The Value and Cost of Crop Minimum Support Price: Farmer and Consumer Welfare and Implementation Cost

2021 ◽  
Author(s):  
Prashant Chintapalli ◽  
Christopher S. Tang
Keyword(s):  
Crop Production ◽  
Market Price ◽  
Consumer Welfare ◽  
Social Value ◽  
Production Costs ◽  
The Other ◽  
Implementation Cost ◽  
Net Benefit ◽  
Minimum Support ◽  
Support Price

In many developing countries, crop minimum support price (MSP) is a subsidy scheme to (i) improve farmer welfare by safeguarding farmers’ incomes against vagaries in crop price and (ii) improve consumer surplus by ensuring sufficient crop production. Among different mechanisms to operationalize an MSP scheme, we focus on credit-based MSPs under which the government credits farmers should the prevailing market price be below the prespecified MSP. By accounting for the implementation cost of the MSP, we examine the effectiveness of the MSP in terms of net benefit (i.e., farmer’s surplus minus the implementation cost) and net social value (i.e., sum of farmer’s and consumer’s surpluses minus the implementation cost) in a market that consists of risk-averse farmers with heterogeneous production costs. Also, farmers face two types of uncertainties: (1) market and (2) production yield uncertainty. We find that a credit-based MSP can induce crop production, which is intuitive. However, we find some more interesting results: (i) offering a higher MSP may not improve farmer’s surplus, (ii) the net benefit of an MSP can be negative—the cost of offering an MSP can exceed the farmer’s surplus, and (iii) there exists an MSP that maximizes the net social value. We extend our single-crop model to the case of two crops to capture the intercrop MSP interaction. We show that when one crop is more rewarding but riskier than the other crop, then it is sufficient to offer an appropriate MSP for one of the two crops while offering no MSP to the other crop. This paper was accepted by Vishal Gaur, operations management.

scholarly journals CORRESPONDENCE ANALYSIS PADA HUBUNGAN FAKTOR-FAKTOR YANG MEMPENGARUHI PENDAPATAN PETANI KOPI PAGARALAM

2021 ◽  
Vol 15 (1) ◽  
pp. 179-192
Author(s):  
Irmeilyana Irmeilyana ◽  
Ngudiantoro Ngudiantoro ◽  
Desty Rodiah
Keyword(s):  
Correspondence Analysis ◽  
Crop Production ◽  
Market Price ◽  
Production Costs ◽  
Primary Data ◽  
Net Income ◽  
Land Productivity ◽  
Coffee Beans ◽  
Coffee Farmers ◽  
Coffee Farming

Pagaralam is one of the coffee-producing districts in South Sumatra (Sum-Sel). Pagaralam coffee farming is a hereditary business, where the majority of land processing is still traditional. This is related to working capital and farmers' income. This study aims to analyze the factors that affect the income of Pagaralam coffee farmers by using correspondence analysis. There are 30 variables or factors studied. Each variable is divided into several categories. The categories of each variable are described graphically with the categories of income variable. Primary data were obtained from 196 respondents who were selected based on purposive sampling technique. There are 13 factors that affect the income of respondents, namely: number of dependents, number of trees, age of the trees, number of female workers from outside the family, frequency of fertilization, frequency of herbicide application, production of harvest, production outside of harvest, gross income, minimum price of coffee beans, the maximum price of coffee beans, economic status and land productivity. There are 8 of the 13 factors that predominantly characterize the profile of net income level of Pagaralam coffee farmers.  In general, the factor that must be considered in coffee farming is land productivity which is also related to production costs in land processing and crop production, as well as external factors regarding the market price of coffee.

scholarly journals Development of Agriculture Model to Measure Survival Income for Different Categories of Agriculture Land-Holding Farmers

2021 ◽  
Author(s):  
Masood Ahmed
Keyword(s):  
Rural Population ◽  
Market Price ◽  
Small Farmers ◽  
Poverty Level ◽  
Minimum Support ◽  
Agriculture Land ◽  
Support Price ◽  
The Impact

The rural population percentage decreased from 82.7% to 68.9% in 2011, even though there is an increase in the total rural population, which stands at 833.7 million, and the rural population were now more than three times compared to the population seven decades ago. Another observation is the decrease in cultivators percentage from 71.9% to 45.1 %, while agriculture labour increase from 28.1% to 54.9% during the same period. Despite the increase in irrigated land and net area sown, the average holdings' size under the farmers is continuously decreasing, and it requires a study to look into the reasons. The research probes the role of Minimum Support Price (MSP) in supporting farmers and measuring market price above MSP needed to help marginal and small farmers remain above the poverty level. It explains how different market rates above MSP have a different impact on different categories of agriculture landholding. The study works on developing a common model that relates the impact of MSP on different farmers categories. The model can be generalized to all crops and regions and useful in designing policies that focus on uplifting the income of agricultural farmers.

scholarly journals The Potential of Temporary Immersion Bioreactors (TIBs) in Meeting Crop Production Demand in Nigeria

2012 ◽  
Vol 3 (1) ◽  
Author(s):  
Paul Terwase Lyam ◽  
Mutah Lalai Musa ◽  
Zainab O Jamaleddine ◽  
Ugochukwu Anthony Okere ◽  
Wasiu Tiwalade Odofin
Keyword(s):  
Crop Production ◽  
Large Scale ◽  
Culture Media ◽  
Labour Force ◽  
Production Costs ◽  
The Other ◽  
Multiplication Rate ◽  
Liquid Media ◽  
Temporary Immersion ◽  
Bioreactor System

Micropropagation, popularly known for large-scale clonal propagation, is the first major and widely accepted practical application of plant biotechnology. The commercial utility of conventional micropropagation of important crop species is limited as a result of the large numbers needed annually to start up new farms in addition to high production costs. These result primarily from high labour cost, low multiplication rate or long duration of multiplication before plantlets are taken to the field, and poor survival rates resulting from contamination risks and during acclimatization. All of these constitute a major setback in the use of Micropropagation for scaling up of the several economic species for commercialization. Temporary Immersion Bioreactor system (TIBs) is a relatively recent micropropagation procedure that employs the use of automated gadgets to control rapid multiplication of plant cultures under adequate conditions. TIBs provide a more precise control of the adequate conditions (gaseous exchange, illumination etc.) required by plants for growth, development and survival than the conventional culture vessels. This bioreactor system incorporates a number of features specifically designed to simplify its operation and reduce production costs. The set-up consists of two vessels, one for the plantlets and the other one for the liquid culture media coupled together through a perforated rubber tubing that permits the flow of the liquid media from one vessel to the other. TIBs consist of three main phases: Multiplication, Elongation and Rooting phase. Plantlets propagated in TIBs have better performance than those propagated by conventional methods of micropropagation. This is as a result of a better handling of the in vitro atmosphere and the nutrition. TIBs provide a rapid and efficient plant propagation system for many agricultural and forestry species, utilizing liquid media to avoid intensive manual handling.  In addition to diminishing production costs regarding labour force, Temporary Immersion Bioreactors save energy, augment micropropagation productivity and efficiency.

scholarly journals On the Wheat Price Support Policy in Pakistan

2019 ◽  
Vol 1 (3) ◽  
pp. 80-86
Author(s):  
Muhammad Aamir Shahzad ◽  
Amar Razzaq ◽  
Ping Qing
Keyword(s):  
Financial Burden ◽  
Production Costs ◽  
Price Support ◽  
Minimum Support ◽  
Wheat Production ◽  
Support Price ◽  
The Government ◽  
The Impact ◽  
Heavy Financial Burden ◽  
Price Policies

Wheat is Pakistan's main food and strategic crop. Currently, the government controls wheat prices through a minimum support price (MSP) policy to encourage production. However, despite the increase in wheat production, input costs and output prices have been increasing over the years. This paper aims to analyse the impact of wheat support price policies. We use data from different government sources to estimate the financial implications of MSP and compare the support price policies of India and Pakistan. We find that Pakistan’s current minimum support price policy encourages farmers to produce larger quantities of wheat, but this places a heavy financial burden on the country's finances. Our results indicate that the higher MSP of wheat has made the country lose its competitiveness in the international market. Besides, we found that the cost of wheat production in Pakistan is much higher than in India. These higher production costs force the government to raise the MSP to maintain farmers' profitability. The high MSP is guaranteed by subsidizing the procurement and release of wheat, which imposes a heavy financial burden on government finances. In addition, the rise in wheat prices in recent years has also hurt consumers. Policymakers can redistribute subsidies by subsidizing wheat inputs, especially fertilizers and seeds, to reduce production costs. To this end, the best policy intervention may be to provide input subsidies rather than subsidies on purchase prices. A reduction in input costs will correspondingly reduce output prices, which will increase farmers' profitability, consumer surplus and the international competitiveness of Pakistani wheat.

scholarly journals Farm Size, Cropping Pattern and Productivity Variation in Punjab: The Analysis of Mansa and Jalandhar Districts

2013 ◽  
Vol 3 (2) ◽  
pp. 22-37
Author(s):  
Jagdeep Singh ◽  
Hanuman Singh Yadav
Keyword(s):  
Productivity Growth ◽  
Modern Technology ◽  
Rice Cultivation ◽  
The Other ◽  
Farm Size ◽  
Cropping Pattern ◽  
Small Farmers ◽  
Minimum Support ◽  
Support Price ◽  
Increase In Productivity

The present paper analyzes the trend and patterns of farm size, productivity and cropping pattern in districts of Mansa and Jalandhar. The results show that medium and large holdings are increasing in number over the time in both the districts. Increase in size of holdings coupled with other factors like increase in productivity in limited number of crops, minimum support price for wheat and rice as well as higher possibility of use of modern technology in wheat and rice cultivation has lead to wheat rice cycle. The other crops like cotton, maize, potato etc. are more popular among marginal and small farmers. It may be due to easy availability of family labour. Overall, the study points towards specialization in the cropping pattern, stagnation in productivity growth and increasing size of operational holdings.

Effectiveness of Auctions in Securing Price Support for Farmers: The Case of a Grain Market in India

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Neha Gupta
Keyword(s):  
Lower Cost ◽  
Secondary Data ◽  
Price Support ◽  
Minimum Support ◽  
Minimum Price ◽  
Support Price ◽  
The Government ◽  
Nonparametric Estimates ◽  
The Impact ◽  
Analyze Data

Abstract This paper reviews rice procurement operations of Government of India from the standpoints of cost of procurement as well as effectiveness in supporting farmers’ incomes. The two channels in use for procuring rice till 2015, were custom milling of rice and levy. In the first, the government bought paddy directly from farmers at the minimum support price (MSP) and got it milled from private millers; while in the second, it purchased rice from private millers at a pre-announced levy price thus providing indirect price support to farmers. Secondary data reveal that levy, despite implying lower cost of procurement was discriminated against till about a decade back and eventually abolished in 2015 in favor of custom milling, better trusted to provide minimum price support. We analyze data from auctions of paddy from a year when levy was still important to investigate its impact on farmers’ revenues. We use semi-nonparametric estimates of millers’ values to simulate farmers’ expected revenues and find these to be rather close to the MSP; a closer analysis shows that bidder competition is critical to this result. Finally, we use our estimates to quantify the impact of change in levy price on farmers’ revenues and use this to discuss ways to revive the levy channel.

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