Rationale of MSP

  • Protects farmers against market fluctuations- minimum prices ensured for the crops protects the agricultural prices, farmers from market fluctuations.
  • Economic assurance – guarantee of a buyer while cultivation of crops and safeguarding their future. Hence, provides an economic assurance and security for the farmers.
  • Food security – Large scale procurement at MSP helps the government in catering the requirements of food security which is targeted by government through schemes like MDM, Aaganwadi, NFSA, etc.
  • Boosts production – It motivates farmers to grow targeted crops and thus helps in achieving the targets of agriculture production.
  • Price volatility makes life difficult for farmers. Though prices of agri commodities may soar while in short supply, during years of bumper production, prices of the very same commodities plummet. MSPs ensure that farmers get a minimum price for their produce in adverse markets. MSPs have also been used as a tool by the Government to incentivise farmers to grow crops that are in short supply.