In News: The Cabinet Committee on Economic Affairs, CCEA has approved Minimum Support Prices for copra for 2023 season.
- The MSP for fair average quality of milling copra has been fixed at 10 thousand 860 rupees per quintal.
- MSP for ball copra has been fixed at 11 thousand 750 rupees per quintal.
- This is an increase of 270 rupees per quintal for milling copra and 750 rupees per quintal for ball copra over the previous season.
Minimum Support Prices (MSP)
- The MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
- 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.
- In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.
- Support prices generally affect farmers’ decisions indirectly, regarding land allocation to crops, quantity of the crops to be produced etc
- MSP assures farmers agricultural income besides providing a clear price signal to the market
- The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
- The government declares MSPs for crops, but there’s no law mandating their implementation
- MSP is devoid of any legal backing. Access to MSP isn’t an entitlement for farmers. They cannot demand it as a matter of right.
- The Centre currently fixes MSPs for 23 farm commodities based on the CACP’s recommendations —
- 7 cereals – paddy, wheat, maize, bajra, jowar, ragi and barley
- 5 pulses – chana, arhar/tur, urad, moong and masur
- 7 oilseeds – rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower and nigerseed
- 4 commercial crops – cotton, sugarcane, copra and raw jute
Factors for Recommending the MSP:
The CACP considers various factors while recommending the MSP for a commodity:
- Cost of production
- Changes in input prices
- Input-output price parity
- Trends in market prices
- Demand and supply
- Inter-crop price parity
- Effect on industrial cost structure
- Effect on cost of living
- Effect on general price level
- International price situation
- Parity between prices paid and prices received by the farmers
- Effect on issue prices and implications for subsidy
Source: News on AIR