Minimum Support Price (MSP)
- MSP is a guaranteed price set by the government to ensure farmers receive fair compensation for their produce, even in cases of market fluctuations.
Key Features:
- Based on recommendations from the Commission for Agricultural Costs and Prices (CACP).
- Factors considered include:
- Cost of production.
- Demand-supply dynamics.
- Market price trends.
- Inter-crop price parity.
- Finalized by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.
Purpose:
- Ensure farmers get remunerative prices for their crops.
- Promote crop diversification for sustainable agriculture.
CACP:
- Established in January 1965, it operates under the Ministry of Agriculture and Farmers Welfare.
Key Highlights
- Overview of MSP Hike for Kharif Crops (2024-25)
- Cabinet decision (June 19, 2024) approved MSP hikes for 14 crops.
- Maximum increases:
- Nigerseed: +12.70%
- Ragi: +11.50%
- Tur (pigeon pea): +7.90%
- Objective: Ensure remunerative prices for farmers.
- Concerns Beyond MSP Hikes
- Departments (DEA, DOE, Niti Aayog) highlighted limitations of MSP as a standalone tool.
- Emphasis on non-price policy recommendations for sustainable agricultural solutions.
- Non-Price Recommendations
- Productivity enhancement through technology upgrades and R&D.
- Promotion of crop diversification (e.g., millets, pulses, oilseeds).
- Adoption of micro-irrigation and solar power initiatives.
- Strengthening storage/warehouse infrastructure (WDRA registration).
- Challenges in Oilseed Production
- High MSP increases for oilseeds did not significantly boost domestic output.
- 60% of India’s edible oil demand met through
- Recommendation: Long-term MSP policy for oilseeds to enhance farmer confidence and production.
- Supply-Side Bottlenecks
- Inadequate infrastructure: Storage, warehousing, and transportation issues persist
- Proposal:
- Mandate WDRA registration for government-constructed warehouses.
- Encourage e-NWR-based pledge finance to reduce procurement logistics costs.
- Rational Price Policies
- Ensure inter-crop price parity and resource-efficient cultivation.
- Address concerns of natural resource utilization and demand-supply balance.
- Government Response
- Ministry of Agriculture:
- Agreed to address non-price issues separately.
- Rejected long-term MSP policy citing dynamic production costs and market conditions.
Way Forward
- Focus on multi-dimensional policies: Infrastructure, technology, and diversification.
- Regular monitoring of implementation to achieve long-term agricultural sustainability.
