Definition of MSP

Minimum Support Prices (MSP), is an initiative of the Government of India to protect producers against any steep fall in prices of agricultural products.

The minimum support prices are announced for certain crops at the beginning of the sowing season, based on recommendations given by the Commission for Agricultural Costs and Prices (CACP). The prices are fixed, and are put in place for insuring farmers against any excessive fall in the prices of produce during bumper production years.

Points to remember

• The minimum support price is the minimum, fixed and guaranteed price below which the prices of the commodities cannot fall.
• MSP ensures that farmers get adequate income for their produce from the government.
  MSP is calculated by considering various factors such as production cost, demand and supply, market trends, and changes in input prices.

Example

• The minimum support price for Barley was Rs. 1325 per quintal for the year 2016-2017.
• The minimum support price fixed by the Government of India for various commodities over the years (2010-2017) can be viewed here.