MSP-Minimum Support Price

MSP-Minimum Support Price is the price that the government sets on agricultural product price to purchase directly from the farmers.

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  MSP rate on the agricultural product acts as a safeguard the farmer to a minimum profit for the harvest, incase the open market has lesser price than the cost incurred.

• The government fixes Minimum Support Prices (MSPs) for 22 mandated agricultural crops on the basis of the recommendations of the Commission for Agricultural Costs & Prices (CACP), after considering the views of State Governments and Central Ministries/Departments concerned and other relevant factors. MSP is determined for the country as a whole and not region or state-specific.
• While recommending MSP, CACP considers various factors viz.
  • • cost of production,
    • overall demand-supply situations of various crops in domestic and world markets,
    • domestic and international prices,
    • inter-crop price parity,
    • terms of trade between agriculture and non-agriculture sector,
    • likely effect of price policy on rest of economy and
    • a minimum of 50 percent as the margin over cost of production.