TNPSC Free Notes Economy In English -Agricultural Price Policy

இந்தக் கட்டுரையில், TNPSC குரூப் 1, குரூப் 2, குரூப் 2A, குரூப் 4 மாநிலப் போட்டித் தேர்வுகளான TNUSRB, TRB, TET, TNEB போன்றவற்றுக்கான  முறைகள் இலவசக் குறிப்புகளைப் பெறுவீர்கள்.தேர்வுக்கு தயாராவோர் இங்குள்ள பாடக்குறிப்புகளை படித்து பயன்பெற வாழ்த்துகிறோம்.

Agricultural Price Policy

Agricultural Price Policy
Agricultural price policy means a policy to determine, regulate and control the prices of
agricultural products.
Important objectives of agricultural price policy are:
To determine, regulate and control agricultural prices;
To prevent violent fluctuations in agricultural prices;
To provide fair prices for agricultural products to the farmers;
To provide quality goods to households at reasonable prices;
To maintain an appropriate relationship and balance between the prices of food grains
and non-food grains;
To integrate prices between various states.
Price Policies of the Government
Minimum Support Prices
A minimum support price is declared by the government, normally at the beginning of the
sowing season for every important agricultural commodity.
These prices are a long-term guarantee to farmers that the prices of these products will not
be allowed to fall below a certain level.
These prices assure the farmers and encourage them to carry on and expand their
production.
They put their best efforts to get maximum production.
If the prices fall below minimum support prices, the government will buy the entire
marketable surplus at procurement prices.
Procurement Prices
These are the prices which are declared by the government, generally at the time of harvest
of crops.
These are the prices at which the government buys agricultural products from farmers.
These prices serve two important objectives:
To provide a guarantee to the farmers that the prices of these products will not be
allowed to fall below a certain level. If market prices fall below this level, the farmers
can sell their products to the government.
It enables the government to procure these products for maintaining public distribution
system and buffer stocks.

These prices are announced by the government on the recommendations of the
Commission for Agricultural Costs and Prices (CACP).
These prices are widely used by the government for the procurement of wheat and rice.
Procurement prices are generally higher than minimum support prices.
Issue Prices
Issue prices are the prices at which food grains are allocated and supplied by the Food
Corporation of India (FCI) to the states and union territories.
These prices meet the requirements of the Public Distribution System.
Prices of goods to be supplied through fair price shops directly depend upon issue prices.
Issue prices are normally less than market prices and higher than procurement prices.
Retail Prices
The public distribution system is carried on through the network of fair price shops (ration
shops).
These shops supply essential consumer goods to households at the prices fixed by the
government.
These prices are known as retail prices.
Retail prices are higher than issue prices so that the expenses of the public distribution
system may be recovered and the licensees may get a certain margin.
Buffer Stock Operations
Buffer stock operations refer to buying and selling of food stocks by the government.
These operations serve two important purposes:
To regulate and control price fluctuations within a reasonable limit.
To enable the government to procure food stocks so that regular supply of these stocks
may be ensured throughout the year as well as throughout the country.
These operations are carried on by the Food Corporation of India (FCI).
Whenever there is a fall in the prices of food stocks, FCI starts buying them at procurement
prices and whenever there is a rise in these prices, FCI starts selling.
Thus, buffer stock operations play an important role in stabilizing agricultural prices.
Agricultural marketing
Agricultural marketing means the economic process under which agricultural goods are
exchanged.
Process of agricultural marketing determines the value of agriculture products in terms of
money and deliver them to their final consumer.

Importance of agricultural marketing
Agricultural marketing is a specific part of marketing.
It is related to agricultural products only. It is the base of most of the economic activities of
a country.
It brings marketable surplus to the market for sale.
Farmers will keep a portion of their produce for self-consumption and cattle and the
remaining portions are left for sale.
Higher level of marketable surplus leads to greater economic development.
The importance of agricultural marketing is as follows:
Provides raw materials for industries.
Provides food grains for the entire population and fodder for cattle.
Provides a base for expansion of internal market of a country.
Helps in the expansion of international market also when marketable surplus found in
excess of the demand of a country, fetches a considerable amount of foreign
exchange.
At present, most of the farmers sell their produce through village level markets, fairs,
mandies; co-operative societies and government also purchases agricultural produce
directly from farmers.
Marketable Surplus
Marketable surplus may be defined as the residual of produce left with the producer after
meeting his requirements for family consumption, farm needs etc.
It also means the portion of produce left for sale.
Marketable surplus, which is genuine and not artificial or forced, is the fountain source of
not only agricultural development but also of overall economic development.
It is the real surplus generated by the agricultural sector. It can be measured as following:
(Old stocks + Current output) – (Consumption + waste + inventories for next season)
Marketable surplus is referred to as ‘gross surplus’ from agriculture, while marketed surplus
is referred to as ‘net surplus’ from agriculture.
Determinants of marketable surplus
The various variables that determine marketable surplus are
size of holding.
production of the crop.
size of the family.
non-farm income.

In addition to this, the quantity of marketable surplus will also depend on an efficient
marketing system.
Importance of marketable surplus
Rising marketable surpluses are the real surpluses, which determine the real income, real
savings, real capital formation and real investment and have great importance in raising
the welfare in inflation free economies.
Fall in the real marketable surpluses in less developed economies, raise the prices of not
only food stuffs but also of other wage goods and invariably the real levels of living of
working class may go down.
Public Distribution System (PDS)
Public distribution system means the regulated and controlled distribution of essential
goods among people.
Under the system, essential consumer goods are provided to people at fair prices through
government agencies.

Main Constituents of Public Distribution System
Fair Price Shops or Ration Shops
Public distribution system ensures the supply of essential commodities through a
network of fair price shops.
At present, there are about 4.50 lakh fair price shops in India, out of which about 3.60
lakh shops are operating in rural areas and 0.90 lakh shops are operating in urban
areas.
Each shop is envisaged to serve a population of about 2000.
Consumers Co-operative Stores
Consumer co-operatives play an important role in the supply of quality goods at
reasonable rates to common people.
There is a three-tier structure of consumer co-operative societies in India.
They are primary consumer co-operative societies, central consumer co-operative stores
and state level consumer federations.
More than 50,000 village-level societies are engaged in the distribution of consumer
goods in rural areas.
Shops selling Cloth at Controlled Prices

These shops sell cloth at controlled prices to consumers on the basis of their ration
cards. More than 66,000 shops are selling such cloth throughout the country.
Super Bazaars
Super bazaars are the bazaars that provide all the goods of daily needs at controlled
prices.
These markets enable the consumers to complete their purchases from one place.
These bazaars are working in almost all the major cities of India.
Kerosene Retailers
In some states, kerosene is distributed through fair price shops while in other states,
specific retailers have been licensed for the purpose.
Commodities of Distribution
Six key essential commodities viz., wheat, rice, sugar, imported edible oils, kerosene and
soft coke are distributed to consumers through public distribution system.
Besides, State Governments are empowered to include other essential goods in the
system.

Responsibility of Supply of Commodities
Different institutions have been assigned the responsibility of procurement, allocation and
distribution of different goods as under:
Food Corporation of India for wheat, rice and other food grains,
Indian Oil Corporation and Ministry of Petroleum for Kerosene,
Coal India Limited for soft coke,
National Textiles Corporation, and
State Trading Corporation for imported edible oils.

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