Minimum support price (India)

The minimum support price (MSP) is an agricultural product price, set by the Government of India to purchase directly from the farmer. This is not enforceable by law. By definition, this rate is to safeguard the farmer to a minimum profit for the harvest, if the open market has lesser price than the cost incurred.[1] The Indian government sets the price for 23 commodities twice a year.[2][3][4]

MSP is fixed on the recommendations of the Commission for Agricultural Costs and Prices (CACP) since 2009.[5]

During the 2018-19 Union Budget the government announced that MSP would be kept at 1.5 times the cost of production (as per recommendations from the M S Swaminathan chaired National Commission for Farmers).[5] The CACP has three formulas for calculating cost of production — A2, A2+FL and C2.[6] A2 covers expenses like seeds and fertiliser. FL covers family labour. C2 includes A2+FL plus things like interest forgone on owned land and fixed capital assets.[6]


  • Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
  • The Government of India announces the minimum support prices at the beginning of the sowing season based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
  • This is not the price that a farmer actually gets for his produce. Moreover, MSP procurement is only done for wheat and paddy, that too only by the states which have invested in developing their APMC Mandis and have budgets set aside for the same - Punjab, Haryana and Rajasthan.

Calculating MSPEdit

Since 2009, the Commission for Agricultural Costs and Prices fixes the MSP of a crop based on:

  • cost of production
  • demand
  • supply
  • price fluctuations
  • market price trends
  • different costs and
  • international market prices
  • agricultural wage rate

Commodities under MSPEdit

A total of 23 commodities are covered by MSP mechanism:[2]

  • Cereals:
  1. Paddy
  2. Wheat
  3. Maize
  4. Sorghum
  5. Pearl millet
  6. Barley
  7. Ragi
  • Pulses:
  1. Chickpea / Gram / Gramme
  2. Tur
  3. Moong
  4. Urad
  5. Lentil
  • Oilseeds:
  1. Peanut
  2. Rapeseed
  3. Soyabean
  4. Sesame
  5. Sunflower
  6. Safflower
  7. Niger seed
  • Commercial crops:
  1. Copra
  2. Sugarcane
  3. Cotton
  4. Raw jute

Minimum Support Prices - Fixed by Government (Rs. per quintal)[7]Edit

Commodity Variety 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
KHARIF CROPS
PADDY Common 1000 1080 1250 1310 1360 1410 1470 1550 1750 1815 1868
Grade 'A' 1030 1110 1280 1345 1400 1450 1510 1590 1770 1835 1888
JOWAR Hybrid 880 980 1500 1500 1530 1570 1625 1700 2430 2550 2620
Maldandi 900 1000 1520 1520 1550 1590 1650 1725 2450 2570 2640
BAJRA 880 980 1175 1250 1250 1275 1330 1425 1950 2000 2150
MAIZE 880 980 1175 1310 1310 1325 1365 1425 1700 1760 1850
RAGI 965 1050 1500 1500 1550 1650 1725 1900 2897 3150 3295
Tur (Arhar) 3000 3200 3850 4300 4350 4625^ 5050^^ 5450^ 5675 5800 6000
MOONG 3170 3500 4400 4500 4600 4850^ 5225^^ 5575^ 6975 7050 7196
URAD 2900 3300 4300 4300 4350 4625^ 5000^^ 5400^ 5600 5700 6000
COTTON Medium Staple 2500 2800 3600 3700 3750 3800 3860 4020 5150 5255 5515
Long Staple 3000 3300 3900 4000 4050 4100 4160 4320 5450 5550 5825
Groundnut 2300 2700 3700 4000 4000 4030 4220* 4450^ 4890 5090 5275
SUNFLOWER SEED 2350 2800 3700 3700 3750 3800 3950* 4100* 5388 5650 5885
SOYABEAN Black 1400 1650 2200 2500 2500     -     - 3050^ 3399 3710     -
Yellow$$ 1440 1690 2240 2560 2560 2600 2775* 3880
SESAMUM - 2900 3400 4200 4500 4600 4700 5000^ 5300* 6249 6485 6855
NIGERSEED - 2450 2900 3500 3500 3600 3650 3825* 4050* 5877 5940 6695
RABICROPS
WHEAT 1120 1285 1350 1400 1450 1525 1625 1735 1840 1925 1975
BARLEY - 780 980 980 1100 1150 1225 1325 1410 1440 1525 1600
GRAM - 2100 2800 3000 3100 3175 3500** 4000^ 4400! 4620 4875 5100
MASUR (LENTIL) - 2250 2800 2900 2950 3075 3400** 3950! 4250* 4475 4800 5100
Rapeseed & Mustard - 1850 2500 3000 3050 3100 3350 3700* 4000* 4200 4425 4650
SAFFLOWER - 1800 2500 2800 3000 3050 3300 3700* 4100 4945 5215 5327
TORIA - 1780 2425 2970 3020 3020 3290 3560 3900 4190 4425   -
OTHER CROPS
COPRA Milling 4450 4525 5100 5250 5250 5550 5950 6500 7511 9521 9960
(Calender Year) Ball 4700 4775 5350 5500 5500 5830 6240 6785 7750 9920 10300
DE-HUSKED COCONUT

Calender Year)

1200 1200 1400 1425 1425 1500 1600 1760 2030 2571 2700
JUTE 1575 1675 2200 2300 2400 2700 3200 3500 3700 3950 4225
** Including Bonus of Rs.75 per quintal.
^ Includin Bonus of Rs. 200 per quintal .
^^ Including Bonus of Rs. 425 per quintal .
* Including Bonus of Rs. 100 per quintal .
$$ Minimum of Support Price of Soyabean yellow is also applicable to black variety during 2015-16 and 2016-17.
! Including Bonus of Rs. 150 per quintal.

Farmers protestEdit

The governments face protests from farmers when the market prices for products fall and there is a demand to increase MSP rates

. Recently govt. is planning to allow private sector to procure these food grains directly from farmers, this will help farmers to sell their produce to a larger buyer base.

However no government has ever decided on legalising MSP, and as such the sale of crops occurs at a fraction of the cost stated as MSP.

Farmers Protest in India are for legalising the MSP, the farmers claim that merely declaring MSP without a legal binding is essentially meaningless.

ReferencesEdit

  1. ^ Budget 2018 on Agriculture: Can new MSP prop up rural economy? - Livemint
  2. ^ a b "CACP". cacp.dacnet.nic.in. Commission for Agricultural Costs and Prices. Retrieved 24 September 2020.
  3. ^ Budget 2018: Focus on MSP ideal for tackling farm distress - The Economic Times
  4. ^ Agriculture
  5. ^ a b "Calculation of MSP". pib.gov.in. Ministry of Agriculture & Farmers Welfare. 3 March 2020. Retrieved 2020-12-05.CS1 maint: others (link)
  6. ^ a b "FM Arun Jaitley reveals formula for fixing MSP 50% over production cost". The Economic Times. 9 February 2018. Retrieved 2020-12-05.
  7. ^ "Minimum Support Prices". farmer.gov.in. Retrieved 2020-12-25.

Further readingEdit