Growth, impact and effectiveness of administered prices for major crops in Punjab

The study based on secondary data from 1960–61 to 2019–20 was carried out to examine the behaviour patterns, relationships and variability in Minimum Support Price (MSP), Farm Harvest Price (FHP), area, production and yield of three major crops wheat, paddy and cotton (American). The data pertaining to FHP and MSP were collected for the period 1990–91 to 2017–18 based on its availability. The tremendous growth in production of wheat and paddy was recorded in the Punjab, with the contribution of area and yield. The cotton crop lagged behind in terms of both area and production. The positive and significant impact of MSP in area, production and yield of wheat, paddy and cotton was observed in the state. FHP and MSP has close association for wheat, paddy and cotton indicated the effectiveness of MSP in price policy. The real MSP of these crops showed very disturbing position over time; less than one per cent growth in paddy and negative in case of wheat and cotton. Although the FHP was higher than MSP for cotton during all the years but area under the crop has decelerated due to market uncertainty. The cotton crop which is substitute for rice needs price certainty to lower down the market risk. Therefore, MSP policy must have to be continued and more incentives should be given for other crops like pulses, oilseeds and cotton etc. for diversification of cropping pattern.