The Commission for Agricultural Costs and Prices (CACP) has stated that some state governments impose various regulatory restrictions, levy high taxes and other charges, and pay bonuses over and above the minimum support price (MSP), and termed these “market distorting practices” that discourage private purchase. “These restrictions and high taxes and charges result in higher procurement incidentals and economic cost and also drive out the private sector from market and as a result, large stocks of foodgrains have to be purchased by the government, when market prices are low,” CACP stated in its report on the price policy for rabi crops for the marketing season (2025-26).
CACP, which recommends MSP for 23 crops to the government, has stated that such market distorting practices should be discouraged and taxes and other charges need to be rationalised. Various states — Punjab (8.5%), Rajasthan (4.35%), Haryana (4%) and Uttar Pradesh (4%) — levy mandi fee and other charges on the sale and purchase of agricultural produce for the development of market infrastructure such as market yards, storage facilities and rural roads to make marketing of agricultural produce more efficient.
States such as Madhya Pradesh, Chhattisgarh and Odisha have announced bonus over the paddy MSP in recent years. “However, since these charges are very high in some states and also vary across states, these end up restricting inter-state trade and thereby, create an inefficient marketing system in the country,” the commission has observed.
It is recommended that such charges should be rationalised and fixed at specific rate per quintal instead of ad valorem so as to foster free market competition and to promote free inter-state trade.In order to encourage farmers to increase production and protect them from cheap imports, the commission has also recommended a dynamic duty structure based on the minimum support price of oilseeds, and global and domestic prices of edible oils. “The demand-supply situation should be implemented and ensure that the landed price of imported oils is not cheaper than domestic price,” CACP has noted.
The commission has reiterated its earlier recommendation of ensuring private sector participation in oilseeds procurement and implementing price deficiency payment scheme as physical procurement in oilseeds may not be feasible.Indian imports around 57% of its annual edible oil requirements. The government last month increased duties on crude palm, soybean and sunflower oils to 27.5% from the current level of 5.5%. The levy on refined edible oil has been raised to 35.75% from 13.75%.
To boost pulses production, CACP has suggested expanding the area under cultivation and improving productivity. It has recommended that availability of quality seed, dissemination of region-specific and system-based technologies and packages of practices and remunerative prices to farmers should be given the highest priority to attain self-reliance in pulses. India imports about 15% of its pulses consumption, especially tur, urad and lentils.
Pitching for an efficient and effective credit delivery system, the CACP report has raised the issue of regional imbalance and disparities in agricultural credit flow. The commission has recommended that special efforts should be made to address the problem of poor health of rural financial institutions and regional disparities in credit flow with a special focus on eastern and north-eastern region and small and marginal farmers.