What is Minimum Support Price (MSP)? • Minimum Support Price | Military Choice

What is Minimum Support Price (MSP)?

• Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be the price for the crops. #GKbyMilitaryChoice

• MSPs have no statutory backing — a farmer cannot demand MSP as a matter of right.

• Commission for Agricultural Costs & Prices (CACP) in the Ministry of Agriculture recommends MSPs for 23 crops.

• CACP consider various factors while recommending the MSP for a commodity like cost of cultivation, supply and demand situation for the commodity; market price trends (domestic and global) and parity vis-à-vis other crops etc.

While recommending MSPs, the CACP looks at the following factors:

•  the demand and supply of a commodity;
•  its cost of production;
•  the market price trends (both domestic and international);
• inter-crop price parity;
• the terms of trade between agriculture and non-agriculture (that is, the ratio of prices of farm inputs and farm outputs);
• a minimum of 50 per cent as the margin over the cost of production; and
• the likely implications of an MSP on consumers of that product.

Crops covered by MSPs include:

• 7 types of cereals (paddy, wheat, maize, bajra, jowar, ragi and barley),

•  5 types of pulses (chana, arhar/tur, urad, moong and masur),

• 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower, nigerseed),

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

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