scholarly journals Cash Settled Commodity Option Contracts as an Alternative to Minimum Support Price: A Mechanism to Alleviate Farmer Distress

2020 ◽  
Vol 11 (4(I)) ◽  
pp. 50-53
Author(s):  
Sree Rama Murthy Y
Keyword(s):  
Options Market ◽  
Market Prices ◽  
Put Options ◽  
Minimum Support ◽  
Option Contracts ◽  
Support Price ◽  
The Government

Cash settled commodity options is a possible alternative to create a mechanism so that minimum support prices work in reality and do not remain a paper exercise. This paper argues that the government should create a commodity options market for all minimum support price (MSP) commodities. Further option contracts should be cash settled. The government should participate by selling put options at or above the minimum support price, so that farmers can exercise the option if they find that market prices are below the minimum support price.

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 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 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 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.

Dynamics of Cost, Returns and Profitability of Soybean across Leading States of India

2021 ◽  
pp. 282-288
Keyword(s):  
Growth Rates ◽  
Production Cost ◽  
Net Income ◽  
Market Prices ◽  
Significant Growth ◽  
Support Price ◽  
Cost Of Production ◽  
The Difference ◽  
The Government ◽  
The Cost

The results revealed that cost concepts of soybean were increased at highly significant growth rates. Net income was positive, and the B.C. ratio was more than one in the base year, which indicated that soybean was profitable in the base year only. The differential yield of soybean was positive, which denoted that farmers managed to produce above the break-even level (profit zone). The difference between the cost of production and minimum support price was positive, indicating that MSP fixed by the government was less than the cost of production (Cost C ), indicating no assurance of profit if the market prices also tumble below the cost of 2 production.

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 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.

Analisis Rantai Nilai Komoditas Cabai Merah

2019 ◽  
Vol 2 (1) ◽  
pp. 336-346
Author(s):  
Dhamon Oridilla B
Keyword(s):  
Distribution Pattern ◽  
Distribution Patterns ◽  
Added Value ◽  
Commodity Chain ◽  
Market Prices ◽  
Data Analyst ◽  
Bargaining Position ◽  
Agricultural Business ◽  
The Government ◽  
Red Peppers

Candi Village in Bandungan District is one of the Chili Supply Sub-district for Semarang Regency and surrounding area has agro-climate suitable for the development of various agricultural commodities supported by wide market opportunity, so it is suitable for agricultural business development. The purpose of this research is to identify the distribution pattern of red pepper, to know each value of commodity chains and distribution, to design alternative distribution pattern of red pepper.Population in this research is 88 respondents from 735 of member of chilli farmer in Desa Candi with total area of 150,3 hectare consisting of rice field, moor and yard. Methods of data analyst using quantitative approach is done by using Margin Marketing Analysis. The results include: (1) The pattern of distribution of existing farming business grows naturally in accordance with the developments and needs of the perpetrators, the actors in this pattern are farmers, wholesalers, collectors, wholesalers, retailers, consumers. (2) The value of the red chili commodity chain in this naturally grown pattern often makes pricing more dominant by traders, so farmers receive prices slightly lower than market prices. (3) Some obstacles faced in distributing red peppers are the difficulty of changing the mindset of the community about advanced farming, this is best utilized by market participants (chain of distribution) who are more informed and always keep abreast of market dynamics. Conventional marketing pattern by farmer cause price level accepted by farmer in general relatively smaller compared to price received by trader. Suggestions shorten the chain of distribution patterns, increase the added value of products and improve the bargaining position of farmers and for the government always guide / accompany farmers in getting accurate market information, which can be used as farmers in bargaining, Increased market transparency can act as a trigger for the functioning of a market, improved competition and increased adaptation to meet the needs of supply and opportunity to compete with market prices. Desa Candi di Kabupaten Bandungan adalah salah satu Kecamatan Penyedia Cabai untuk Kabupaten Semarang dan sekitarnya memiliki agroklimat yang cocok untuk pengembangan berbagai komoditas pertanian yang didukung oleh peluang pasar yang luas, sehingga sangat cocok untuk pengembangan bisnis pertanian. Tujuan dari penelitian ini adalah untuk mengidentifikasi pola distribusi cabai merah, untuk mengetahui masing-masing nilai rantai komoditas dan distribusi, untuk merancang alternatif pola distribusi cabai merah. Populasi dalam penelitian ini adalah 88 responden dari 735 anggota petani cabai di Desa Candi dengan total luas 150,3 hektar yang terdiri dari sawah, tegalan dan pekarangan. Metode analis data menggunakan pendekatan kuantitatif dilakukan dengan menggunakan Analisis Pemasaran Margin. Hasil meliputi: (1) Pola distribusi usaha pertanian yang ada tumbuh secara alami sesuai dengan perkembangan dan kebutuhan pelaku, pelaku dalam pola ini adalah petani, pedagang besar, pengumpul, pedagang besar, pedagang besar, pengecer, konsumen. (2) Nilai rantai komoditas cabai merah dalam pola yang dikembangkan secara alami ini sering membuat penetapan harga lebih dominan oleh para pedagang, sehingga petani menerima harga yang sedikit lebih rendah daripada harga pasar. (3) Beberapa kendala yang dihadapi dalam mendistribusikan paprika merah adalah sulitnya mengubah pola pikir masyarakat tentang pertanian maju, hal ini paling baik digunakan oleh pelaku pasar (rantai distribusi) yang lebih banyak informasi dan selalu mengikuti perkembangan dinamika pasar. Pola pemasaran konvensional oleh petani menyebabkan tingkat harga yang diterima petani pada umumnya relatif lebih kecil dibandingkan dengan harga yang diterima pedagang. Saran mempersingkat rantai pola distribusi, meningkatkan nilai tambah produk dan meningkatkan posisi tawar petani dan bagi pemerintah selalu membimbing / menemani petani dalam mendapatkan informasi pasar yang akurat, yang dapat digunakan sebagai petani dalam tawar-menawar, Peningkatan transparansi pasar dapat bertindak sebagai pemicu berfungsinya pasar, meningkatnya kompetisi dan peningkatan adaptasi untuk memenuhi kebutuhan pasokan dan peluang untuk bersaing dengan harga pasar.

How the United Kingdom Controls Pharmaceutical Prices and Spending: Learning From Its Experience

2021 ◽  
pp. 002073142199709
Author(s):  
Marc A. Rodwin
Keyword(s):  
United Kingdom ◽  
Cost Effective ◽  
Market Prices ◽  
The United Kingdom ◽  
Generic Market ◽  
Pharmaceutical Spending ◽  
The Difference ◽  
The Government ◽  
Pharmaceutical Prices ◽  
Limit Access

To control costs and improve access, nations can adopt strategies employed in the United Kingdom to control pharmaceutical prices and spending. Current policy evolved from a system created in 1957 that allowed manufacturers to set launch prices, capped manufacturers’ rates of return, and later cut list prices. These policies did not effectively control spending and had limited effects on purchase prices. The United Kingdom currently controls pharmaceutical spending in 4 ways. (a) Since 1999, it has typically paid no more than is cost-effective. (b) Since 2017, for medicines that will have a significant budget impact, National Health Service England seeks discounts from cost-effective prices or seeks to limit access for 2 years to patients with the greatest need. (c) Since 2014, statutes and a voluntary scheme have required branded manufacturers to pay the government rebates to recoup the difference between the global pharmaceutical budget and actual spending. (d) For hospitals, generics and some patented drugs are procured through competitive bidding; community pharmacies are reimbursed through a system that provides an incentive to beat average generic market prices. These policies controlled the growth of spending, with the largest effects following budget controls in 2014. Changes since 2008 have reduced savings, first by paying more than is cost-effective for cancer drugs and then by applying higher cost-effectiveness thresholds for some drugs used to treat cancer and certain other drugs.

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