Context:

Recently, The Centre has set the minimum support price (MSP) for paddy sown in the kharif or monsoon season at 2,183 per quintal, an increase of 143 a quintal from last year’s figure.

• The MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
• MSP is a “minimum price” for any crop that the government considers as remunerative for farmers and hence deserving of “support”.
• The Cabinet Committee on Economic Affairs (CCEA) takes a final decision on MSPs

Crops under MSP:

• The Commission for Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
• CACP is an attached office of the Ministry of Agriculture and Farmers Welfare.
• The mandated crops include 14 crops of the kharif season, 6 rabi crops and 2 other commercial crops.
• In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively

Significance

• Better price for their crops: With the increase in the MSP, farmers will get a better price for their crops and procurement will also be done.
• Promotion to grow oilseeds: As farmers get a secured price for their crops, it will encourage more and more farmers to grow oilseed 11 as prompt them to shift away from grains.
• Focus on Nutri-Rich crops: The added focus on nutri-rich nutri-cereals is to incentivise itsproduction in the areas where rice-wheat cannotbe grown without long term adverse implicationsfor groundwater table.
• Needs of consumers: MSP ensures that the country’s agricultural output responds to the changing needs of its consumers. Ex: The government hiked the MSP of pulses to expand sowing of pulses.

Read also:- Hike in MSP for kharif crops

MSP Calculation:-

• The Centre fixes MSPs for every kharif and rabi cropping season based on recommendations of the Commission for Agricultural Costs and Prices (CACP)
• When a farmer grows a crop, he incurs costs, some of it explicit and some implicit or unpaid. The CACP considers the following costs:
• A2: – Covers all cash and in kind expenses incurred by farmers on seeds
• A2+FL: – Actual costs plus an imputed value of unpaid family labour
• C2: – Includes ‘A2+FL’ along with revenueforgone on owned land (rent) and fixed capital assets (interest).

Way forward

• The MSP shields farmers by guaranteeing a floor price for their produce and helps in achieving food security and tackle shortages of key food items.
• In this importance of MSP, the Government and the Unions should amicably resolve the farmer issues so that it can benefit more than the harm it is causing.
• Proper and rigorous implementation of ambitious projects like e-NAM, doubling farmer’s income by2022, price stabilisation fund, recommendations of Swaminathan and Shanta Kumar committee is required.

Read also:- ‘Lightweight’ payments system