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Title : Minimum Support Price: Key Demand of farmers

Date : Nov 24, 2021

Description :



Topic à Agriculture related topics


  • What is MSP, exactly:


  • The government purchases grains from farmers at the minimum support price (MSP). MSPs have already been established for 23 crops grown during the Kharif and Rabi seasons.


  • What is the method for calculating it:


  • The MSP is the price at which the government buys crops from farmers, and it is estimated at least 1.5 times the producers' cost of production.


  • According to the Union Budget for 2018-19, MSP would be retained at 1.5 times the cost of production.
  • The MSP is determined twice a year, based on recommendations from the Commission for Agricultural Costs and Prices (CACP), a governmental body that issues reports for the kharif and rabi seasons.


  • Which manufacturing costs are taken into account while establishing MSP:


  • The CACP includes both 'A2+FL' and 'C2' expenses when recommending MSP.
  • All monetary and in-kind expenses incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel, and irrigation, among other things, are included in A2 expenditures.
  • On top of A2+FL, C2 expenditures account for the rent and interest foregone on owned land and fixed capital assets, respectively.


  • The MSP's disadvantages include:


  • • The main concern with the MSP is a paucity of government procurement machinery for all products except wheat and rice, which are actively procured under the PDS by the Food Corporation of India.
  • Farmers in states where the grain is completely procured by the government benefit the most, while those in states where the grain is procured less frequently are frequently affected.


Tags : agriculture reforms, income of farmers

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