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Question: How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers?


Answer: Agriculture is one of the most important contributor to economic development as well as job generation in the world especially in rural areas. Large number of citizens depend either directly or indirectly on agriculture for their living and hence it is important to take additional measures to support agriculture through subsidies.

Effect of subsidies on:

  • Cropping pattern
    Subsidies are directly responsible to cropping pattern of an area. The crops that receive better and more attractive subsidies is always selected for growing. The better the subsidy larger is the area of a particular crop in a region.
    Ex: Sugarcane crops are better subsidised in form of loans and remuneration and hence are widely grown.
  • Crop diversity
    If subsidies are not restricted to a particular crop and instead widely distributed among various crops then crop diversity is bound to increase. This is because farmers are more attracted for growing a crop which has support in form of subsidies.
    Ex: Haryana government had announced subsidies for crops other than paddy and wheat so as to increase crop diversity.
  • Economy of farmers
    Subsidies can enhance the economic condition of farmers tremendously. Subsidies will reduce the need for borrowing at high interest rates and will help in taking care of initial costs. These will ultimately boost the profit margin.

Significance on small and marginal farmers

  • Crop insurance
    Crop insurance acts as cover against any incidents that can destroy crops and push a farmer towards poverty, especially small and marginal farmers. By paying a small amount as premium, farmers can be assured of profits in the future.
  • MSP
    Minimum Selling Price ensures that farming becomes a profitable profession and rural economy is boosted. By providing a certain amount as MSP that covers cost of growing and a profit margin, income of small farmers will increase regardless of market prices.
  • Food processing
    Food processing industries act as fixed market for small farmers who do not have the required resources to sell their produce to far places. These industries will provide the required materials such as seeds, fertilizers in addition to good rates in return for compulsory selling to them.

Thus, these measures have a major role to play if agriculture production has to boost. Growing agriculture economy will provide additional benefits such as job creation and exports boost.

Updated on 09 Mar 2020 |   Added on .08 Mar 2020  |  by admin