Centre Increases MSP for Rabi Crops

Table of Contents

Minimum Support Price (MSP)

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 sets the MSP at the start of the sowing season, based on the recommendation of the Commission for Agricultural Costs and Prices (CACP).

Recommendation: Commission for Agricultural Costs and Prices (CACP)
- Attached office under the Ministry of Agriculture and Farmers’ Welfare.
- It was established in January 1965 as the Agricultural Prices Commission and was renamed in 1985.
- Composition: Chairman, Member Secretary, 1 official member and 2 non-official members.
  - The non-official members are representatives of the farming community.
- Determinants of MSP
  - Demand and supply
  - Cost of production
  - Price trends in the market, both domestic and international
  - Inter-crop price parity
  - Terms of trade between agriculture and non-agriculture
  - A minimum of 50 percent as the margin over cost of production
  - Likely implications of MSP on consumers of that product.

Decision Stage: Cabinet Committee on Economic Affairs (CCEA)
- It is headed by the Prime Minister.
- Presently it has 11 members including key Union Ministers like the Minister of Finance, Commerce and Industry, agriculture, and others.
- It reviews and approves MSP levels
Procurement is done by Food Corporation of India (FCI) and State agencies