Farmer-centric Pricing Model for Seed Procurement
Agriculture
- PYQs8
- Articles1
Background
This model exemplifies government/cooperative efforts to address farmer income, price stability, and quality control in agricultural inputs, which are critical for agricultural sustainability and food security.
Ensuring remunerative prices for agricultural produce and inputs is a key aspect of farmer welfare policies in India, aiming to protect farmers from market volatility and incentivize quality production.
Facts & tables
- Objective 1
- Ensures assured procurement of seeds from farmers
- Objective 2
- Protects seed-producing farmers from price fluctuations
- Incentive
- Provides a remunerative premium for meeting higher quality and technical requirements
- Pricing Mechanism
- Price is the highest of: (i) MSP + minimum 10% incentive, (ii) prevailing mandi market price, or (iii) concerned State Seed Corporation’s procurement rate
| Type | Reference |
|---|---|
| Conceptual area | Minimum Support Price (MSP) |
| Conceptual area | Agricultural Marketing Reforms |
| Body | Role |
|---|---|
| Bharatiya Beej Sahakari Samiti Limited | Implements |
Prelims angle
Prelims angle: Statement-based questions
Prelims angle: Conceptual understanding
- Assured seed procurement.
- Protects from price volatility.
- Rewards quality production.
- Highest of 3 price benchmarks.
- MSP + 10% incentive is one benchmark.
| Year | Framing tags |
|---|---|
| 2023 | Multi-statement analysis, Factual recall |
| 2023 | Definition-based questions, Conceptual understanding |
| 2020 | Multi-statement analysis, Factual recall |
| 2020 | Conceptual understanding, Multi-statement analysis |
| 2020 | Statement-based questions, Institutional roles and functions |
| 2020 | Statement-based questions, Conceptual understanding |
| 2018 | Factual recall, Policy measures |
| 2015 | Conceptual understanding, Definition-based questions |
Timeline
-
Minimum Support Price (MSP)
Conceptual area
-
Agricultural Marketing Reforms
Conceptual area
-
Prelims 2015
Conceptual understanding, Definition-based questions
-
Prelims 2018
Factual recall, Policy measures
-
Prelims 2020
Multi-statement analysis, Factual recall
-
Prelims 2020
Conceptual understanding, Multi-statement analysis
-
Prelims 2020
Statement-based questions, Institutional roles and functions
-
Prelims 2020
Statement-based questions, Conceptual understanding
-
Prelims 2023
Multi-statement analysis, Factual recall
-
Prelims 2023
Definition-based questions, Conceptual understanding
-
Branch of the Bharatiya Beej Sahakari Samiti Limited in Bihar
A pricing model ensuring seed-producing farmers receive the highest of three benchmarks (MSP+10%, mandi price, or State Seed Corp rate) to guarantee procurement, protect from price drops, and reward quality.
See also
No related topics linked yet.
Past papers
2015–2023 · 8 questions
In the news
Branch of the Bharatiya Beej Sahakari Samiti Limited in Bihar
A pricing model ensuring seed-producing farmers receive the highest of three benchmarks (MSP+10%, mandi price, or State Seed Corp rate) to guarantee procurement, protect from price drops, and reward quality.
Try these PYQs
Consider the following statements:
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
Statement 1 is incorrect: Procurement at MSP is not "unlimited." While the government provides an open-ended procurement policy for certain cereals (like rice and wheat) in specific states, for most pulses and oilseeds, procurement is capped by targets, storage capacity, and the Price Support Scheme (PSS) guidelines. Statement 2 is incorrect: MSP is designed as a safety net (floor price), not a price ceiling. It does not prevent market prices from rising higher due to demand. Note on MSP Calculation: As per the Union Budget 2018-19, the Government of India follows the principle of fixing MSP at a level of at least 1.5 times the all-India weighted average cost of production (A2+FL). This formula is recommended by the Commission for Agricultural Costs and Prices (CACP) to ensure a minimum 50% return over the cost of production for farmers.
Which one of the following best describes the main objective of ‘Seed Village Concept’?
A seed village, wherein trained group of farmers are involved in the production of seeds of various crops and cater to the needs of themselves, fellow farmers of the village and farmers of neighbouring villages in the appropriate time and at an affordable cost is called a seed village.
Consider the following:
1. Areca nut
2. Barley
3. Coffee
4. Finger millet
5. Groundnut
6. Sesamum
7. Turmeric
The Cabinet Committee on Economic Affair, has announced the Minimum Support Price for which of the above?
* The Cabinet Committee on Economic Affairs (CCEA) announces the Minimum Support Price (MSP) for certain staple crops and some key commercial crops. * Barley, Finger millet, Groundnut, and Sesamum are crops for which MSP is typically announced by the government. These are important food or oilseed crops and support farmer income. * Areca nut and Coffee are considered cash crops and MSP is generally not announced for them. * Turmeric can be classified as a spice crop, and MSP announcements for spices is not very common, Therefore, the most options for which CCEA announces MSP are 2, 4, 5 and 6.
Consider the following statements:
1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinicia) seeds.
2. Niger is cultivated as a Kharif crop.
3. Some tribal people in India use niger seed oil for cooking.
How many of the above statements are correct?
* Statement 1 is correct: The Government of India provides Minimum Support Price (MSP) for niger seeds to support farmers and ensure a baseline return on their crops. This is especially important for crops like niger which might have volatile market prices. * Statement 2 is correct: Niger is primarily cultivated as a Kharif crop in India. Kharif refers to the monsoon season in India, typically from June to September. Niger thrives in these rainy conditions. * Statement 3 is correct: Niger seed oil has various uses, and some tribal communities in India traditionally use it for cooking purposes. The oil has a nutty flavour and can be used as a substitute for other cooking oils.
With reference to chemical fertilizers in India, consider the following statements:
1. At present, the retail price of chemical fertilizers is market-driven and not administered by the Government.
2. Ammonia, which is an input of urea, is produced from natural gas.
3. Sulphur, which is a raw material for phosphoric acid fertilizer, is a by-product of oil refineries.
Select the correct answer using the code given below:
Statement 1 is not correct. The Government of India subsidizes fertilizers to ensure that fertilizers are easily available to farmers and the country remains self-sufficient in agriculture. This has been achieved largely by controlling the price of fertilizer and the amount of production. For example, as per the New Urea Policy of 2015, the government fixes the market price of urea. Statement 2 is correct. Fertilizer production uses 1.2% of the world's total energy out of which 90% is used for ammonia production, which is a key ingredient in the production of nitrogen fertilizers. Ammonia can be produced from natural gas. Statement 3 is correct. Sulfur is a major by-product of oil refining and gas processing. Most crude oil grades contain some sulfur, most of which must be removed during the refining process to meet strict sulfur content limits in refined products. Also, Sulphur is used in phosphoric acid fertilizer (There is a process known as 'The Wet Process' for producing the same). Hence, option B is the correct answer.
Show 3 more PYQs
Which of the following factors/policies were affecting the price of rice in India in the recent past?
1. Minimum Support Price
2. Government’s trading
3. Government’s stockpiling
4. Consumer subsidies
Select the correct answer using the code given below:
Minimum Support Price (MSP): The government sets an MSP to ensure a minimum income for farmers. If the market price falls below the MSP, the government procures rice from farmers at the MSP. This can lead to higher rice prices for consumers if the government releases these stocks slowly or not at all. Government's trading: Government agencies like the Food Corporation of India (FCI) procure and sell rice in the market. Large-scale procurement by the government can affect market availability and potentially drive up prices. Government's stockpiling: The government maintains buffer stocks of rice for food security purposes. If these stocks are depleted due to various reasons, it can lead to a shortage and price hikes. Consumer subsidies: The government provides subsidized rice to certain sections of the population through schemes like PDS (Public Distribution System). This can influence overall demand and market dynamics. If the subsidies are substantial, it can put upward pressure on prices. Therefore, all these factors can play a role in influencing the price of rice in India.
Hence, option D is the correct answer.
Consider the following statements:
1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison of Scheduled Commercial Banks are Regional Rural Banks
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
Which of the statements given above is/are correct?
Statement 1 is incorrect. In terms of short-term credit delivery to the agriculture sector, Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) generally deliver more credit compared to District Central Cooperative Banks (DCCBs). SCBs and RRBs have a larger network and resources to provide credit to the agriculture sector. Statement 2 is correct. One of the primary functions of DCCBs is indeed to provide funds to the Primary Agricultural Credit Societies (PACS). DCCBs act as the intermediary between the Reserve Bank of India (RBI) and PACS, facilitating the flow of credit from the central bank to the grassroots level through cooperative credit institutions. Hence, option B is the correct answer.
Which one of the following best describes the concept of 'Small Farmer Large Field'?
* The concept of 'Small Farmer Large Field' is a participatory collective action model that aims to improve the livelihood of small and marginal farmers in India by achieving economies of scale and bargaining power in the supply chain. * It was adapted from the Large Field Model of Vietnam and was piloted to address the key challenges faced by millions of small and marginal farmers in India. The model allows small farmers to benefit from achieving economies of scale by organizing themselves into groups.