Minimum support price (India)
This article needs to be updated.December 2020)(
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. The Indian government sets the price for 23 commodities twice a year.
MSP is fixed on the recommendations of the Commission for Agricultural Costs and Prices (CACP) since 2009.
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). The CACP has three formulas for calculating cost of production — A2, A2+FL and C2. 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.
- 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.
Since 2009, the Commission for Agricultural Costs and Prices fixes the MSP of a crop based on:
- cost of production
- 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:
- Commercial crops:
|Rapeseed & Mustard||-||1850||2500||3000||3050||3100||3350||3700*||4000*||4200||4425||4650|
|** 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.|
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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.
- Budget 2018 on Agriculture: Can new MSP prop up rural economy? - Livemint
- "CACP". cacp.dacnet.nic.in. Commission for Agricultural Costs and Prices. Retrieved 24 September 2020.
- Budget 2018: Focus on MSP ideal for tackling farm distress - The Economic Times
- "Calculation of MSP". pib.gov.in. Ministry of Agriculture & Farmers Welfare. 3 March 2020. Retrieved 2020-12-05.CS1 maint: others (link)
- "FM Arun Jaitley reveals formula for fixing MSP 50% over production cost". The Economic Times. 9 February 2018. Retrieved 2020-12-05.
- "Minimum Support Prices". farmer.gov.in. Retrieved 2020-12-25.
- Aditya, K.S.; Subash, S.P.; Praveen, K.V.; Nithyashree, M.L.; Sharma, Akriti; Bhuvana, N. (7 August 2017). "Awareness about Minimum Support Price and Its Impact on Diversification Decision of Farmers in India". Asia & the Pacific Policy Studies. 4 (3): 514–526. doi:10.1002/app5.197. S2CID 158304705 – via onlinelibrary.wiley.com.
- Evaluation Study On Efficacy of Minimum Support Prices (MSP) on Farmers (DMEO Report No.231) (PDF) (Report). NITI Aayog: Development Monitoring and Evaluation Office. Government of India. January 2016. Retrieved 5 December 2020.
- Minimum Support Price By Optimizeias (21st July 2020)