Input-Output Price Parity and Farm Profitability: A Strategic Perspective for Karnataka
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Author: Vaishnavi, Lokesha, H., Vedamurthy, K.B. and Manojkumar Patil
Author Address: Assistant Coordinator, MBA (Food Business), Associate Professor, Dairy Science College, KVAFSU, Bengaluru-560024 (Karnataka), Professor, Department of Agricultural Economics, University of Agricultural Sciences, Bengaluru-560 065, and Research Associate,
Keywords: Agriculture price policy, crop profitability, minimum support price, price parity, strategic support price, translog cost function.
JEL Codes: E64, Q10, Q11, Q18.
Abstract
Agricultural pricing policies are crucial for farm profitability and food security in India. This study analysed how input and output prices significantly influence the profitability of cereals in Karnataka, with the strategic support prices playing a crucial role in maintaining the price parity. The average annual TFP growth was 1.041 per cent. Rising input costs, particularly for human labour, led to reduced profitability for Jowar (6.12 per cent) and Ragi (4.89 per cent). The net effect was adverse for Jowar (-1.50 per cent) and Ragi (-0.86 per cent) due to rising input costs outpacing output prices. The study recommended increasing the MSP for Jowar (60 per cent) and Ragi (46.24 per cent) above the existing levels. A strategic price adjusted for changing input costs can stabilise farm incomes and promote sustainable production, enabling efficient pricing policies.
Description
Indian J Econ Dev, 2025, 21(4), 713-720
https://doi.org/10.35716/IJED-25143