Minimum Support Prices (MSPs) for All Crops

Why in news

The government fixes Minimum Support Prices (MSPs) for 22 mandated agricultural crops annually, aiming to provide price support to farmers when market prices fall below the MSP. This includes procurement of cereals and coarse cereals by FCI, and pulses, oilseeds, and copra under the PM-AASHA scheme.

Exam relevance

GS1, GS3 · Society, Economy · Prelims · Mains

Key facts

1. Government fixes Minimum Support Prices (MSPs) for 22 mandated agricultural crops annually.
2. MSPs are fixed based on recommendations of the Commission for Agricultural Costs & Prices (CACP).
3. The Union Budget for 2018-19 announced a principle to keep MSPs at least one and a half times the cost of production.
4. Since 2018-19, MSPs for Kharif, Rabi, and commercial crops have been increased with a minimum margin of 50% over the all-India weighted average cost of production.
5. Government procures cereals and coarse cereals through FCI and other State Agencies.
6. Procurement of pulses, oilseeds, and copra is done under the Price Support Scheme of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) when market prices fall below MSP, upon request from State Governments.

Prelims pointers

• Number of mandated agricultural crops for which MSP is fixed: 22.
• Recommendation body for MSPs: Commission for Agricultural Costs & Prices (CACP).
• Principle announced in Union Budget 2018-19 regarding MSPs: At least one and a half times the cost of production.
• Minimum margin over cost of production for MSP increases since 2018-19: 50%.
• Agency for procurement of cereals and coarse cereals: Food Corporation of India (FCI) and other designated State Agencies.
• Scheme for procurement of pulses, oilseeds, and copra: Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA).

Mains practice question

Discuss the significance of Minimum Support Prices (MSPs) in the Indian agricultural economy. Analyze the challenges and potential reforms associated with the MSP regime.

Static linkage

The Minimum Support Price (MSP) mechanism is a key policy tool used by the Indian government to ensure remunerative prices for farmers and to safeguard them against price volatility. It is linked to agricultural policy, food security, and rural economy.

Significance

MSPs are crucial for ensuring farmer income stability, encouraging crop diversification, and maintaining food security. The policy aims to bridge the gap between production costs and market realization, thereby incentivizing agricultural production. The procurement mechanism ensures that farmers receive a minimum price even during market gluts.