A Viable Crisis of MSP & Agricultural

Marketing in India

Piyush Kumar Mishra (2014078)

Sanjana Singh (2014102)
 Why MSP?
 MSP came out as a failure although it was coined as a brilliant
initiative to protect the interest of the farmers.

 It was saved for the times when the price in international market
was high.

 Determination of MSP has always been a challenge for the

government.

 It is cost ineffective.

 Wrecked governmental policies.

 Critical Points
• International Markets

• Asymmetry between Cost of production & MSP

• Shifting in cropping pattern

• Credit tying arrangements

• Government intervention

• MSP not in pace with cost

• Falling market prices & procurement policies

• Failure of MSP regime & Inflation

• Reformation
 Suggestions
• Building Awareness
• Role of farmers in MSP calculation
• Financial facilities
• Storage facilities
 Agricultural Marketing
 The regulatory framework for agricultural markets consists of
two sets of measures.
 One, measures for the development and regulation of wholesale
markets
 Two, a series of legal instruments for regulating the functioning
of markets and trade activities.
 Agricultural Produce Market Regulation Act, 1966 which
mandates sale of products to be carried out in specific market
areas.
 Prices in them are to be determined by open auction, conducted
in a transparent manner in the presence of an official of the
market committee.
 Deficiencies
 The growth in market facilities did not keep pace with the
growth in market arrivals, forcing producers to seek the help of
middle men in the market.
 There was also a reversal in the credit situation after 1991,
making farmers more dependent on commission agents and
traders for loans.
 Agricultural markets in the country are crowded with small
traders who operate on a small scale in a limited market segment.
 There is the absence of proper ware housing facilities in the
villages.
 The different varieties of agricultural produce are not graded
properly.
 The number of unregulated markets in the country is
substantially large. The Arhatiyas and brokers, taking advantage
of the ignorance, and illiteracy of the farmers, use unfair means
to cheat them.
 It is often not possible for the farmers to obtain information on
exact market prices in different markets. So, they accept whatever
price the traders offer to them.
 The co-operative marketing societies have generally catered to
the needs of the large farmers and the small farmers are left at
the mercy of the money lenders.
 The Department of Agriculture and Cooperation introduced a
central sector scheme, the ‘Grameen BhandaranYojana’, in
March 2002 to promote the construction of rural godowns.
 Recommendations for the XII
Plan
 Producers organizations (PO) could be the best alternative for
enabling farmers / producers to get better remuneration for their
produce.
 Linking directly producers with Retailers / processors /
Exporters is another alternative marketing system which is cost
efficient.
 Promote more of Rythu Bazaars / Kisan Bazaars which allows
farmers to directly sell their produce to consumers without
intermediaries .
 There is a need to combine value chain promotion with
livelihood perspective to enable the resource poor to enter in to
and stay in to globalized commercial markets.
 Choosing the right market and a market development strategy is essential to
scale up the operations that can come only by innovation of products and
business models.

 Partnership with the private sector can come in handy as they can provide
technology, and upgrade business (quality) and social standards.

 Inefficient marketing system has led to an avoidable waste of around Rs

50127 crores. A major part of this can be saved by introducing scale and
technology in agricultural marketing.

 Different channels of marketing to be introduced.

 Conclusion
• Agriculture marketing in India has made notable progress since independence
but many challenges still remain. A dynamic and vibrant marketing system
with adequate supply chain infrastructure has been felt necessary to keep pace
with the changing agriculture production and growing market surplus.
Moreover efforts should be made at all legal and policy levels to strengthen
the rural economy and create rural employment, which will surely augment
production and productively leading to food security and inclusive growth of
the country. There is also increasing pressure an agriculture produce economy
to respond to the challenges and opportunities that the global markets pose in
the era of globalization and liberalization.