Minimum Support Prices (MSP)

Source:  TOI

Context: The Cabinet Committee on Economic Affairs (CCEA) approved revised Minimum Support Prices (MSP) for 14 Kharif crops for the 2025–26 marketing season.

About Minimum Support Prices (MSP):

• What is MSP?
  • MSP is the minimum guaranteed price offered by the government to farmers for their crops, even if market prices fall. It protects farmers from distress sales and ensures income stability.
• Who Determines It?
  • MSP is recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs (CCEA).
• When was MSP Introduced?
  • First introduced in 1966–67 during the Green Revolution, primarily for wheat and paddy.
• MSP Calculation Method
  • A2+FL Formula:
    • A2 = Paid-out costs (labour, seeds, irrigation, etc.)
    • FL = Imputed value of family labour
  • Margin: Government ensures 50% or more margin over production costs.
• Crops Covered Under MSP
  • Kharif Crops:
    • Cereals: Paddy, Jowar, Bajra, Ragi, Maize
    • Pulses: Tur (Arhar), Moong, Urad
    • Oilseeds: Groundnut, Sunflower, Soyabean, Sesamum, Niger-seed
    • Commercial: Cotton
  • Rabi Crops:
    • Wheat, Barley, Gram, Lentil (Masur), Rapeseed & Mustard, Safflower
  • Commercial Crops:
    • Copra, Jute and Toria and De-husked Coconut also covered under related MSPs.
  • Key Features of MSP:
    • Announced Twice Yearly: Declared before the Kharif and Rabi sowing seasons to guide farmers’ planting decisions.
    • Prevents Exploitation: Ensures a minimum guaranteed price to protect farmers from market volatility and distress sales.
    • Encourages Crop Diversification: Offers higher MSPs for pulses and oilseeds to shift focus from water-intensive cereals.
    • Budget 2018–19 Mandate: MSP fixed at 5 times the cost of production (A2+FL) to ensure fair profits for farmers.
    • Promotes Nutritional Crops: Higher MSP for millets and Shree Anna supports healthier diets and climate-resilient farming.