A committee set up to examine the methodological issues in fixing the minimum support price (MSP) by the Union Government has submitted its report recommending drastic measures to improve the price-fixing mechanism of the Commission for Agriculture Costs and Prices (CACP).
The committee was headed by Prof Ramesh Chand, Director, National Centre for Agricultural Economics and Policy Research. Punjab Mandi Board Chairman Ajmer Singh Lakhowal was one of the 11 members of the committee.
As Swaminathan Commission had recommended fixing the MSP at least 50 per cent more than the weighted average cost of the production of a crop, the recommendations of this committee have a special significance.
Ajmer Singh Lakhowal said here today that recommendation of the committee should be implemented with immediate effect. Though farmers are never satisfied with the MSP that is fixed in the case of wheat, paddy and other crops by the CACP, one good aspect is that it ensures that a majority of farmers would not get less price than the MSP of their crop.
The committee has recommended that farmer should be treated as an expert in agriculture work and head of the family engaged in farming should be treated as skilled labour and his wage should be calculated accordingly. Counting the time spent by farmers in production alone and value it as the wage rate of ordinary labour is gross undervaluation of farmer’s time, states the report.
Interest on the working capital should be estimated for a whole, not half, period of the crop season and the actual interest paid by the farmer, who is chosen for a sample of study to work cost of production, should be taken into account. Land rental value should be based on the actual rates prevailing in the sample villages or with the sample farmers in particular without fixing any ceiling on the same. Animal labour charges should be counted for the whole year and not only as per the number of hours that the bullock pair works. Post harvest costs like cleaning, grading, drying, packaging, marketing and transportation of produce to market incurred by farmers should form part of the cost of the cultivation (COC). Appropriate risk margin should also be added to arrive at the cost of cultivation.
The committee has observed that interest and depreciation on the fixed capital should be projected by raising them at the rate of inflation. At least two villages should be selected from each block to work out the cost of production.