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Informist, Wednesday, Mar. 5, 2025

NEW DELHI – Only 15% of paddy farmers and 9.6% of wheat farmers have benefited from the minimum support price-based procurement system, a recent study conducted by the Indian Council of Agricultural Research-National Institute of Agricultural Economics and Policy Research has found. The paper titled "The Dilemma of Agricultural Price Policy Reforms Balancing Food Security, Farmers' Interests, and Sustainability of Natural Resources" has been authored by Prabhat Kishore, Pratap S. Birthal, and S.K. Srivastava. Kishore is a scientist at the institute, Srivastava is senior scientist and Birthal is the director of the research institute. The study is based on data from the Situation Assessment Survey of Agricultural Households 2018-19.

According to the study, paddy farmers managed to sell only about 24% of their marketable surplus at the benchmark price, while wheat farmers fared slightly worse, selling around 21% at this rate. The study also implies that only large farmers make most gains from government procurement, stating that smallholders' participation in the minimum support price-backed procurement system appears to be constrained by their scale of production. "The data reveals an apparent disparity in participation rates across different farm categories," it says. 

The study finds that marginal farmers have a notably low engagement with the MSP-backed procurement system with only 10.5% of paddy sellers and 4.5% of wheat sellers from this farm class participating in it. "In contrast, large farmers have a significantly higher engagement with this system; 31.3% of paddy sellers and 23.4% of wheat sellers participate by selling 37.8% of their surplus paddy and 29.8% of wheat," it reads. 

Commenting on the effectiveness of the MSP-based system, the study found that farmers who did not participate in the system realized lower prices than the support prices and had significantly lower crop yield. It said that farmers in the MSP system could realise a 13.5% higher yield of paddy and a 5% higher yield of wheat. 

The study says that by reducing market uncertainty and price risk and contributing to yield enhancement, the minimum support price-backed procurement system could result in a 23.2% higher income from paddy cultivation and 9.6% more income from wheat cultivation.  End

Reported by Pallavi Singhal

Edited by Tanima Banerjee

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