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The Government fixes Minimum Support Prices every year for 22 mandated agricultural crops on the recommendations of the Commission for Agricultural Costs and Prices, after considering the views of State Governments and concerned Central Ministries.
The Union Budget for 2018-19 announced the principle of setting MSP at least one and a half times the cost of production, applied from 2018-19 with a minimum margin of 50 per cent over the all-India weighted average cost of production.
Cereals and coarse cereals are procured through the Food Corporation of India and designated State agencies; pulses, oilseeds and copra come under the Price Support Scheme within PM-AASHA, with NAFED and NCCF as the central nodal agencies.
Cotton and jute are procured at MSP by the Cotton Corporation of India and the Jute Corporation of India respectively.
The Market Intervention Scheme, also under PM-AASHA, covers perishable commodities outside the Price Support Scheme and is triggered only when market prices fall at least 10 per cent below the previous normal year.
An MSP is a price the Government announces; it is not by itself a promise to buy. The distinction is what the release makes explicit: only the marketable surplus is available for procurement, and government agencies step in when the market price of a produce falls below the MSP. So a farmer's actual benefit depends on three separate conditions holding together — that the crop is one of the 22 mandated crops, that a procurement agency operates in that state for that crop, and that a purchase centre is within reach. This is why the release spends more space on machinery than on prices: which agency buys what (FCI for cereals, NAFED and NCCF for pulses, oilseeds and copra, CCI for cotton, JCI for jute), the requirement that a State Government request procurement under the Price Support Scheme, and the opening of temporary purchase centres alongside existing mandis and godowns. The recent procedural changes point the same way — payment of MSP directly into the farmer's bank account, and linkage of Aadhaar and land records with State procurement portals so that the payment reaches the actual cultivator.
Simple Analogy: The MSP is the price on the board at the shop; procurement is whether the shop is open, stocked and near enough to walk to.
Procure pulses, oilseeds and copra when market prices fall below MSP
Key: Operates under the PM-AASHA umbrella on the request of the concerned State Government, through the central nodal agencies NAFED and NCCF
Protect growers of perishable agricultural and horticultural commodities not covered by the Price Support Scheme from distress sale during a bumper crop
Key: A component of PM-AASHA, implemented at the request of a State or UT Government; requires at least a 10 per cent decrease in ruling market prices over the previous normal year
Provide an umbrella framework for assuring remunerative prices to farmers
Key: Announced in September 2018; its components include the Price Support Scheme, the Price Deficiency Payment Scheme and the Private Procurement and Stockist Scheme, alongside the Market Intervention Scheme
Reduce import dependence and achieve self-sufficiency in pulses
Key: Runs till 2030-31; under it, Tur, Urad and Masur are procured under PM-AASHA from pre-registered farmers, as much as they offer, through NAFED and NCCF
Ensure the MSP actually reaches the cultivator
Key: Direct payment of MSP into the farmer's bank account, and linkage of Aadhaar and land records with State procurement portals; temporary purchase centres are opened alongside existing mandis and depots
Recommends Minimum Support Prices to the Government; it is an advisory body, so its recommendations are not binding
Procures cereals and coarse cereals at MSP, alongside designated State agencies
The central nodal agencies for procurement of pulses, oilseeds and copra under the Price Support Scheme within PM-AASHA
Procure cotton and jute respectively at MSP
The 1.5 times principle is applied on the all-India weighted average cost of production, which is why the debate over which cost measure is used remains central to the MSP argument
Assured procurement of Tur, Urad and Masur from pre-registered farmers is the demand-side lever of the Mission for Aatmanirbharta in Pulses, complementing the supply-side genomics and seed work
NAFED and NCCF are cooperative federations, placing the cooperative sector at the centre of price support for pulses and oilseeds
MSP is now paid directly into farmers' bank accounts, with Aadhaar and land record linkage on State procurement portals to establish who actually cultivated the land
GS Paper 3 > Economy > Issues of Buffer Stocks, MSP and Food Security
General Awareness > Indian Economy and Agriculture
General Awareness > Agriculture Finance and Government Schemes
General Awareness > Indian Economy
The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
Answer: procurement incidentals and distribution cost
Consider the following statements: 1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India. 2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise. Which of the statements given above is/are correct?
Answer: Neither 1 nor 2
MSP, CACP and procurement agencies appear almost every year in Prelims and are a standing GS Paper 3 agriculture theme
The part of total production available for sale after the farmer's own consumption, seed and other retained uses — the only portion that can be procured
Pradhan Mantri Annadata Aay Sanrakshan Abhiyan, the umbrella scheme announced in September 2018 covering the Price Support Scheme, the Price Deficiency Payment Scheme, the Private Procurement and Stockist Scheme and the Market Intervention Scheme
The PM-AASHA component for perishable commodities, triggered when prices fall at least 10 per cent below the previous normal year
Commission for Agricultural Costs and Prices — the advisory body that recommends MSP, set up in 1965 and renamed in 1985