Agriculture and Allied Sectors

The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus

[amp_mcq option1=”transportation cost only” option2=”interest cost only” option3=”procurement incidentals and distribution cost” option4=”procurement incidentals and charges for godowns” correct=”option3″]

The correct answer is C. The economic cost of food grains to the Food Corporation of India includes Minimum Support Price and bonus (if any) paid to the farmers plus procurement incidentals and distribution cost.

The economic cost for FCI is the total cost incurred in the process of procurement, storage, and distribution of food grains under the public distribution system (PDS) and other welfare schemes. It comprises two main components:
1. Acquisition Cost: This is the price paid to the farmers (MSP + bonus, if any).
2. Incidentals and Distribution Costs: These are expenses incurred beyond the acquisition cost.
– Procurement Incidentals include expenses incurred during procurement up to the point of storage, such as mandi charges, handling charges, transportation from mandi to depot, interest on borrowed capital for procurement, and storage losses.
– Distribution Costs include expenses incurred from the point of storage onwards, such as freight charges for inter-state movement, handling charges at distribution centres, storage losses during distribution, administrative costs, and retailers’ margins (in some cases).
Option C correctly encapsulates these additional costs as “procurement incidentals and distribution cost”.

The economic cost is higher than the MSP and is a key factor in determining the issue price of food grains sold through the PDS, although the issue prices (Central Issue Price) are often kept significantly lower than the economic cost, leading to food subsidies borne by the government.

Consider the following:

• 1. Areca nut
• 2. Barley
• 3. Coffee
• 4. Finger millet
• 5. Groundnut
• 6. Sesamam
• 7. Turmeric

The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above?

[amp_mcq option1=”1, 2, 3 and 7 only” option2=”2, 4, 5 and 6 only” option3=”1, 3, 4, 5 and 6 only” option4=”1, 2, 3, 4, 5, 6 and 7″ correct=”option2″]

The Cabinet Committee on Economic Affairs (CCEA) announces Minimum Support Prices (MSP) for various crops based on recommendations by the CACP. Among the listed items, MSP is announced for Barley (Rabi crop), Finger millet (Ragi – Kharif/Nutri-cereal), Groundnut (Kharif oilseed), and Sesamum (Sesame/Til – Kharif oilseed). MSP is not typically announced for Areca nut, Coffee, or Turmeric.

MSP is a price support mechanism by the government for selected agricultural crops to protect farmers from price fluctuations. The list of crops covered includes various cereals, pulses, oilseeds, and certain commercial crops. Plantation crops like Areca nut and Coffee, and spices like Turmeric are generally not included in the MSP list.

The government announces MSP for 22 mandated crops and fair and remunerative price (FRP) for sugarcane. The mandated crops include 14 Kharif crops, 6 Rabi crops, and 2 other commercial crops. Barley is a Rabi cereal. Finger millet (Ragi), Groundnut, and Sesamum are Kharif crops among the mandated list. Areca nut, Coffee, and Turmeric fall outside this list.

Consider the following statements :

• 1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
• 2. The Government does not impose any customs duty on all the imported edible oils as a special case.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option1″]

The correct option is A because statement 1 is generally true regarding India’s edible oil market over the last five years (prior to the question being framed), while statement 2 is incorrect.

India is one of the world’s largest importers of edible oils, significantly relying on imports to meet domestic demand. The government levies customs duties on imported edible oils, although the rates may vary over time based on policy objectives like protecting domestic producers or controlling inflation.

Statement 1 is accurate. India’s domestic production of edible oils has consistently fallen short of consumption, leading to substantial imports of palm oil, soybean oil, and sunflower oil. The volume of imports has often exceeded domestic production. Statement 2 is incorrect; the Indian government imposes customs duties (basic customs duty, agriculture infrastructure and development cess, etc.) on imported edible oils, though rates are adjusted periodically. There is no blanket policy of zero customs duty on all imported edible oils.

What is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme ?

• It is a pan-India electronic trading portal for agricultural commodities.
• It provides the farmers access to nationwide market commensurate with the quality of their produce.

Select the correct answer using the code given below :

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option3″]

Both statements 1 and 2 are correct.

– Statement 1 is correct. The National Agriculture Market (e-NAM) is designed as a pan-India electronic trading portal that integrates the existing APMC mandis to create a unified national market for agricultural commodities.
– Statement 2 is correct. A key objective of e-NAM is to provide farmers with access to a wider market beyond their local mandi, allowing them to sell their produce to bidders across the nation and potentially receive better prices commensurate with the quality of their produce.

e-NAM aims to bring transparency to agricultural trade by facilitating online trading, promoting better price discovery, and streamlining procedures at the mandis.

Consider the following statements:

• The Standard Mark of Bureau of Indian Standards (BIS) is mandatory for automotive tyres and tubes.
• AGMARK is a quality Certification Mark issued by the Food and Agriculture Organisation (FAO).

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option1″]

Statement 1 is correct, while statement 2 is incorrect.

– Statement 1 is correct. Under the Bureau of Indian Standards (BIS) Act, 2016 and relevant orders, the BIS Standard Mark is mandatory for automotive tyres and tubes to ensure quality and safety.
– Statement 2 is incorrect. AGMARK (Agricultural Mark) is a certification mark for agricultural products in India, assuring quality. It is administered by the Directorate of Marketing and Inspection (DMI) under the Ministry of Agriculture & Farmers Welfare, Government of India, not by the Food and Agriculture Organisation (FAO).

BIS prescribes standards for various products and services and provides a certification mark, while AGMARK is specific to agricultural commodities.

With reference to ‘Pradhan Mantri Fasal Bima Yojana’, consider the following statements :

• Under this scheme, farmers will have to pay a uniform premium of two percent for any crop they cultivate in any season of the year.
• This scheme covers post-harvest losses arising out of cyclones and unseasonal rains.

Which of the statements given above is/are correct?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option2″]

The correct answer is B) 2 only. Statement 2 is correct regarding the coverage of post-harvest losses under PMFBY, while statement 1 is incorrect regarding uniform premium rates.

– Statement 1 is incorrect: Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), the premium rates vary based on the crop and season. Farmers pay 2% of the sum insured for Kharif crops, 1.5% for Rabi crops, and 5% for commercial/horticultural crops. The remaining premium is paid by the government (Central and State).
– Statement 2 is correct: The PMFBY scheme includes coverage for post-harvest losses. These losses are assessed at the individual farm level for damage arising out of specified perils like cyclone, cyclonic rains, and unseasonal rains that occur up to a period of two weeks from harvesting, for those crops which are required to be kept in cut & spread condition to dry in the field.

PMFBY was launched in 2016, replacing previous schemes like the National Agricultural Insurance Scheme (NAIS) and Modified NAIS. It aims to provide comprehensive risk coverage against non-preventable natural risks from pre-sowing to post-harvest stages.

The substitution of steel for wooden ploughs in agricultural production is an example of

[amp_mcq option1=”labour-augmenting technological progress” option2=”capital-augmenting technological progress” option3=”capital-reducing technological progress” option4=”None of the above” correct=”option2″]

The correct option is B (capital-augmenting technological progress). The substitution of a steel plough for a wooden plough is an example of capital-augmenting technological progress.

– A plough is a form of physical capital used in agricultural production.
– Replacing a wooden plough with a steel plough implies an improvement in the efficiency, durability, or effectiveness of the capital good.
– Capital-augmenting technological progress makes capital more productive, meaning more output can be produced with the same amount of capital, or the same output with less capital (relative to labour), or it increases the effective amount of capital available. A stronger, more efficient steel plough allows for better tilling, potentially faster, requiring less effort to achieve the same result, or enabling tilling of harder soil, thus increasing the productivity derived from the capital input.
– Labour-augmenting technological progress increases the productivity of labour. While a better plough *might* allow a farmer to work faster or more effectively, the direct technological improvement is in the tool (capital), making the capital itself more productive.
– Capital-reducing technological progress is not a standard term in this context; the change here is about making capital *more* productive or effective, not necessarily reducing the absolute amount of capital used (though fewer trips might be needed, it’s primarily about enhanced capital productivity).

Technological progress can be classified based on how it affects the marginal productivity of labour and capital. Hicks-neutral technology leaves the ratio of marginal productivities unchanged. Harrod-neutral technology is labour-augmenting. Solow-neutral technology is capital-augmenting. In this specific example, the improvement in the plough enhances the productivity of the capital good itself.

In India, markets in agricultural products are regulated under the

[amp_mcq option1=”Essential Commodities Act, 1955″ option2=”Agricultural Produce Market Committee Act enacted by States” option3=”Agricultural Produce (Grading and Marking) Act, 1937″ option4=”Food Products Order, 1956 and Meat and Food Products Order, 1973″ correct=”option2″]

In India, markets in agricultural products are primarily regulated under the Agricultural Produce Market Committee (APMC) Act enacted by the respective State Governments.

The APMC Acts establish market areas (mandis) where agricultural produce can be bought and sold. The state governments have the authority to regulate the functioning of these markets, including market fees, licensing of traders, and market infrastructure.

While other acts listed are relevant to agriculture and food products, they regulate different aspects. The Essential Commodities Act deals with controlling the production, supply, and distribution of essential commodities. The Agricultural Produce (Grading and Marking) Act focuses on quality standards. The Food Products Order and Meat and Food Products Order relate to the processing and quality standards of processed food items. The direct regulation of market infrastructure and trade in primary agricultural produce within states falls under the purview of the state APMC Acts.

The Fair and Remunerative Price (FRP) of sugarcane is approved by the

[amp_mcq option1=”Cabinet Committee on Economic Affairs” option2=”Commission for Agricultural Costs and Prices” option3=”Directorate of Marketing and Inspection, Ministry of Agriculture” option4=”Agricultural Produce Market Committee” correct=”option1″]

The Fair and Remunerative Price (FRP) of sugarcane is approved by the Cabinet Committee on Economic Affairs (CCEA).

The Commission for Agricultural Costs and Prices (CACP) is an advisory body that recommends the Minimum Support Prices (MSPs) for various crops and the Fair and Remunerative Price (FRP) for sugarcane. However, the final approval for the FRP comes from the Union Cabinet, specifically the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.

FRP is the minimum price that sugar mills are legally required to pay to farmers for sugarcane. It is fixed by the Central Government under the Sugarcane (Control) Order, 1966. States can also declare their own State Advised Price (SAP), which is usually higher than the FRP.

In the context of food and nutritional security of India, enhancing the ‘Seed Replacement Rates’ of various crops helps in achieving the food production targets of the future. But what is/are the constraint/constraints in its wider/greater implementation?

• 1. There is no National Seeds Policy in place.
• 2. There is no participation of private sector seed companies in the supply of quality seeds of vegetables and planting materials of horticultural crops.
• 3. There is a demand-supply gap regarding quality seeds in case of low value and high volume crops.

Select the correct answer using the code given below.

[amp_mcq option1=”1 and 2″ option2=”3 only” option3=”2 and 3″ option4=”None” correct=”option2″]

Let’s analyze the statements regarding constraints in enhancing Seed Replacement Rates (SRR):
1. There is no National Seeds Policy in place. – This statement is incorrect. India does have a National Seeds Policy, for instance, the National Seeds Policy of 2002, which aims to ensure the availability of quality seeds.
2. There is no participation of private sector seed companies in the supply of quality seeds of vegetables and planting materials of horticultural crops. – This statement is incorrect. The private sector plays a significant role in the Indian seed industry, especially in the high-value segments like hybrid vegetables and horticultural crops.
3. There is a demand-supply gap regarding quality seeds in case of low value and high volume crops. – This statement is correct. For major crops like cereals, pulses, and oilseeds (low value, high volume per farmer), ensuring the timely availability of affordable, quality seeds to a large number of small and marginal farmers across vast areas is a significant logistical and economic challenge, leading to a demand-supply gap, particularly for specific varieties or during peak seasons. This limits the potential for enhancing SRR for these crops.
Therefore, only statement 3 represents a constraint.

– Seed Replacement Rate (SRR) refers to the percentage of the total cropped area sown with certified/quality seeds of improved varieties in place of farm-saved seeds.
– Enhancing SRR is crucial for improving crop productivity and achieving food security goals.
– Constraints often include the cost of quality seeds, limited awareness among farmers, inadequate infrastructure for production and distribution, and the availability challenges mentioned in statement 3.

While the private sector is active, public sector institutions and policies are still vital for seed production, certification, and distribution, especially for food security crops and in remote areas, to address constraints like the one mentioned in statement 3.