Understanding the effectiveness of minimum support price policy on area, production and productivity of oilseed crops in India

Abstract

The purpose of the study was to investigate the impact of the Minimum Support Price (MSP) policy on the expansion of oilseed cultivation area, production and productivity in India, aiming to address the country’s heavy reliance on costly edible oil imports, which exceed 65 percent of its total requirements, costing over `70,000 crores annually. The study aimed to assess how the implementation of the MSP policy could contribute to increasing domestic oilseed production and reducing the dependence on imports.The data on MSP, oilseed cultivation area, production, and productivity was collected for the period 1985 to 2020. Compound Annual Growth Rate, correlation analysis, and scatter plots were utilized to analyze the trends and associations between MSP and the area, production and yield of key oilseed crops in India, namely Groundnut, Sunflower, Rapeseed-Mustard, Soybean, and Safflower. The study revealed that there was a positive and statistically significant Compound Annual Growth Rate (CAGR) between the Minimum Support Price (MSP) and yield for all five oilseed crops. Additionally, a positive and significant trend was observed in the CAGR of Soybean and Rapeseed-Mustard for both area and production. The scatterplots and Spearman correlation analysis further supported these findings, indicating a strong positive correlation between the MSP of Soybean and Rapeseed-Mustard with their respective area, production, and yield. It was also noted that the government provided higher MSP support to oilseed crops such as Sunflower, Safflower, and Groundnut, where a negative CAGR in the area was observed.