Sugarcane is an important cash crop grown in India. Sugarcane cultivation and development of sugar industry runs parallel to the growth of human civilization and is as old as agriculture. The importance and use of sugarcane and sugar in the country's socio-economic milieu is deep rooted and immense in the current day rural economy set up sugarcane cultivation and sugar industry has been focal point for socio-economic development in rural areas by mobilizing rural resources generating -employment and higher income, transportation and communication facilities.

Government policies affect sugarcane cultivation in a number of ways. Various policies framed by government and micro level factors are influence sugar cultivation, cost and income of sugarcane farmers. The cost of production has significantly increased over a period of time and minimum support Price has not adjusted in accordance with increased cost. Thus, sugarcane farmers in India find themselves in a complex web of problems leading to declining profits. The sugarcane farmers in Maharashtra had given an ultimatum to the state government for its failure to declare better prices for the crop, failing which the farmers said they would organise a 48-hour bandh. The Government announced the Fair` and Remunerative Price (FRP) for sugarcane for the 2014-15 sugarcane season. The FRP imposed a minimum support price for sugarcane at Rs.220 per quintal.

(i)What do you think are the reasons for declining profits in sugarcane farming?

(ii)Explain with a suitable diagram, the amount of consumer and producer surplus without the imposition of minimum support price.

(iii)Explain what would happen to consumer and producer surplus in the sugarcane market after the imposition of MSP.

(iv)Will there be any deadweight loss? Explain