Impact of Socio-economic Factors on Agricultural Prices: A Case Study of Paddy Cultivation in India

As part of agricultural price policy of the country, the government announces minimum support price (MSP) for selected crops every year based on the recommendations of the Commission for Agricultural Costs and Prices (CACP). Since large part of procurement of paddy happens though the private procurement agencies, implementation of MSP remains extremely limited. Further, as far as government-regulated agencies are concerned, procurement remained concentrated in a few states; therefore uniformity of price even in the regulated markets is far from being a reality. Thus, the average price received by farmers is largely the outcome of intra-regional socio-economic dynamics. Even within a particular region, not all farmers at any point in time receive same price for their produce. In this context, the article, based on the analysis of unit level data of NSS 77th round, argues that while differences in socio-economic status based on land ownership, caste, religion, education, gender, etc., which are indicative of differential well-being conditions of households, are also instrumental in inducing some other relative deprivation in terms of bargaining power in the economy. Which to a large extent remains instrumental in the determination of final prices of the produce for farmers. Such deprivation, though prevalent in both regulated and non-regulated markets, is evidently more pronounced in non-regulated markets. Since access to regulated markets is not independent of the socio-economic status of the farmers, both exclusion and discrimination based on socio-economic status seem prevalent in the realisation of final price by the farmers, particularly in case of paddy cultivation in India. JEL Codes: Q11, Q13, Q130