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Agriculture Fertilizer Prices
Pricing of Agriculture Commodities in India
Pricing of Agriculture Commodities in India
Price determination is simple process in industrial sector as compared to agriculture products. Determination of price of agriculture commodities is one of the critical issues because of its complication. Farmers are using their own resource and labour force to produce agro products but they do not charging their appropriate cost in determination of priced of agricultural products. In the developing country like India farmers are illiterate or semi literate, they have not proper knowledge about methods of pricing. Therefore, they considering only those items which are spent in money term, but they excluded their non-money expenses like use of won resources, imputed value of family labour, rent paid for leased-in Land, rental value of owned land, cost of managerial functions performed by farmer etc. Therefore in this article I would like to provide appropriate pricing methods which can be apply for pricing of agriculture commodities.
CACP methods of Agriculture Product Pricing
The Commission for Agricultural Costs and Prices (CACP) was basically setup as the Agricultural Prices Commission was set up in January, 1965 to advise the Government on price policy of major agricultural commodities with a view to evolving a balance and integrated price structure in the perspective of the overall needs of the economy and with due regard to the interests of the producer and the consumer. Since March 1985, the Commission has been known as Commission for Agricultural Costs and Prices. The commission is working for better price determination fro increase the level production in India; it provides recommendations to the government for minimum support prices determination in India. Total 25 agricultural commodities are currently covered under the mandate given to the CACP for advising the government in respect of the price policy. The Commission is required to convey its recommendations to the Government well before the sowing season of the crop. Minimum support prices (MSP) for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission for Agricultural Costs and Prices (CACP). Cost concepts defined by Commission for Agricultural Costs and Prices (CACP) were followed are given in the chart:
Cost A1 = Value of purchased material inputs (seed, insecticides and pesticides, manure, fertilizer),hired human labour, animal labour (hired and owned), hired farm machinery, depreciation on farm implements and farm buildings, irrigation charges, land revenue cesses and other taxes, and interest on working capital.
Cost A2 = Cost A1 + rent paid for leased-in Land.
Cost A2+FL = Cost A2 + imputed value of Family Labour.
Cost B1 = Cost A1+ interest on value of owned capital assets (excluding land).
Cost B2 = Cost B1+ rental value of owned land (net of land revenue) and rent paid for leased-in land.
Cost C1 = Cost B1 + Imputed value of Family Labour.
Cost C2 = Cost B2 + Imputed value of Family Labour.
Cost C2* = Cost C2 estimated by taking into account statutory minimum or actual wage whichever is higher.
Cost C3 = Cost C2* + 10% of Cost C2+ on account of managerial functions performed by farmer.
Source: Directorate of Economics & Statistics, Ministry of Agriculture. In India,
Commission for Agricultural Cost and Prices (CACP) is the commission for suggest better pricing methods to determine the prices of agricultural products. It define the various cost concepts like A1, A2, A2+FL, B1, B2, C1, C2, C2* and C3 for the determination of Minimum Support Prices of various agricultural products in India. .
About the Author
Mr. Kumbhar Vijay Maruti (M.A.NET, SET, GDC&A, DIT) Dept. of Economics & Business Economics, Rayat Shikshan Sanstha’s, Abasaheb Marathe College, Rajapur Dist – Ratnagiri State- Maharashtra PIN 416 702 “mailto:Vijay.kumbhar9@gmail.com”Vijay.kumbhar9@gmail.com
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