Unit 5

Agricultural Price Policy in India

The government has developed an Agricultural Price Policy in India for
agricultural products to ensure that farmers receive fair prices to encourage them
to spend more on agriculture. The government establishes minimum support
prices for important agricultural products based on the Commission on
Agricultural Costs and Prices (CACP) recommendations.
Agricultural Price Policy in India - Overview
At the time of independence, the Agricultural Price Policy in India was heavily
influenced by the multiplicity of regulations implemented during WWII. It
comprised strict controls on agricultural movement between states, procurement
of food grains through a mandatory charge on growers, market purchases, and
quotas in almost all states.

The Government of India started experimenting with State buying and selling of
food grains in April 1959, following the suggestions of the Food Grains Enquiry
Committee of 1957, which called for "domination over the wholesale trade in food
grains," and its successive approval by the National Development Council in Nov
1958.

State commerce was to be limited to two key commodities: wheat and rice.
However, the idea ran into problems since it was implemented haphazardly and
without consideration for economic dynamics.

Keeping this in mind, every year the government declares Minimum Support
Prices (MSP) for main agricultural products as part of their Agricultural Price
Policy in India. Through the ration shops, the government supplies food grains to
BPL families. These rates are set after conferring with the Agricultural Costs and
Prices Commission.

The following are some of the important objectives of India’s agricultural policy:
(i) Raising the Productivity of Inputs:

One of the important objectives of India’s agricultural policy is to improve the productivity of
inputs so purchased viz., HYV seeds, fertilizers, pesticides, irrigation projects etc.
(ii) Raising Value-Added per Hectare:

Another important objective of country’s agricultural policy is to increase per hectare value-added

rather than raising physical output by raising the productivity of agriculture in general and
productivity of small and marginal holdings in particular.

(iii) Protecting the Interest of Poor Farmers:

One of the important objectives of agricultural policy is to protect the interest of poor and marginal

farmers by abolishing intermediaries through land reforms expanding institutional credit support to
poor farmers etc.

(iv) Modernizing Agricultural Sector:

Modernizing agricultural sector is another important objective of agricultural policy of the country.

Here the policy support includes introduction of modern technology in agricultural operations and
application of improved agricultural inputs like HYV seeds, fertilizers etc.

(v) Checking Environmental Degradation:

Agricultural policy of India has set another objective to check environmental degradation of natural
base of Indian agriculture.

(vi) Agricultural Research and Training:

Another important objective of Indian agricultural policy is to promote agricultural research and

training facilities and to percolate the fruits of such research among the farmers by establishing a
close linkage between research institutions and farmers.

(vii) Removing Bureaucratic Obstacles:

The policy has set another objective to remove bureaucratic obstacles on the farmers Co-operative
societies and self help institutions so that they can work independently.

Factors Affecting the Agricultural Pricing Policy in India

When recommending pricing per the Agricultural Price Policy in India, the
Commission on Agricultural Costs and Prices (CACP) considers crucial criteria
such as:

1. Production costs
 2. Input price changes
3. Price Parity Between Inputs and Outputs
4. Market Price Trends
5. Price Parity Between Crops
6. The Supply and Demand Situation
7. Impact on Industrial Cost Structure
8. General price level effects
9. Cost of living effects
10. Price parity between paid and received by farmers (Terms of Trade)

Advantages of Agricultural Price Policy in India

As part of the Agricultural Price Policy in India to protect farmers' interests as

well as the need for self-sufficiency, the government has announced minimum
support prices for 24 important crops.

The MSP's key goals are as follows:

 To avoid a price drop in the event of excess production.

 To protect farmers' interests by guaranteeing them a minimum price for
their products in the event of a market price drop.
 To address the need for domestic consumption
 To maintain agricultural product price stability
 To eliminate price disparities between two regions or across the entire
country.
 Increase agricultural product output and exports.

Disadvantages of Agricultural Price Policy in India

 In order to enhance farmers' revenue, the poor in the country must pay
more. This technique will exacerbate the country's inefficient allocation
problem.
 Supporting farmers via higher prices is inefficient because it penalizes
consumers by increasing costs. It also means that large growers will reap
the greatest benefits. Even if they have gotten more than they require, small
farmers continue to struggle.
 Farmers employ a large amount of fertilizer to improve their production, but
this causes problems for those who do not benefit from the increased
production.

The primary goal of the Agricultural Price Policy in India is to protect the interests
both of farmers and consumers. Food grain prices should be set with great care so
neither farmers nor customers suffer.

Marketing policy
More Definitions of Marketing Policy Marketing Policy means the set of principles described in a
certain Brand and Product Marketing Manual, which has been provided to Licensee prior to or
contemporaneously with the execution of this Agreement. UMBRO reserves the right to make
reasonable modifications to the Marketing Policy at any time, provided any such addition or
modification will be consistent with UMBRO's global marketing policy and no change to the Marketing
Policy will be primarily applicable only in the Territory so that it adversely impacts the rights and
obligations of Licensee under this Agreement as of the date of the change in the Marketing Policy.

The 4 Ps of Marketing: What They Are and

How to Use Them
The four Ps are a “marketing mix” comprised of four key elements—product, price, place,
and promotion—used when marketing a product or service. Typically, businesses
consider the four Ps when creating marketing plans and strategies to effectively market to
their target audience.

Although there are many other “marketing mixes,” the four Ps are the most common and
foundational to creating a successful marketing plan. In this article, you will learn more
about their purpose, history and find a detailed breakdown of the four Ps.
What are the 4Ps of marketing? (Marketing mix
explained)
The four Ps are product, price, place, and promotion. They are an example of a
“marketing mix,” or the combined tools and methodologies used by marketers to achieve
their marketing objectives.

The 4 Ps were first formally conceptualized in 1960 by E. Jerome McCarthy in the highly
influential text, Basic Marketing, A Managerial Approach [1]. There, McCarthy noted
that while the text of the book was “similar to that found in the traditional texts, the
approach is not.”

McCarthy’s novel approach was influenced by the still-recent “marketing mix” concept,
which Harvard Business School professor Neil. H. Borden popularized in the 1950s. In
fact, Borden himself had been influenced by a 1948 study written by James Culliton, in
which the author equated business executives to “artists” or “mixer[s] of ingredients” [2].
Rather than using the same approach for every situation, then, Culliton and Borden
recognized that successful executives instead mixed different methods depending on
variable market forces.

McCarthy streamlined this concept into the four Ps—product, place, price, and
promotion—to help marketers design plans that fit the dynamic social and political
realities of their time and target market. In effect, the purpose of the four Ps remains the
 same today as when McCarthy first published his book: “developing the ‘right’ product
and making it available at the ‘right’ place with the ‘right’ promotion and at the ‘right’
price, to satisfy target consumers and still meet the objectives of the business”
Product

The product is the good or service being marketed to the target audience.

Generally, successful products fill a need not currently being met in the marketplace or
provide a novel customer experience that creates demand. For example, the original
iPhone filled a need in the market for a simplified device that paired a phone with an iPod,
and the chia pet provided a humorous experience for consumers that was utterly unique.

As you are working on your product, it is essential to consider your target audience and
their unique needs. Some questions to consider when working on a product include:
 What is your product?
 What does your product do? Does the product meet an unfilled need or provide a novel
experience?
 Who is your product’s target audience?
 How is your product different from what others offer?
Price

Price is the cost of a product or service.

When marketing a product or service, it is important to pick a price that is simultaneously

accessible to the target market and meets a business’s goals. Pricing can have a significant
impact on the overall success of a product. For example, if you price your product too
high for your targeted audience, then very few of them will likely purchase it. Similarly, if
you price your product too low, then some might pass it up simply because they are
concerned it might be of inferior quality and cut into your potential profit margins.

To identify a successful price, you will want to thoroughly understand your target
audience and their willingness to pay for your product. Some questions you might ask
yourself as you are considering your product’s price include:
 What is the price range of your product’s competitors?
 What is the price range of your target audience?
 What price is too high for your audience? What price is too low?
 What price best fits your target market?
Place

Place is where you sell your product and the distribution channels you use to get it to your
customer.

Much like price, finding the right place to market and sell your product is a key factor in
reaching your target audience. If you put your product in a place that your target customer
 doesn’t visit—whether on or offline— then you will likely not meet your sales target. The
right place, meanwhile, can help you connect with your target audience and set you up for
success.

For example, imagine you are selling an athletic shoe you designed. Your target market is
athletes in their early twenties to late thirties, so you decide to market your product in
sports publications and sell it at specialty athletics stores. By focusing on sports stores
over shoe stores in general, you are targeting your efforts to a specific place that best fits
your marketing mix.

To decide the best place to market and sell your product, you should consider researching
the physical or digital places that your target audience shops and consumes information.
Some questions to consider include:
 Where will you sell your product?
 Where does your target audience shop?
 What distribution channels are best to reach your target market?

Promotion

Promotion is how you advertise your product or service. Through promotion, you will get
the word out about your product with an effective marketing campaign that resonates with
your target audience.

There are many different ways to promote your product. Some traditional methods
include word of mouth, print advertisements, and television commercials. In the digital
age, though, there are even more marketing channels that you can use to promote your
product, such as content marketing, email marketing, and social media marketing.

Some questions to consider as you are working on your product promotion include:
 What is the best time to reach your target audience?
 What marketing channels are most effective for your target audience?
 What advertising approaches are most persuasive to your target audience?

 The Public distribution system (PDS) is an Indian food Security

System established under the Ministry of Consumer Affairs, Food,
and Public Distribution.
 PDS evolved as a system of management of scarcity through
distribution of food grains at affordable prices.
 PDS is operated under the joint responsibility of the Central and the
State Governments.
 o The Central Government, through Food Corporation of India
(FCI), has assumed the responsibility for procurement, storage,
transportation and bulk allocation of food grains to the State
Governments.
o The operational responsibilities including allocation within the
State, identification of eligible families, issue of Ration Cards and
supervision of the functioning of Fair Price Shops (FPSs) etc., rest
with the State Governments.
 Under the PDS, presently the commodities namely wheat, rice, sugar
and kerosene are being allocated to the States/UTs for distribution.
Some States/UTs also distribute additional items of mass consumption
through the PDS outlets such as pulses, edible oils, iodized salt,
spices, etc.
Evolution of PDS in India
 PDS was introduced around World War II as a war-time rationing
measure. Before the 1960s, distribution through PDS was generally
dependant on imports of food grains.
 It was expanded in the 1960s as a response to the food shortages of
the time; subsequently, the government set up the Agriculture Prices
Commission and the FCI to improve domestic procurement and
storage of food grains for PDS.
 By the 1970s, PDS had evolved into a universal scheme for the
distribution of subsidised food
 Till 1992, PDS was a general entitlement scheme for all consumers
without any specific target.
 The Revamped Public Distribution System (RPDS) was launched in
June, 1992 with a view to strengthen and streamline the PDS as well
as to improve its reach in the far-flung, hilly, remote and inaccessible
areas where a substantial section of the underprivileged classes lives.
 In June, 1997, the Government of India launched the Targeted Public
Distribution System (TPDS) with a focus on the poor.

o Under TPDS, beneficiaries were divided into two categories:

Households below the poverty line or BPL; and
Households above the poverty line or APL.
 Antyodaya Anna Yojana (AAY): AAY was a step in the direction of
making TPDS aim at reducing hunger among the poorest segments of
 the BPL population.

o A National Sample Survey exercise pointed towards the fact that

about 5% of the total population in the country sleeps without two
square meals a day. In order to make TPDS more focused and
targeted towards this category of population, the "Antyodaya Anna
Yojana” (AAY) was launched in December, 2000 for one crore
poorest of the poor families.
 In September 2013, Parliament enacted the National Food Security
Act, 2013. The Act relies largely on the existing TPDS to deliver food
grains as legal entitlements to poor households. This marks a shift
by making the right to food a justiciable right.
How PDS system functions?
 The Central and State Governments share responsibilities in order to
provide food grains to the identified beneficiaries.
 The centre procures food grains from farmers at a minimum support
price (MSP) and sells it to states at central issue prices. It is
responsible for transporting the grains to godowns in each state.
 States bear the responsibility of transporting food grains from these
godowns to each fair price shop (ration shop), where the beneficiary
buys the food grains at the lower central issue price. Many states
further subsidise the price of food grains before selling it to
beneficiaries.

Importance of PDS
 It helps in ensuring Food and Nutritional Security of the nation.
 It has helped in stabilising food prices and making food available to
the poor at affordable prices.
 It maintains the buffer stock of food grains in the warehouse so
that the flow of food remain active even during the period of less
agricultural food production.
 It has helped in redistribution of grains by supplying food from
surplus regions of the country to deficient regions.
 The system of minimum support price and procurement has
contributed to the increase in food grain production.
Issues Associated with PDS System in India
 Identification of beneficiaries: Studies have shown that targeting
mechanisms such as TPDS are prone to large inclusion and
exclusion errors. This implies that entitled beneficiaries are not
getting food grains while those that are ineligible are getting undue
benefits.

o According to the estimation of an expert group set up in 2009,

PDS suffers from nearly 61% error of exclusion and 25% inclusion
of beneficiaries, i.e. the misclassification of the poor as non-poor
and vice versa.
 Leakage of food grains: (Transportation leakages + Black Marketing
by FPS owners) TPDS suffers from large leakages of food grains
during transportation to and from ration shops into the open market. In
an evaluation of TPDS, the erstwhile Planning Commission found 36%
leakage of PDS rice and wheat at the all-India level.
 Issue with procurement: Open-ended Procurement i.e., all incoming
grains accepted even if buffer stock is filled, creates a shortage in the
open market.
 Issues with storage: A performance audit by the CAG has revealed a
serious shortfall in the government’s storage capacity.

 Given the increasing procurement and incidents of rotting food

grains, the lack of adequate covered storage is bound to be a
cause for concern.
 The provision of minimum support price (MSP) has encouraged
farmers to divert land from production of coarse grains that are
consumed by the poor, to rice and wheat and thus, discourages crop
diversification.
 Environmental issues: The over-emphasis on attaining self-
sufficiency and a surplus in food grains, which are water-intensive, has
 been found to be environmentally unsustainable.

o Procuring states such as Punjab and Haryana are under

environmental stress, including rapid groundwater depletion,
deteriorating soil and water conditions from overuse of
fertilisers.
o It was found that due to cultivation of rice in north-west India, the
water table went down by 33 cm per year during 2002-08.
PDS Reforms
 Role of Aadhar: Integrating Aadhar with TPDS will help in better
identification of beneficiaries and address the problem of inclusion
and exclusion errors. According to a study by the Unique
Identification Authority of India, using Aadhaar with TPDS would help
eliminate duplicate and ghost (fake) beneficiaries, and make
identification of beneficiaries more accurate.
 Technology-based reforms of TPDS implemented by states:
Wadhwa Committee, appointed by the Supreme court, found that
certain states had implemented computerisation and other technology-
based reforms to TPDS. Technology-based reforms helped plug
leakages of food grains during TPDS.

o Tamil Nadu implements a universal PDS, such that every

household is entitled to subsidised food grains.
o States such as Chhattisgarh and Madhya Pradesh have
implemented IT measures to streamline TPDS, through the
digitisation of ration cards, the use of GPS tracking of delivery,
and the use of SMS based monitoring by citizens.

Introduction
Agricultural policy in the United States is a complex and evolving web of
governmental interventions in output markets, input markets, trade,
public-good investments, renewable and exhaustible natural resources,
regulation of externalities, education, and the marketing and distribution
of food products. For the US federal government, these interventions
have resulted in enormous budgetary costs, huge surpluses of farm
products, major disputes with other countries, distorted international
markets, and special benefits to interest groups that are often highly
concentrated. These same programs, however, have contributed to an
agricultural sector whose productivity over much of the last century has
been spectacular.

The Nature of Agricultural Policy Instruments

Agricultural policy is implemented through five kinds of instruments: (1)
new legislation, (2) executive decrees, (3) investment projects, and (4)
programs, which usually require significant numbers of field staff
working with farmers, input supplies, processors and the like, and (5)
voluntary collaboration by the private sector. Instruments may be
combined; a program may have an investment component, or may
require an executive decree before it can be carried out. Legislation and
decrees define the rules of the game and establish programs, such as
guarantee funds, subsidies targeted on the poor, and the formation
of water user associations, among many other examples.