Does minimum support price (MSP) cover the cost of cultivation of Paddy in Tamil Nadu?

The development of the agriculture is very important in developing countries like India as the agriculture is the engine of economic growth. Aberration in the weather parameters (mainly monsoon) coupled with non-remunerative price for the agriculture produce results in decrease in the farmers’ income. The government of India has implemented a minimum support price (MSP) policy for agricultural commodities to reduce price risk for farmers. To assess the extent to which the MSP meets the actual cost of production/cultivation of paddy in Tamil Nadu this study was conducted using secondary data spanning a period from 2010-11 to 2021-22. This study concludes that farmers were incurring on an average Rs.74718 to cultivate paddy in a hectare of land and it is increasing over the period of time. Further, the cost of producing a quintal of paddy was varying between Rs.947 in 2010 to Rs.1831 during 2021 with compound annual growth rate of 4.36 and 5.36, respectively. Among different inputs, the share of human labour was the highest with share of 41 per cent to the operational cost. Announced MSP was not covering the actual cost of production but during the year 2018-19 to 2021-22 the MSP was above the actual cost of production. Hence, decision makers should focus to protect the interest of farmers by announcing appropriate quantum of Minimum Support Price (MSP), helps the farmer in realizing the profitable income thereby ensure adequate food grains production in the country.