MINIMUM SUPPORT PRICE (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     19th October 2023        

Context: The Centre recently increased the MSP of wheat by 7.06% to 2,275 per quintal for the 2024-25 rabi season, marking the highest hike since 2014.

Minimum Support Price (MSP)

  • About: MSP serves as a government-established rate at which crops are bought from farmers, providing them with protection against significant declines in agricultural prices.
  • Announced by: The Commission for Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops and Fair and Remunerative Prices (FRP) for sugarcane.
  • Origin of Concept: MSP was initially introduced in 1966, drawing inspiration from the Green Revolution.
  • Crops covered: 7 types of cereals (paddy, wheat, maize, bajra, jowar, ragi and barley)

o 5 types of pulses (chana, arhar/tur, urad, moong and masoor)

o 7 oilseeds (rapeseed-mustard, groundnut, soybean, sunflower, sesamum, safflower, niger seed)

o 4 commercial crops (cotton, sugarcane, copra, raw jute)

Factors for Recommending the 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 the cost of production,
  • Implications of MSP on consumers of that product.

Rabi Crops under  MSP

 Wheat, barley, gram, lentil, mustard, and safflower.

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