Agri-Business and Farm Economics — Quick Reference

Cost categories

Cost	Includes	Use

|---|---|---|

Cost A	Cash/paid-out expenses only	Minimum cash to avoid a loss
Cost B	Cost A + imputed land/capital value	Opportunity cost of owned resources
Cost C	Cost B + imputed family labour	Full economic profitability — use for genuine comparison

Always compare crops/options on the same cost basis — comparing Cost A of one against Cost C of another is misleading.

Profitability formulas

•Gross Returns = Output quantity × Price

•Net Returns = Gross Returns − Cost (specify which basis: A/B/C)

•Break-even = yield/price at which Net Returns = 0

APMC — pros and criticisms

Intended purpose	Common criticism

|---|---|

Price transparency (open auction)	Licensing limits number of buyers
Protection from exploitative direct deals	Commission agent fees add cost
Regulated market structure	State-specific Acts fragment the market

e-NAM = electronic linking of APMC mandis, aimed at reducing fragmentation while keeping regulated-market safeguards.

Market channels — quick comparison

Channel	Layers	Farmer's price share

|---|---|---|

Traditional (mandi → wholesaler → retailer)	Multiple intermediaries	Lower
e-NAM	Digital, wider buyer pool	Improved vs. single physical mandi
Direct/FPO-based	Fewest intermediaries	Higher, but needs organizational capacity

FPO — quick facts

•Formal legal entity, typically registered as a Producer Company

•Solves the aggregation problem — gives smallholders collective bargaining scale

•Capitalized by member shares + NABARD equity grant support

NABARD — key structural fact

NABARD generally does not lend directly to farmers — it refinances banks (commercial, RRB, cooperative), who lend at retail level. Tools: interest subvention, refinance rates, priority-sector lending targets.

Contract farming — the tradeoff

Farmer gets	Farmer gives up

|---|---|

Guaranteed price (price-risk protection)	Flexibility — must follow buyer's variety/input/quality spec, can't sell elsewhere even if market price rises

NWR (Negotiable Warehouse Receipt)

WDRA-registered warehouse storage → NWR issued → pledge as loan collateral → liquidity without immediate sale. Directly counters harvest-time distress selling.

PMFBY (crop insurance) — quick facts

Covers yield loss from natural calamity/pest/disease. Government-subsidized premium; farmer pays a capped percentage.

(needs verification — recheck against current source: exact premium rates and scheme terms are periodically revised.)

Export policy tools

MEP (Minimum Export Price) and export duty/bans — used to balance export earnings against domestic price stability (e.g., periodic onion export restrictions to control domestic prices).

Agri-Business — Quick Ref