scholarly journals How has the minimum support price policy of India affected cross-commodity price linkages?

2021 ◽  
pp. 1-18
Author(s):  
Luis Emilio Morales ◽  
Jean Balié ◽  
Emiliano Magrini
Keyword(s):  
Market Integration ◽  
Commodity Price ◽  
Price Policy ◽  
Price Transmission ◽  
Agricultural Commodities ◽  
Price Shocks ◽  
Minimum Support ◽  
Risk Levels ◽  
Support Price ◽  
The Government

For several decades, the government of India has implemented a minimum support price (MSP) policy for agricultural commodities to reduce price risk levels for farmers. Concerns have been raised about whether this policy could affect market integration of related agricultural products, modify price incentives, and ultimately alter resource allocation and production between commodities. This study uses a panel vector auto-regression model across six states for the period 2002-2017 to analyse the effects of the MSP on the transmission of price shocks between cereals and oilseeds. The results demonstrate that the MSP partially and completely offsets price linkages between agricultural commodities, potentially introducing distortions in price incentives that affect land allocation and production between commodities. Beyond the effects of the MSP across commodities, Indian authorities can expect that price shocks on maize be transmitted to soybean over the next production period. Finally, this study demonstrates that the use of alternative data frequencies can identify differences in market reactions over time that can be related to production cycles and delays in price transmission.

scholarly journals An Analytical Study of Relationship between Socio-Economic Profile and Impact of Minimum Support Price Scheme on Small Farmers of Begusarai District of Bihar

2021 ◽  
Vol 8 (8) ◽  
pp. 70-79
Author(s):  
Krishna Kumar ◽  
Syed H. Mazhar
Keyword(s):  
Low Income ◽  
Price Policy ◽  
School Level ◽  
Primary Data ◽  
Extension Agents ◽  
Small Farmers ◽  
Minimum Support ◽  
Support Price ◽  
The Government ◽  
The Impact

Minimum Support Price fixed by the government to protect the farmers against excessive fall in price during bumper production years. Questions, are being raised about the efficacy and effectiveness of the instruments of price policy specifically the Minimum Support Prices. Under these circumstances it assumes greater significance to understand the impact caused by the minimum support prices on small farmers with socio-economic scale. Total of 60 beneficiaries and 60 non-beneficiaries was selected in Teghara block of Bihar district by purposive sampling method. The primary data were collected with the help of interview schedule and the responses were recorded, classified and tabulated and appropriate statistical tools were employed. The results showed that higher percentage of small farmers were middle aged, attained middle school level education and had low income, the beneficiaries who had primary school level education with high farm experience, present near to the market and contacted extension agents had been sought to have more impacted.

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.

scholarly journals Market Integration and Causality: An Application to the Major Apple Markets in India

2021 ◽  
Vol 66 (1) ◽  
Author(s):  
Shilpa S
Keyword(s):  
Impulse Response ◽  
Response Function ◽  
Market Integration ◽  
Impulse Response Function ◽  
Price Transmission ◽  
Fruit Crops ◽  
Causality Test ◽  
Additional Information ◽  
Major Implication ◽  
The Government

Market integration and prices of fruit crops such as apple play an important role in determining the production decisions of apple farmers. In this context, the present study examines the degree of spatial market integration and price transmission across five major apple markets of the country, viz. Shimla, Chandigarh, Delhi, Bengaluru and Mumbai by adopting Johansen’s Cointegration Test, Grangers Causality and Impulse Response Function. The outcomes of the study strongly buttress the cointegration and interdependence of the apple markets in India. To get additional information on whether and in which direction price transmission is occurring between market pairs, Ganger’s Causality Test has been used, which has confirmed Shimla to be the price determining market as it has causal relations with all the selected markets. The Impulse Response Function supported that all the selected markets responded well to standard deviation shock given to any other market. The major implication of the study is further improvement in market integration situation through dissemination of price and arrival data efficiently and developing communication means with in the markets by the government.

scholarly journals VOLATILITAS HARGA BAWANG MERAH DI INDONESIA

2019 ◽  
Vol 13 (2) ◽  
pp. 309-336
Author(s):  
Sahara ◽  
Mei Hardianti Utari ◽  
Zulva Azijah
Keyword(s):  
Error Correction ◽  
Economic Value ◽  
Price Policy ◽  
Transmission Efficiency ◽  
Jel Classification ◽  
Price Transmission ◽  
Wholesale Market ◽  
Error Correction Models ◽  
Market Inefficiencies ◽  
The Government

Abstrak Bawang merah merupakan salah satu komoditi hortikultura yang strategis dan bernilai ekonomi tinggi. Penelitian ini bertujuan untuk menganalisis efisiensi pemasaran (transmisi) dan asimetri harga bawang merah di Indonesia. Analisis asimetri harga dilakukan dengan menggunakan pendekatan Error Correction Models (ECM). Hasil penelitian menunjukkan bahwa telah terjadi asimetri harga yang berarti bahwa transmisi harga atau harga yang diteruskan antara  lembaga pemasaran. Hal ini disebabkan karena transmisi harga berlangsung secara tidak sempurna akibat adanya inefisiensi pasar baik dalam jangka pendek maupun jangka panjang. Dalam hal ini produsen tidak mendapat manfaat atas kenaikan harga di tingkat konsumen dan konsumen tidak mendapat manfaat atas penurunan harga di tingkat produsen. Hasil penelitian ini merekomendasikan perlunya campur tangan pemerintah untuk mengawasi rantai pemasaran sampai ke pasar induk. Pemerintah perlu menata distribusi sentra produksi, distribusi hasil panen antar wilayah, serta mengawasi dan mengevaluasi kebijakan harga bawang merah. Kebijakan-kebijakan tersebut bertujuan untuk menjamin kecukupan dan kelancaran distribusi bawang merah. Kata Kunci: Asimetri, Bawang Merah, ECM, Transmisi Harga. Abstract Shallot is one of the strategic horticultural commodities and has a high economic value. This study aims to analyze marketing (transmission) efficiency and asymmetry of the price shallots in Indonesia. Price asymmetry analysis is performed using the Error Correction Models (ECM) approach. The results showed that there had been price asymmetry which meant that the transmission of prices or prices were passed on between marketing institutions. This is due to the imperfect transmission of prices due to market inefficiencies both in the short and long term. In this case producers do not benefit from price increases at the consumer level and consumers do not benefit from price decreases at the producer level. The result of this research recommend the need for government intervention to oversee the marketing chain to the wholesale market. The government needs to organize the distribution of production centres, distribution of harvests between regions, and oversee and evaluate the shallot price policy. These policies aim to ensure the adequacy and smooth distribution of shallots. Key words : Asymmetry, ECM, Price Transmission, Shallot. JEL Classification : Q11, Q12, Q13

scholarly journals Interrogating the MSP Regime, Farm Laws and Agrarian Future in India

2021 ◽  
pp. 097639962110569
Author(s):  
Pritam Singh ◽  
Shruti Bhogal
Keyword(s):  
Agricultural Marketing ◽  
Minimum Support ◽  
Support Price ◽  
The Government ◽  
Legal Right

The three new farm laws promulgated by the Government of India in 2020 as agricultural marketing reforms, with the claim that they were aimed at expanding farmers’ marketing choices and increasing their incomes, have triggered massive protests by farmers. These protests have crystallized around two key demands: first, repeal the laws and second, make the minimum support price (MSP) for procuring farmers’ produce a legal right. Given that discussions between the government and farmers’ organizations continue to be at an impasse, it is critical to understand the arguments over the laws and the MSP, and the implications of these arguments for the agrarian future of India.

scholarly journals Evaluation of Rice Markets Integration in Bangladesh

2010 ◽  
Vol 15 (2) ◽  
pp. 77-96 ◽  
Author(s):  
Mohammad Ismail Hossain ◽  
Wim Verbeke
Keyword(s):  
Market Integration ◽  
Structural Adjustment ◽  
Agricultural Sector ◽  
Price Transmission ◽  
Long Run ◽  
Adjustment Program ◽  
Integration Test ◽  
Short Run ◽  
The Government ◽  
Market Interdependence

The liberalization of the agricultural sector in general and the rice subsector in particular has been a major component of Bangladesh’s structural adjustment program initiated in 1992. However, the government has continued to intervene in the rice subsector. This paper examines whether the regional/divisional rice markets have become spatially integrated following the liberalization of the rice market. Wholesale weekly coarse rice prices at six divisional levels over the period of January 2004 to November 2006 were used to test the degree of market integration in Bangladesh using co-integration analysis and a vector error correction model (VECM). The Johansen co-integration test indicated that there are at least three co-integrating vectors implying that rice markets in Bangladesh during the study period are moderately linked together and therefore the long-run equilibrium is stable. The short-run market integration as measured by the magnitude of market interdependence and the speed of price transmission between the divisional markets has been weak.

Has Agricultural Price Policy Benefitted Paddy Farmers?

2021 ◽  
pp. 77-102
Author(s):  
A. Narayanamoorthy
Keyword(s):  
Time Series Data ◽  
Price Policy ◽  
Series Data ◽  
Agricultural Commodities ◽  
Elasticity Of Demand ◽  
Support Price ◽  
Paddy Farmers ◽  
Paddy Crop ◽  
Agricultural Price ◽  
The Impact

This chapter looks at the impact of support price policy on the income from paddy crop. Markets for agricultural produces in India are mostly unorganized and distorted where farmers are often scrupulously exploited. Also since the elasticity of demand for agricultural commodities particularly foodgrains is less than unit, increased production during bumper harvest brings down the prices of agricultural commodities sharply. But, the support price provided to paddy has come under severe scrutiny for various reasons in recent years. Farmers have been demanding for higher support price for paddy but some economists argue that increase in paddy price is ‘dirty economics and dirtier politics’. With the help of time series data, chapter 4 provides an elegant analysis whether the support price scheme has helped paddy cultivating farmers in terms of increasing their income.

scholarly journals Government Interventions, Market Integration, and Price Risk in Pakistan’s Punjab

1996 ◽  
Vol 35 (2) ◽  
pp. 129-144 ◽  
Author(s):  
Takashi Kurosaki
Keyword(s):  
Market Integration ◽  
Salient Feature ◽  
Government Support ◽  
Price Support ◽  
Government Interventions ◽  
Support Mechanism ◽  
Support Price ◽  
The Government ◽  
Unexplained Variation ◽  
Market Surplus

This paper empirically examines the spatial and intertemporal price relations of grains in Pakistan’s Punjab. The salient feature of the paper is that quantity variables such as market surplus and government release are incorporated in the price arbitrage model to quantify the effects of government interventions. Regression analysis using three-year crosssection data shows that the farm-gate prices of wheat after harvest are mostly explained by the government support price while those of Basmati paddy have more unexplained variation. This difference could be due to a difference in the price support mechanism. Investigation on intertemporal price relations shows that wholesale wheat prices regularly increase at the rate of storage costs in the first half of a food year, and that the price rise is repressed by the government release in the second half only in a normal year.

scholarly journals Farmers’ Agitation in India Due to Audacious Farm Bill of 2020

2021 ◽  
Vol 4 (1) ◽  
pp. 35-37
Author(s):  
Subhendu Bhattacharya ◽  
Utsavi Patel
Keyword(s):  
Land Reform ◽  
Crop Insurance ◽  
Safety Net ◽  
Farm Bill ◽  
Agricultural Output ◽  
Minimum Support ◽  
Indian Agriculture ◽  
Support Price ◽  
The Government ◽  
Corporate Support

Farmers are doing primary and significant duty for the society by engaging in agriculture. They are tirelessly ploughing the field, planting the seed, watering the land and yielding crops. Production of cereals, pulses, fruits and vegetable are necessary to feed people of billion plus nation and ensuring food security. It is necessity of the government to provide necessary support with legislation of law, enactment of the same, crop insurance and provision of subsidy for agricultural inputs. There should be advancement in irrigation facility, application of biotechnology, credit facility, land reform and availability of market. But new framed agricultural reform act enraged the farmers and injected fear in their mind. Farmers feel apprehensive regarding the restructuring of the Indian agriculture. There is a shadow of uncertainty about annulment of minimum support price facility. It is presumed that new farm bill would take away Mandi facility which so far gave assurance to selling of crop. Although middle men were involved in the process, farmers were sanguine about selling of agricultural output with intermediation of them. Farmers so far enjoyed crop insurance and minimum support price for agricultural output. But newly passed bill in parliament spread tension among farmers about future uncertainties. Fear and ambiguity lingered with respect to corporate support and assurance. Loss of land and livelihood to corporate also gripped the minds. Question revolved about farmers wherewithal and whereabouts if corporates fail to buy crop or agricultural output. Like majority of Indian citizen, farmers are devoid of social security measure. Corporate indifference might cause grave loss for poor farmers in the absence of safety net. But sticking to this defunct system, would result in more harm than good for Indian farmers.

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.

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