Agricultural prices and food security are intrinsically linked, as fluctuations in agricultural prices directly impact food availability, accessibility, and affordability. In India, where a significant portion of the population relies on agriculture for their livelihood and a considerable number of people still live below the poverty line, the relationship between agricultural prices and food security is of paramount importance. Stable agricultural prices ensure that farmers receive fair compensation for their produce while consumers can access affordable food. Conversely, price volatility can lead to economic instability, food shortages, and increased poverty. Understanding and managing agricultural prices are therefore critical to ensuring food security and promoting sustainable agricultural development in India.

It is a crucial aspect of the agricultural economy, aimed at stabilizing prices, ensuring fair returns to farmers, and maintaining affordable food prices for consumers. In India, agriculture price policy plays a significant role in achieving food security, promoting agricultural growth, and ensuring the economic well-being of farmers. This policy involves various measures, including price support mechanisms, procurement operations, and market interventions, designed to balance the interests of producers and consumers. It is particularly significant in a country where nearly 58% of the population depends on agriculture for their livelihood.

Objectives

1.Ensuring Fair and Remunerative Prices for Farmers

i.Minimum Support Price (MSP): The primary objective of the agriculture price policy is to ensure that farmers receive a fair and remunerative price for their produce. The government sets the MSP for 23 crops based on recommendations from the Commission for Agricultural Costs and Prices (CACP). The MSP aims to cover the cost of production and provide a reasonable profit margin to farmers, typically calculated as 1.5 times the cost of production.

ii.Income Stability: By guaranteeing a minimum price, the policy aims to provide income stability to farmers, protecting them from the volatility of market prices and ensuring a steady income stream. This stability is crucial for encouraging farmers to invest in their farms and adopt modern agricultural practices. In 2020-21, the MSP procurement system ensured that over 40 million farmers received assured prices for their crops.

2.Ensuring Food Security