Minimum Support Price (MSP)

Minimum Support Price (MSP)

Minimum Support Price (MSP)

TOPIC IN NEWS:-  Farmers’ union rejected the Centre’s invitation to join the committee,  on the minimum support price and other issues in the farming sector. 

What is Minimum Support Price (MSP)?

  • MSP  is the price set by the government for certain agricultural products, at which the products would directly be purchased from the farmers if the open market prices are less than the cost incurred.
  • MSP is the rate at which the government purchases crops from farmers.
  • It is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
  • The Commission for Agricultural Costs & Prices (CACP) recommends MSPs. It is an attached office of the Ministry of Agriculture and Farmers Welfare.

Objectives of setting up Minimum Support Price (MSP) 

  • To support farmers from distress sales.
  • To control the price of products.
  • To procure food grains for public distribution.

Factors for Recommending the MSP

The CACP considers various factors while recommending the MSP for particular commodities like- the cost of cultivation, Input-output price parity, Demand and supply, Trends in market prices, Effect on the cost of living, Effect on issue prices, and implications for the subsidy, Parity between prices paid and prices received by the farmers, International price, implications for consumers (inflation).

 Crops under MSP

  • CACP recommends MSPs for 22 mandated crops and fair & remunerative price (FRP) for sugarcane.
  • The mandated crops include 14 crops of the Kharif season, 6 rabi crops, and 2 other commercial crops.

Crops covered under MSP

  • Cereals:- Barley, Bajra, Maize, Jowar, Paddy, Ragi, wheat,
  • Pulses:- Arhar/tur, Gram, Lentil, Moong, Urad
  • Oilseeds:- Groundnut, Nigerseed, rapeseed/mustard, Soybean, Sesamum, Sunflower seed, Safflower seed, Toria
  • Copra, De-husked coconut,  Raw cotton, Raw jute, Sugarcane (fair and remunerative price), Virginia flu-cured (VFC) Tobacco

 Advantages of Minimum Support Price

  • MSP acts as a tool for the government to control a sharp fall and rise in crop prices.
  • MSP acts as a security to farmers so that they get a fair amount for their products and also helps them sustain their losses, and does not affect them drastically.
  • MSP helps to boost the morale and motivation of farmers by maintaining & giving a fair price for the crops they produce.
  • MSP for these crops is also important so that more and more farmers are tempted to grow these crops with an assurance that they will recover a certain amount from the government guarantee.
  • Government purchases the crops from farmers at MSP and further it is sold at government fair price shops at a price lower than the market rate. That will help the government make these crops available & affordable to the below-poverty line people.

 In this article, we mention all information about Minimum Support Price (MSP) 


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