Evaluation Study - | NITI Aayog

1 Evaluation Study On Efficacy of Minimum Support Prices (MSP) on Farmers (DMEO Report ) NITI Aayog Development Monitoring and Evaluation Office Government of India New Delhi-110001 January, 2016 PREFACE Based on the recommendations of the Commission for Agricultural Costs and Prices, the Department of Agriculture and Co-operation, Government of India, declares Minimum Support Prices (MSP) for 22 crops before their sowing seasons. The idea behind MSP is to give guaranteed price and assured market to the farmers and protect them from the price fluctuations and market imperfections. The guaranteed price and assured market are expected to encourage higher investment and in adoption of modern farming practices.

2 Further, with the globalization resulting in freer trade in agricultural commodities, it is very important to protect the farmers and their interest. The Evaluation Study on MSP was carried out by the erstwhile Programme Evaluation Organization (PEO), now the Development Monitoring and Evaluation Office (DMEO), on a request received from the Ministry of Agriculture, Government of India. The Study was designed with an objective to explore the effectiveness of MSP and to ascertain if the intended benefits have reached the farmers after such a long period of implementation.

3 The constraints faced in the implementation of MSP have also been analyzed. The Study was conducted by in-house by DMEO by utilizing the services of its 15 field units viz. Regional Evaluation Offices & Project Evaluation Offices. The Study covered 14 States, 36 Districts, 72 Blocks, 144 Villages and 1440 Households. The Study is based on both the primary and secondary data. The Study reference period was from the year 2007-08 to 2010-11. The Study design was prepared by Dr. RC Dey, DMEO and the REO, Kolkata played an important role in consolidating the inputs received from all the field units.

4 The Study report is divided into VIII Chapters. The Ist Chapter is introductory and IInd explains the objectives and methodology of Study . Chapter III, IV, V and VI discuss the Implementation Process, Market Accessibility & Effectiveness, MSP Impact and MSP Monitoring respectively. An attempt has been made in Chapter-VII to analyze the latest one year data (2010-11). Finally, the Chapter VIII carries the Study Findings, Suggestions and Conclusion. I hope the Study findings and suggestions would help the implementing organizations in improving the effectiveness and efficiency of MSP. The Study received constant support and encouragement from the CEO, NITI Aayog and the Director General (DMEO).

5 I am thankful to the DMEO officers and staff for their contribution in finalizing this Evaluation Report. Place: New Delhi C. Angrup Bodh Dated: January, 2016 Adviser (DMEO) 1 Evaluation Report on Minimum Support Price CONTENTS Page Nos. Executive Summary 07-11 Evaluation Objectives Evaluation Methodology Reference Period Major Findings State Specific Findings Findings Based on Case Study Study Recommendations Chapter I. Introduction 12-14 Introduction of MSP Determination of Minimum Support Price Viability of the Study Chapter II. Objectives and Methodology 15-18 Study Objectives Methodology Reference Period Data Collection/Questionnaires/Field Survey Sampling Framework Instruments of Observation Chapter III.

6 Implementation Process 19-41 Organizational Mechanism in States Performance of Agencies in Implementation of MSP Identification of Regional and Inter Crop Price Variations Roles Played by Other Agencies in MSP Protection of Farmers from Market Imperfections Chapter IV. Market Accessibility and Policy Effectiveness 42-49 Awareness of MSP and Timeliness in their Announcement MSP as an Incentive Price 2 Evaluation Report on Minimum Support Price Payments, Underweight and Distress Selling Constraints in MSP faced by the Beneficiaries Chapter V. Impact of Minimum Support Price 50-67 Impact on Cropping Pattern Change in Adoption of Technology due to MSP Impact of MSP on Income of Farmers Chapter VI.

7 Monitoring of the Scheme 68-71 Chapter VII. Case Study 72-81 Generation of Annual Income from Agriculture by Farmers Awareness of Farmers about MSP Medium of Awareness about MSP Production, Consumption and Sale of Major Crops Mode of Payments Received by the Farmers Delays in Receiving MSP Payments Mediums adopted by farmers to sell their Produces Chapter VIII. Findings, Suggestions and Conclusion 82-86 Study Findings Findings Based on Case Study State Specific Findings Suggestions Conclusion List of Tables 03-04 List of Abbreviations 05-06 Annexures 87-94 3 Evaluation Report on Minimum Support Price List of Tables Tables Table Title Page No.

8 All-India average growth in Area, Production and Yield of Major Crops 12-13 Main Crops Procured State-wise under MSP (2007-10) 14 Production of some important crops under MSP in the selected States 16 Procurement of crops at State level by other agencies Under MSP operations in Andhra Pradesh 24 Procurement for Assam 24 Procurement for Bihar 25 Cotton Procurements under MSP in Gujarat 25-26 Other Crop Procurements under MSP in Gujarat 26 Procurement for Karnataka 27 Procurement for Madhya Pradesh 27-28 Procurement for Maharashtra 28-29 Procurement for Odisha 29 Procurement for UP 29 Procurement for Uttarakhand 30 Procurement for Punjab 30-31 Procurement for West Bengal 31 Procurement of crops at State level by different

9 Agencies Under MSP and MIS operations in Tamil Nadu 31-32 Procurement for Rajasthan 32 Wholesale prices and its variations in Andhra Pradesh 32-33 Wholesale prices and its variation in Assam 33 Wholesale prices and its variation in Gujarat 34 Wholesale prices and its variation in Karnataka 34 Wholesale prices and its variation in MP 35 Wholesale prices and its variation in Maharashtra 35 Wholesale prices and its variation in Odisha 36 Wholesale prices and its variation in Rajasthan 36 Wholesale prices variation in Tamil Nadu 37 District wise variation in Maximum Price and Minimum Price in UP 38 Wholesale prices and its variation in WB 38 Impact on the Cropping Pattern in selected district of AP 50 Area as % to Gross Cropped Area -GCA in Andhra Pradesh 50-51 Impact on Cropping Pattern in selected district of Assam 51-52 Impact on Cropping Pattern in selected district of Bihar 52 Impact on cropping pattern in the three selected districts in Bihar 52-53 4 Evaluation Report on Minimum Support Price Impact on Cropping Pattern in selected district of Gujarat 53 Impact on land use in Karnataka State 53 Impact on land use in Punjab 54 Impact on Land Use in the sampled districts in MP 55 Percentage to

10 Gross Cropped Area in the sampled districts in MP 55 Impact on the Cropping Pattern in Maharashtra 56 Impact on the Cropping Pattern in selected districts of Maharashtra 56 Impact on the Cropping Pattern in Odisha 57 Impact on the Cropping Pattern in Rajasthan 57-58 State level impact on land use crop-wise Tamil Nadu 58 Impact on the Cropping Pattern in UP 58 Area as % to Gross Cropped Area-GCA) in UP 59 Impact on the Cropping Pattern in Uttarakhand 59 Income from agriculture in the selected households in Andhra Pradesh 62 Income from agriculture in the selected farm households in Bihar 62 Income from agriculture in the selected farm households in Gujarat 63 Income from agriculture in the selected farm households in Karnataka 63 Income from agriculture in the selected farm households in Maharashtra 64 Income from agriculture in the selected farm households in Odisha 64 Income of the Households from agriculture in the villages in Rajasthan 65 Income from agriculture in the selected farm households in