Concept and Purpose
- MSP is a pre-announced minimum price at which the government purchases crops from farmers if market prices fall below the threshold.
- Introduced in 1966–67 during the Green Revolution to stabilise farm incomes and ensure food security.
- Acts as a financial safety net for farmers by protecting them against price crashes, exploitation by middlemen, and uncertainty due to supply shocks.
- Government declares MSP twice a year for Kharif and Rabi crops.
- Recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs (CCEA).
Crops Covered Under MSP (22 Crops)
Kharif Crops (14)
- Paddy
- Jowar
- Bajra
- Ragi
- Maize
- Tur (Arhar)
- Moong
- Urad
- Groundnut
- Sunflower seed
- Soyabean (Yellow)
- Sesamum
- Nigerseed
- Cotton
Rabi Crops (6)
- Wheat
- Barley
- Gram
- Masur (Lentil)
- Rapeseed & Mustard
- Safflower
Commercial Crops (2)
- Copra
- Jute
Note:
- MSP also announced for Toria and De-husked Coconut, linked to rapeseed–mustard and copra MSPs.
How MSP Is Determined
- CACP recommends MSP after assessing:
- Cost of Production (primary factor: seeds, fertilisers, irrigation, labour).
- A2+FL Formula:
- A2 = actual paid-out costs
- FL = imputed value of family labour
- Government assures minimum 50% margin over cost of production.
- Demand–supply conditions
- Trends in domestic & international prices
- Inter-crop price parity to encourage cropping balance
- Terms of trade between agriculture and non-agriculture
- Input price changes, cost of living, and subsidy implications
- Impact on farmer income and rural economy
Significance of MSP
- Guaranteed income support during price crashes.
- Motivates farmers to cultivate essential crops, strengthening food security.
- Helps stabilise farm sector during periods of surplus production or market volatility.
- Protects small and marginal farmers from distress sales.
- Supports rural economy and enhances purchasing power of farming households.
- Provides confidence to farmers to invest in seeds, fertilisers, and inputs for next season.
Recent MSP (2025–26) – Key Highlights
(As per Directorate of Economics & Statistics, Ministry of Agriculture)
- Government revised MSPs for both Kharif and Rabi crops with increases ranging from 1.4% to 12.7% compared to the previous year.
- Highest rise seen in Nigerseed (+12.7%) and Ragi (+11.5%).
- Essential pulses such as Tur, Urad, Moong saw increases between 1.4%–7.9%.
- Wheat MSP increased by ₹150 (6.6%).
- Copra and Jute saw modest increases in the range of 2–5%.
- MSP changes aim to offset input cost rises and maintain farmers’ profitability across seasons.
