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Minimum Support Price, MSP in agriculture current affairs | Agriinsights

Agriculture is the backbone of many economies, feeding a huge population. The government of India established policies such as Minimum Support Prices (MSP) to protect farmers' well-being and food security. In this article, we will dig into the complexities of MSP, looking at its definition, determination procedure, nodal body in charge, crops covered, variables impacting MSP recommendations, and how production costs are calculated.

Table of Contents

What is Minimum Support Price (MSP)?

Minimum Support Price is the price set by the government to provide a safety net to farmers and ensure them a minimum remuneration for their produce. The primary objective of MSP is to protect farmers from market fluctuations and ensure a stable income, thereby incentivizing them to continue agricultural activities.

Objectives of Minimum Support Price

  • Income Security for Farmers
  • Price Stability
  • Encouraging Crop Diversification
  • Food Security
  • Rural Development

Impact of Minimum Support Price

  • Empowering Farmers
  • Market Confidence
  • Reducing Farmer Distress

How MSP is Determined?

The determination of MSP includes an in-depth analysis of multiple factors. The government examines production costs, market pricing, demand and supply dynamics, as well as an overall economic scenario. The Commission on Agricultural Costs and Prices (CACP) makes recommendations to the government on MSPs, and then the central government determines the minimum support price, but the government is not legally compelled to pay the MSP.

Nodal Agency for MSP?

The Food Corporation of India (FCI) is the key agency for crop procurement and works with other state agencies.

Crops under Minimum Support Price

Minimum Support Price is not uniform across all crops. The government typically announces MSPs for major crops such as rice, wheat, pulses, oilseeds, and cotton. The list of crops covered under MSP may vary from year to year based on factors such as cropping patterns, market trends, and the need to support specific agricultural sectors.

MSP has been declared for 24 commodities now, including
7 Cereals Paddy, Wheat, Jowar, Bajra, Barley, Maize, and Ragi.
5 Pulses Gram, Arhar, Moong, Urad, and Lentil.
8 Oilseeds Groundnut, Rapeseed/Mustard, Toria, Soyabean, Sunflower, Sesamum, Niger seed, and Safflower seed.
Cash crops Raw Cotton, Copra, Raw Jute, and Virginia Flu Curved Tobacco.

Factors Influencing MSP Recommendation

Several factors influence the CACP's recommendations for MSP. These include the cost of production, changes in input prices, market conditions, international prices, and the overall economic environment. The goal is to ensure a reasonable profit margin for farmers while considering the affordability of food for consumers. The MSP ensures farmers a guaranteed price for their crops that is far higher than their production expenses. MSP would be maintained at one and a half times (1.5 times) the cost of production, according to the Union Budget for 2018-19.

How was the Production Cost Determined?

The determination of production cost is a critical aspect of setting MSP. The cost includes various components such as input costs (seeds, fertilizers, pesticides), labour costs, rental or lease charges for land, irrigation costs, and other miscellaneous expenses. Accurate estimation of these costs allows for a fair calculation of MSP, ensuring that farmers receive adequate compensation.

Note - CACP considers both A2+FL and C2 costs while recommending MSP.

MSP for Kharif Crops - Click Here
MSP for Rabi Crops - Click Here

Conclusion:

Minimum Support Prices play a pivotal role in safeguarding the interests of farmers and maintaining food security. The process of determining MSP involves careful consideration of production costs, market dynamics, and various economic factors. The Commission for Agricultural Costs and Prices acts as the guiding force behind MSP recommendations, striving to strike a balance between ensuring fair returns for farmers and affordable food prices for consumers. As agricultural landscapes evolve, the MSP mechanism continues to adapt to new challenges, playing a crucial role in sustaining the agricultural sector.
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