Minimum Support Price (MSP) hiked for Paddy, Pulses and Oilseeds
Part of: GS Prelims and GS -III – Economy
- In order to encourage crop diversification, the Central Government has hiked the Minimum Support Price (MSP) for Paddy, Pulses and Oilseeds.
- The MSP is the rate at which the government purchases crops from farmers.
- It is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
Crops under MSP
- The Commission for Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
- CACP is an attached office of the Ministry of Agriculture and Farmers Welfare.
- The mandated crops include 14 crops of the kharif season, 6 rabi crops and 2 other commercial crops.
- The MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.
How does CACP fix MSP?
- It takes into account:
- Supply and demand situation for the commodity
- Market price trends (domestic and global)
- Implications for consumers (inflation)
- Environment (soil and water use)
- Terms of trade between agriculture and non-agriculture sectors.
Significance of MSP Hike
- Focus on nutri-rich cereals will incentivise its production in the areas where rice-wheat cannot be grown
- Realigned MSPs in favour of oilseeds, pulses and coarse cereals will encourage farmers to shift production towards these crops.
Issues with Hike
- Modest increase as compared to cultivation costs and inflation
- Absence of assured procurement leading to no incentive to cultivate crops.