What is Minimum Support Price (MSP)?

Minimum Support Price (MSP) is the price at which the Government of India purchases crops from farmers, regardless of the prevailing market price. It acts as a safety net to protect farmers from distress sales during bumper harvests when market prices may fall below the cost of production. MSP is announced by the Cabinet Committee on Economic Affairs (CCEA) on the recommendations of the Commission for Agricultural Costs and Prices (CACP), an attached office of the Ministry of Agriculture.

The Government currently announces MSP for 22 mandated crops and Fair and Remunerative Price (FRP) for sugarcane. These include 14 kharif crops (paddy, jowar, bajra, maize, ragi, arhar/tur, moong, urad, cotton, groundnut, sunflower, soyabean, sesamum, nigerseed), 6 rabi crops (wheat, barley, gram, masur, rapeseed/mustard, safflower), and 2 commercial crops (jute and copra).

Since 2018-19, the government has followed the principle of fixing MSP at a minimum of 1.5 times the All-India weighted average cost of production (A2+FL), as recommended by the Swaminathan Committee (National Commission on Farmers, 2006). A2+FL includes actual paid-out costs plus imputed value of family labour.

Key Features

# Feature Details
1 Announced by CCEA on CACP recommendations
2 Number of Crops 22 crops + FRP for sugarcane
3 Pricing Formula Minimum 1.5 times A2+FL cost (since 2018-19)
4 Procurement Agencies FCI (wheat, rice), NAFED, CCI (cotton), JCI (jute)
5 Legal Status Not legally enforceable; no statutory backing
6 Seasons Kharif (14 crops), Rabi (6 crops), Commercial (2 crops)
7 Cost Concepts A2 (paid-out costs), A2+FL (+ family labour), C2 (+ imputed rent, interest on capital)
8 Swaminathan Recommendation MSP at C2 + 50% (farmers demand MSP over comprehensive cost C2)

Current Status / Latest Data

Kharif 2025-26 (announced May 2025):

  • Paddy (common): Rs 2,369/quintal (+Rs 69, ~3% hike)
  • Tur (arhar): Rs 8,000/quintal (+Rs 450)
  • Groundnut: Rs 7,263/quintal (+Rs 480)
  • Soyabean: Rs 5,329/quintal (+Rs 436)
  • Cotton (medium staple): hiked with oilseeds/pulses getting higher increases (up to 9%)

Rabi 2025-26 (announced October 2024):

  • Wheat: Rs 2,425/quintal (+Rs 150; margin of 105% over A2+FL)
  • Rapeseed & Mustard: Rs 5,950/quintal (+Rs 300; highest absolute increase)
  • Lentil (Masur): highest percentage increase among rabi crops (+Rs 275)
  • Gram: Rs 5,650/quintal (+Rs 210; margin of 60% over A2+FL)

UPSC Exam Corner

Prelims: Key Facts

  • MSP is announced for 22 crops + FRP for sugarcane
  • CACP recommends; CCEA approves MSP
  • MSP is fixed at minimum 1.5 times A2+FL cost since 2018-19
  • MSP has no statutory/legal backing currently
  • FCI is the primary procurement agency for wheat and rice
  • Swaminathan Committee recommended MSP at C2 + 50%

Mains: Probable Themes

  1. Critically evaluate the effectiveness of MSP as a tool for ensuring farmer income security in India
  2. Should MSP be given legal backing? Discuss the economic and fiscal implications
  3. Analyse the regional and crop-wise disparity in MSP procurement and its impact on cropping patterns
  4. Evaluate the Swaminathan Committee's recommendation of MSP at C2+50% in the context of fiscal sustainability

Sources: PIB - Rabi MSP 2025-26, PIB - MSP Safety Net to Self-Sufficiency, Tribune India - Kharif MSP 2025-26