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How effective the msp is? Empirical evidence from Kerala

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  • Divya,MK
  • Nithya, Kalpana E

Abstract

The assurance of a profitable and consistent crop price is essential for boosting crop production and productivity. The MSP programme of the government seeks to guarantee a minimum price for producers as well as an affordable price for consumers via the Public Distribution System. The research attempts to assess the effectiveness of the MSP for paddy in Kerala using various secondary data sources from the period 2004-05 to 2021-22. The effectiveness of price policy is assessed by calculating the deviations of farm harvest price (FHP) from MSP. To further strengthen the validity of the evaluation of MSP policy, growth in prices and procurement, the cost of production, and the margin of MSP over costs are examined. Though the deviations of FHP and MSP are negative the MSP policy is found to be effective in Kerala. The growth in FHP (9.2%) is higher than both central and state MSP and growth in state MSP surpassed central MSP with higher growth (12.28%) in State Incentive Bonus (SIB). MSP in the state is large enough to cover Cost C2 except for 2004-05 and 2005-06. There is a significant positive growth in quantity procured through Supplyco (11.16%) and farmer beneficiaries (15.76%). Therefore, it can be concluded that MSP is effective in the procurement of paddy in Kerala.

Suggested Citation

  • Divya,MK & Nithya, Kalpana E, 2023. "How effective the msp is? Empirical evidence from Kerala," Indian Journal of Agricultural Marketing, Indian Society of Agricultural Marketing, vol. 37(3).
    • Handle: RePEc:ags:injagm:399896
    DOI: 10.22004/ag.econ.399896
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