What is minimum support price?
Minimum Support Prices is the price at which government purchases crops from the farmers irrespective of the market price. The objective of the scheme is to check fall of prices of farm produce below certain level and thus support the farmers.
How the price are fixed?
Government fixes MSPs of various kharif and rabi crops every year on the recommendations of Commission for Agricultural Costs & Prices (CACP), views of concerned State Governments and Central Ministries/Departments and other relevant factors.
Who does the procurement under MSP?
Procurement under MSP is undertaken by the designated Central and State Government agencies and Cooperatives. MSP is in the nature of minimum price offered by the Government. Producers have the option to sell their produce to Government agencies or in the open market as is advantageous to them
Factual Information:
- This scheme started in 1966-67 on advent of green revolution
- MSP is announced for 25 crops
- No MSP for Sugarcane. Instead government fixes FRP (Fair & Remunerative Price) for sugarcane. Each state then fixes its own SAP(State Advised Price)
- For Oil seeds and Pulses, there is a Price Support Scheme by NAFED (nodal Agency). So, when the prices of oilseeds, pulses and cotton fall below MSP, NAFED purchases them from the farmers.