January 31, 2011

Indian government needs to consider higher costs when pricing crops

India's farm sector has demanded the government consider increasing cultivation costs when fixing the support price of all agricultural crops next year, according to Agriculture Minister Sharad Pawar.

Farmers are witnessing an increase in their production costs, especially, after the hike in fuel prices and rise in labour costs, he said.

The country's food grains production has been improving because of good hike in MSP over last few years, he added.

The government fixes the minimum support price (MSP) of 21 crops to ensure remunerative prices to farmers to encourage higher investment and production of agricultural commodities.

MSP is fixed after taking into account the suggestions of the Commission for Agricultural Costs and Prices (CACP). The minister said that the government is in the process of appointing the Chairman of CACP.

In the last seven years, the support price of major crops has almost doubled. As a result, the country's wheat production has increased substantially, achieving a record output of 80.68 million tonnes, in the 2008-09 crop year. Wheat price has risen from INR640/quintal (US$14) to INR1,120/quintal (US$24) in the review period.