Minimum Support Price (MSP)

 

Minimum Support Price (MSP) is one of the methods in which the Indian government protects agricultural producers/farmers against any steep decline in the farm prices. These support prices are decided and declared by the government at the start of the planting season for a few crops. The prices are decided and fixed as per the advice of the CACP/Commission for Agricultural Costs and Prices. The chief reason behind the MSP is to insure farmers against any price fall during excess production. The MSP is a guarantee/assured price that the farmers will get for their produce. The two objectives of the MSP are to prevent producers from committing distress sales and to secure food grains for public distribution. Whenever the market price goes below the minimum price for any commodity due to excessive production resulting in surplus produce in the market, government agencies buy the entire quantity offered by the producers at the MSP.