·       MSP is crucial for farmers as it provides them with a safety net against sharp falls in farm prices, especially during bumper production years.

·       However, MSP currently lacks statutory backing, meaning that farmers cannot legally demand it as a guaranteed right.

·       The MSP is announced for 22 crops, encompassing a variety of kharif, rabi, and commercial crops. These include:

·       14 kharif crops (paddy, jowar, bajra, maize, ragi, tur/arhar, moong, urad, groundnut, soyabean, sunflower, sesamum, niger seed, cotton),

·       6 rabi crops (wheat, barley, gram, masur/lentil, rapeseed and mustard, and safflower) and

·       2 commercial crops (jute and copra).

·       In addition, MSP for Toria and de-husked coconut is also fixed on the basis of MSPs of rapeseed & mustard and copra respectively.

·       Additionally, a Fair and Remunerative Price (FRP) is set for sugarcane, which ensures that farmers receive a minimum price for their sugarcane produce.

·       The Cabinet Committee of Economic Affairs decides on MSP at the beginning of each sowing season based on recommendations from the Commission for Agricultural Costs and Prices (CACP). The CACP considers various factors such as demand-supply dynamics, production costs, market trends, inter-crop price parity, and implications for consumers while making its recommendations.

·       The CACP calculates different costs (A2, A2+FL, C2) for each crop in different states based on production cost estimates.

·       A2 cost covers all paid-out costs directly incurred by the farmer, while A2+FL includes an imputed value of unpaid family labour. C2 cost is the most comprehensive, incorporating rentals and interest for owned land and fixed capital assets. However, the government announces MSP based on A2+FL, not the recommended C2+50% proposed by the National Commission for Farmers.

Benefits of MSP

·       Price Stability: MSP helps stabilize agricultural prices, preventing extreme fluctuations and ensuring affordability for consumers.

·       Production Encouragement: It motivates farmers to increase agricultural production by offering a fair price for their produce.

·       Food Security: MSP promotes a steady food supply by encouraging the production of staple crops, reducing dependence on imports, and enhancing domestic food security.

·       Income Security: It provides farmers with a guaranteed minimum price for their crops, ensuring a stable and predictable income, particularly during market volatility.