Minimum Support Price (MSP)

 

Minimum Support Price: Meaning

The MSP, or Minimum Support Price, is a method of safeguarding Indian farmers against market and natural disasters. The MSP, which acts as a "safety net" for farmers, lies at the heart of the agricultural revolution that saw India go from a food-deficit to a food-surplus nation. Over time, the MSP has aided Indian farmers in avoiding the effects of financial swings. Following the farmers' demonstrations reaching the national capital, the MSP has become a major debate subject. At the FE Knowledge Desk, we dissect the Minimum Support Price notion.

When was the MSP introduced in India?

In terms of cereal output, India was facing a huge deficit at the time of independence. Following a difficult first decade, India chose to implement substantial agricultural reforms. The Centre established the Minimum Support Price for the first time in the year 1966-67. For the first time, the MSP for wheat was set at Rs 54 per quintal.

What kind of crops are covered by the MSP?

The MSP is now provided by the Centre for 23 crops. Cereals such bajra, wheat, maize, paddy barley, ragi, and jowar; pulses like tur, chana, masur, urad, and moong; oilseeds like safflower, mustard, niger seed, soyabean, groundnut, sesame, and sunflower; and oilseeds like safflower, mustard, niger seed, soyabean, groundnut, sesame, Raw jute, cotton, copra, and sugarcane are among the commercial crops covered by the MSP.

How does the government decide the MSP?

The two major cropping seasons in India are 'Rabi' and 'Kharif.'

The MSP is announced by the government at the start of each planting season.

The MSP is established after the government has thoroughly examined the principal points raised by the Commission on Agricultural Costs and Prices.

These suggestions are based on pre-determined equations. This covers the actual costs incurred, as well as implied family labour and the value of fixed assets or rent paid by the farmers.

These variables are known as A2, FL, and C2 in technical language. The government calculates the MSP by combining all of these together.

Conclusion

To increase production and productivity per hectare of land, a more scientific approach is required in agriculture, and a larger budget should be made mandatory in research.

The NITI Aayog has already stated that MSP will be announced far before of the country's planting season.

Instead than fixing MSP on the basis of past costs, it must be fixed for current expenditures.

The entire procurement process needs to be overhauled, and procedures should emphasize local procurement, particularly at the panchayat level. To enhance shelf life and prevent rotting of grains, advanced warehousing infrastructure such as modernized storage facilities, weighing bridges, and so on should be kept within the purview of panchayats solely.

The recommendations of the Shanta Kumar Committee regarding the overhaul of the Food Corporation of India (FCI) must be implemented across the country, as must the suggestions made by the National Commission of Farmers under MS Swaminathan in 2007 to fix the MSP at cost of production + 50% in order to have a definitive roadmap for financial expenses and better remunerative output for farmers rather than relying on temporary methods.

Farmers must be educated in terms that allow them to grasp the benefits of crop diversification so that they can produce more pulses and avoid supply-side shocks.