The Hindu Business Line : Pilot studies to find out actual cost of farm output

Hyderabad, May 12 The Commission for Agricultural Costs and Prices (CACP) has decided to roll out pilot studies in various States to find out the costs of production in realistic terms. The idea is to cross check them with the inputs it gets from State Agricultural Universities.

The decision obviously follows the widespread criticism from farmers’ organisations and agricultural experts that the CACP has not been capturing the costs of production and that there is a huge gap between the CACP estimates and ground realities.

“If there are huge discrepancies, we can tell the Ministry of Agriculture and the agencies concerned to change the procedures of collecting the information,” Prof Mahendra Dev, the newly-appointed Chairman of CACP, said.

In an interview, he said the pilot projects would help evolve a more realistic method to find out the costs.

The CACP advises the Union Government on pricing policy for 25 agricultural commodities. A well-known economist, Prof Dev was the Director of the Hyderabad-based Centre for Economic and Social Sciences (CESS) that had done important socio-economic researches.

Accepting that there could not be a single estimate of costs and prices for the entire country, he said the Commission could come out with a common observation, taking into account the inputs it got from 16 States.

Global factors

“There can be differences in costs of cultivation for different regions. Cost of labour and other inputs could vary from State to State. But it is up to the State Government concerned to step in and add,” he pointed out.

Unlike in the past, one should take into consideration the global factors too while fixing the prices. “It is not just domestic factors, the global factors too play a vital role in the backdrop of globalisation. Global prices will have a bearing on the local situation,” he said.

Prof. Dev was also aware of the advisory prices not going up significantly. “They have been mostly going up in the range of 1-5 per cent during 2001-05. But in the last two years, it has changed because of the farm distress,” he observed.

Balancing act

One of the biggest challenges in fixing the price is the larger interests of consumers. If the MSP prices are up significantly, it would lead to increased costs of procurement and also rise in prices in the open market.

The immediate agenda for the new Chairman is to submit the sugar report in August-September and rabi report in July. Asked about the criticism that the Commission used dated information to ascertain costs and prices, he said he would look into the issue and ensure relevant information to make the findings more realistic.