State PCS

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Minimum Support Price

Recently, The Centre has set the minimum support price (MSP) for paddy sown in the kharif or monsoon season at 2,183 per quintal.


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


  • 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

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