ABSTRACT
The issue debated in this chapter is the present cost calculation and data collection system in place in the Directorate of Economic & Statistics, Ministry of Agriculture and Farmers Welfare, which is centred on crop economic instead of the farm household economy. The government’s minimum support price calculation, as a needs-based methodology for crop cultivation costs, is limited to estimating the cost of growing crops – that is, collecting input costs for crop cultivation only – amounting to crop-cost statistics. In reality, even for the purpose of a minimum support price, the cost statistics for farming need to include the production costs as well, with the farm household considered as an economic unit. This is consistent with the agricultural cost and income calculation for best practices. The chapter highlights that non-food agricultural costs of farming amount to around 50% of the total farming cost, and excluding this part of the cost thus reflects just half the total cost of farming. To that extent, it reflects a support price that is too low for farmers.
