FHP, MSP, and crop procurement by the government agencies and their benefited farmers of wheat and paddy. The study calculated the percent change in over the period of 2012-13 to 2020-21 of costs data from the Directorate of Economics & Statistics (DES), and this study analysed the procurement data published by the Food Corporation of India (FCI) and the Ministry of Agriculture and Farmers Welfare, Government of India. The percentage analysis is used as a statistical tool for this research, to access the effectiveness of MSP by its institutional arrangements that enforce the MSP effectively. The institutional arrangements to enforcement the MSP of wheat and paddy is found to be effective in Punjab. The MSP seeks to guarantee fair prices for the growers that promote greater investment and output of the produce. The result of the paper revealed that within the time being the cost of production, cost of cultivation, FHP, MSP, and government procurement of wheat and paddy is increasing, whereas the number of benefited farmers has not significantly increased. The findings of this research unravel that wheat and paddy growers of Punjab are getting supported largely due to effective procurement by the government at the MSP. Overall, at the state of Punjab the procurement of wheat and paddy by the government agencies such as FCI and state agencies is satisfactory, and conclude that the institutional arrangements for wheat and paddy procurement at MSP in Punjab is effective in nature.

Role of agricultural marketing channels in price realization: an empirical analysis of selected crops in India

PurposeThe provision of fair and remunerative prices to farmers through government intervention is one of the key debates to address the farmers' distress in India. This article identifies how different marketing channels are responsible for higher price realization over the officially announced minimum support price (MSP).Design/methodology/approachThe study uses the NSSO-SAS, 2012–13 and NSSO-SAS, 2018–19 for Aggregate level data and Unit Level Data on the Situation Assessment Survey of Farmers' households. It uses logit regression to determine the factors responsible for better price realization.FindingsOur major findings indicate that two factors importantly determine better price realization than MSP. Firstly, government agencies provide better prices for crops covered by MSP, such as paddy, wheat and cotton. However, the probability of receiving higher prices increases for some crops if the farmers belong to the upper land size classes and upper social category. Secondly, jowar, bajra, maize and ragi, other important crops that don't benefit from government agencies, may require higher levels of procurement at the state level.Research limitations/implicationsThe present study only analyzes selected major crops. Distance is an important factor in choosing a marketing channel that is not incorporated due to unavailability in NSS Data.Originality/valueThe study is based on the latest original empirical evidence and sheds light on the variation in price realization in different agricultural marketing channels in India.

The Growth Rate of Minimum Support Price of Wheat and Population in Comparison to Area, Production and Yield of Wheat in India

The Growth Rate of Minimum Support Price of Wheat and Population in Comparison to Area, Production and Yield of Wheat in India

Wheat Support Price: A Note for Policymakers

Wheat is one of the most strategic crops globally, which has always been a big challenge for many governments. Over the last few months, Pakistan’s government is struggling to fix wheat prices in the country due to weak governance and mismanagement. The Minimum Support Price (MSP) for the Year 2019-20 was PKR. 1,400, but the market price of wheat rose to PKR. 2,256 per 40 kg in the first week of October. The Prime Minister of Pakistan directed relevant authorities to devise a comprehensive plan to ensure the supply of wheat on market prices. The plan should look at the current stock, future demand, and import policy to fulfil domestic needs. PIDE has developed a brief to provide a comprehensive plan to ensure the supply of wheat on market prices.

Competitive Digital Strategic Model of Amazon - A Case Study Analysis

Purpose: We continue our investigation into the origins of business models and look at how the business models of new firms originate by integrating institutional and restriction theories. Design: Amazon's business models are studied following the deductive and inductive approaches. Inductive: by checking the assumptions and coming to a conclusion, Deductive: by checking the theories and proving the hypothesis. Objective: To find out the competitive digital strategies of Amazon, that could be learned and copied for other organizational applications. Findings/Result: The findings show that there are several consumer complaints and service issues about Amazon's influence, notably in regard to pricing, customer service, in-store staff, and post-purchase support. The paper claims that Amazon's development and profitability have been greatly aided by business strategies combining technology, distribution networks, and customer service. These tactics have also assisted Amazon in differentiating itself from its competitors in the brick-and-mortar and online retail industries. Originality/Value: The business model as well as the SWOT analysis presented may be used by organizations to assess and narrow down their options for a business modeling platform. This case study work is original and would help researchers to do further study accordingly. Paper Type: Case study.

Efficacy of Public Extension and Advisory Services for Sustainable Rice Production

Agriculture is an integral constituent of Pakistan’s economy and the primary source of livelihood for nearly 65% of the population living in rural areas. Rice is the second major staple food after wheat and a significant source of foreign exchange earnings through Basmati exports. Pakistan has established an extensive network of agricultural extension to educate the farming community about modern agricultural practices for enhancing the agricultural productivity of major food crops grown in the country. The present study was undertaken to evaluate rice farmers’ views about public extension services and to identify their perspective regarding various ways of enhancing rice production in Pakistan. A multi-stage simple random sampling technique was employed, and data were collected from 193 rice farmers with the help of structured interviews using a pre-tested questionnaire. The findings revealed that a vast majority of the rice farmers were poorly satisfied with the public extension services. The results of the Spearman Rank-Order Correlation showed that landholding size had a significant effect on deciding extension contact; public extension agents are more likely to visit and serve those rice farmers who possess large landholders and therefore have the tendency to intentionally neglect small-scale rice farmers. For enhancing rice production in Pakistan, farmers believed that the provision of subsidized agricultural inputs and a minimum support price for rice is indispensable. Based on our findings, we suggest that to make public extension services more effective, public extension agents should particularly focus on the capacity building of small-scale farmers rather than large-scale farmers. Moreover, there is a need to broaden the scope of public extension services from simple crop protection measures to a set of comprehensive sustainable agricultural practices for increasing agricultural productivity, resource-use efficiency, as well as resilience toward adverse impacts of climate change.

A small farmer’s market choice in the presence of multiple markets: The Indian case

We study a small farmer’s optimal market choice in the presence of multiple markets in an emerging economy. A small farmer sells her product through either of the three markets available: government-regulated market, corporate-owned market (a private market having high-quality requirements), and fixed-price market (a government procurement center). Using a dynamic game of incomplete information, we examine the impact of technology choice, quality effort, and yield quantity on the farmer’s market choice. We discuss the implications of the full information and asymmetric information case analysis with the help of real-life examples. We find out that the farmer does not put her optimal quality effort due to misalignment of stakeholder payoffs. We analytically prove that market inefficiency exists due to this misalignment; we subsequently propose that contract farming can eliminate this problem. We demonstrate that the corporate-owned and government-regulated markets have individual incentives to keep their markets segregated by maintaining different threshold quality requirements. We conduct a logistic regression analysis to explain the impact of various parameters on the small farmer’s market choice. It shows the impact of change in critical parameters on the small farmer’s optimal market choice. Our analysis allows policymakers to understand the behavior of small farmers as strategic players. Our study emphasizes the importance of the threshold quality requirement of markets and prices offered in these markets on a small farmer’s market choice rather than traditional factors such as transportation cost and minimum support price. We conduct field interviews of small farmers to augment our findings.

Multi-criteria Agriculture Recommendation System using Machine Learning for Crop and Fertilizesrs Prediction.

Agriculture plays an essential role in the economies of developing countries such as India and contributes significantly to the gross domestic product (GDP). The escalation in population has led to an upsurge in food demand. Numerous challenges such as the selection of crops, fertilizers, and pesticides without considering the various parameters like types of soil, water requirement, temperature conditions, and profitability analysis of crops for a particular region may lead to degradation in the quality of crop, yield and profitability. With the advancement of Computational technologies, researchers are working on recommending crops according to soil condition, water requirement, and market profitability along with fertilizers recommendation, disease identification, and pesticide recommendation. Through this research, we propose a machine learning-based crop and fertilizer recommendation algorithm called AgriRec. We have utilized soil properties, water level, farm size, and minimum support price of crop and design a machine learning model which predicts crops for different seasons. Further, we propose another mechanism that processes the properties/details of soil, crop, and fertilizer to envisage a combination of fertilizer(s) for a given pair of soil and crop. Our algorithm is tested for 5000 land samples of Gujarat region with 24 different crop and it successfully recommends crops with 95.85% accuracy and fertilizer with 92.11% accuracy with 4 times better performance as compared to existing benchmark recommendation approaches.

Direct budget subsidizing as a factor of sustainable development of agricultural production in the Republic of Belarus

Currently, most of the world’s countries are pursuing an active agrarian policy in order to support national agricultural producers. At the same time, the ongoing changes in the global and domestic food markets, due to rising prices, reduction in the product range, and social tension in society require optimization of costs of the country’s budgets and development of proposals for the most effective measures. The paper presents an analysis of methodological approaches to assessing the efficiency of direct budget support for agricultural production used in the member states of the Eurasian Economic Union (EAEU) and in Organization for Economic Cooperation and Development (OECD). Taking into account the identified advantages and disadvantages of applying these approaches in practice in the Republic of Belarus, as well as using the experience of the EAEU member states, methodological approaches have been developed to assess the efficiency of state support measures aimed at subsidizing of: 1) compensation for the cost of production resources; 2) price support; 3) losses of banks related to issuing preferential loans to rural producers; 4) stimulating the volume of output and the efficiency of related types of economic activity by increasing the amount of resources produced by the agriculture. Based on the presented developments, the most rational level of production costs was determined, when each additional ruble (as well as according to types) invested in the production allows to get the maximum increase in performance indicators. In addition, a positive effect of stimulating the growth of agricultural production on the performance of manufacturing (food) industry entities has been determined. These developments can be used to justify the sources and volumes of financing the priority areas for development of agriculture in the Republic of Belarus in the mid- and long-term outlook.

Combining SWOT analysis and neutrosophic cognitive maps for multi-criteria decision making: a case study of organic agriculture in India.

The conventional agricultural system heavily depends on chemicals and inorganic fertilizers, which cause environmental issues. Organic agriculture impacts 6 of the 17 Sustainable Developmental Goals (SDGs) of the United Nations. Strategies to develop organic agriculture have used SWOT and MCDM techniques for analysis. However, the examination of the influence of one strategy over the other strategies has yet to be investigated. This paper proposes a model that combines the existing SWOT analysis with neutrosophic cognitive maps (NCM) models to analyze interconnections among the various strategies obtained from SWOT. This research deploys the proposed SWOT-NCM model to analyze the case study of developing organic farming in Tamil Nadu, India. It offers insights into the strategy's influence over other strategies so that the best is given maximum importance while implementing organic farming. The framework captures the interconnections and ranks the strategies by order of influence, providing fresh insights by taking the farmers' perspective while working with the strategies from the SWOT analysis to model an NCM. A comparative analysis of this SWOT-NCM model with other MCDM models that use SWOT to analyze the agriculture problem, and a sensitivity analysis of the proposed model, is performed. According to our study, the best possible strategy to encourage organic farming is minimum support price (MSP) and centralized procurement. This proposed model can analyze other MCDM problems that use SWOT analysis.

Using fuzzy cognitive maps to develop policy strategies for the development of green rural housing: A case study in China

Under the strategy of rural revitalization, China has a considerable demand for building green rural housing. Thus, it is urgent to develop related policy strategies for green rural housing development. However, the issue of green rural housing development has been overlooked in recent studies. This research fills this gap by increasing our understanding of factors that hinder green rural housing development and identifying effective policy strategies via fuzzy cognitive maps (FCM). Firstly, 23 system variables were identified including 8 policy drivers, 12 system structure variables and 3 system outcome variables. Then, the causal-effect relationships among these variables were visualized. Secondly, a fuzzy inference simulation was conducted to explore the most effective policy strategies for green rural housing development. The results show that these factors inhibiting green rural housing development are interrelated, which form solid vicious cycles not only between economic factors, social factors and technological factors but also within these sub-aspect factors. Three policy mixes were identified as the most effective policy strategies: financial support and price support, infrastructure development and technology support, guiding information and certification and labelling. The results offer a valuable reference to policy-making on facilitating rural green housing development.

Optimum Support Policy Component for the Development of Agricultural Production: Potato Producer

The present study aimed to determine the optimum policy component in an example of potato cultivation development based on the principle of the efficient use of scarce resources and maximizing the benefit of the producer. Agricultural support policies are commonly implemented by adopting a top-down approach. Regarding benefit maximization at the target group level, policies for agricultural products should be determined with a bottom-up approach. In this manner, in the present study, potato producers were determined to be the target group. Therefore, this study investigated the policy component that provides the highest benefit in line with the demands, expectations, and tendencies of the target group. The micro-data obtained from the potato-growing enterprises operating in provinces where potato cultivation was intensively carried out within the scope of Turkey constituted the research data. A face-to-face survey technique was used as the method for collecting the producer data. Simple descriptive statistics and one of the multivariate analysis techniques, conjoint analysis, were applied in the analysis and evaluation of the data. The optimum policy component setup was determined to be “Price and Payment Support: Above Market Price and 2 months term, Support Area and Amount: to production, 25.47 USD/da (23.04 EUR/da), time of announcement for the supports: pre-planting, and producer’s declaration: I do (I declare)” for the potato product. Accordingly, the necessity of a bottom-up approach in the planning and implementation of an agricultural support policy in Turkey is explained based on the results obtained. Therefore, it is considered necessary and beneficial to measure the level of producer benefits on the focus of applications that encourage potato production.

Techno‐economic and policy analysis of hydrogen and gasoline production from forest biomass, agricultural residues and municipal solid waste in California

AbstractTechno‐economic and policy analyses were performed of hydrogen and gasoline production from forest biomass (FB). They were compared with fuels produced using agricultural residues and municipal solid waste in California. Twelve process designs were analyzed, with and without carbon capture and storage, and life‐cycle analysis was performed, using California's Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) 3.0 model, to calculate the average life‐cycle carbon intensity of different process designs for hydrogen and gasoline. Discounted cash flow models were developed to assess profitability in terms of the net present value and internal rate of return (IRR). The results showed that forest‐to‐fuel pathways (positive IRR between 2%−16%) were the least competitive biomass‐based pathway option. Sensitivity analysis was performed on economic parameters including feedstock price and renewable identification number (RIN) credit price. In the case of RIN credits, profitability declined significantly as the proportion of FB from federal lands increased given existing statutory limitations. Given the importance of increasing forest management to reduce wildfire risks, the necessary additional policy incentives were quantified to equalize the cost of forest‐to‐fuels pathways with the other biofuels pathways. To ensure FB‐to‐fuels pathways are cost competitive with agricultural residues, policymakers could increase the low carbon fuel standard (LCFS) credit price for forest fuels (additional credit price support of $41–75 t/CO2e), give additional credit to lifecycle emissions reductions from forest fuels (additional carbon intensity decrease of 19–76 gCO2e MJ−1), provide concessionary debt or equity with a target weighted average cost of capital (WACC) = 3–4%, subsidize capital costs (12–22% of costs), or subsidize FB delivery ($35–66 per dry ton delivered).

How damaging are environmental policy targets in terms of welfare?

International environmental agreements can lead to the design of environmental policy targets for individual countries. One of the most timely examples are targets aiming at increasing the share of renewable energy production in the overall energy mix. To reach these targets, corresponding governments must stimulate the private sector to undertake sufficient investments in time. This paper studies the effect of a subsidy on the probability of reaching a policy target and on the resulting welfare. The subsidy in the form of a fixed price support accelerates investment and increases the investment size. As such it helps to reach a policy target in time, but also has its own effects on the total surplus, the latter being the sum of producer and consumer surplus. The paper defines a new measure, “the expected Total Surplus corresponding to the Policy Target” abbreviated by TSPT, which takes all these effects into account, including the penalty that is incurred upon not reaching the policy target. Based on the TSPT we determine the optimal subsidy size. We find that a policy target increases the optimal subsidy size. An international policy target can cause a tradeoff in the sense that a large investment is required to achieve the target, while at the same time such a large investment is bad in terms of total surplus. We also find that targets designed with earlier deadlines and intermediate levels of target sizes are more effective in motivating governments to reach the target with a high likelihood. A larger penalty can induce more subsidy support from the government, but always harms total surplus.

The impact of policy changes on the mustard ecosystem: a multi-stakeholder perspective

PurposeDespite various consequences for different stakeholders in the mustard ecosystem, India prohibited blending in mustard oil to achieve self-reliance in edible oils and promote consumer health. This paper uncovers the implications of this policy on mustard production, consumption and prices.Design/methodology/approachThis paper deploys system dynamics (SD) to model the mustard ecosystem. SD uses simulation modeling to comprehend the nonlinear behavior of complex systems over time utilizing causal-loop and stock-flow diagrams.FindingsWhile the mustard price does not vary in the short run, it diverges toward a higher side in the long run due to the changed policy mandate. Surprisingly, due to the predominance of market prices, the policy administered minimum support price (MSP) was found to have a limited influence on mustard prices. Hence, the focus should be on supply augmentation through non-price-based measures like disseminating information to enhance the yield rate of seed production and promoting the adoption of efficient technologies with higher oil conversion efficiency.Research limitations/implicationsThe paper allows policymakers to quantitatively evaluate the effectiveness of policy interventions to mitigate the adverse impacts of policy mandate. It presents a reliable roadmap for policymakers to roll out effective policies.Originality/valueThe paper uncovers the system-level impact of policy on stakeholders and examines the effectiveness of MSP.