Minimum Support Price (MSP) hiked for Paddy, Pulses and Oilseeds

  • IASbaba
  • June 14, 2021
  • 0
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Minimum Support Price (MSP) hiked for Paddy, Pulses and Oilseeds

Part of: GS Prelims and GS -III – Economy

In news

  • 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.

Related articles:

MSP — the factoids versus the facts

New Agriculture Bills and opposition to it

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