The government uses the Minimum Support Price (MSP) as a controlled price. Despite market volatility, it guarantees farmers will earn at least a specific amount for their crops. The government established this policy to protect farmers from unexpected market price changes which might otherwise result in financial losses. Government authorities share MSP information to the farming community ahead of crucial crop planting seasons for wheat, rice, pulses and oilseeds.
Importance of MSP in Indian Agriculture
India bases its agricultural policy on MSP to offer financial stability to farmers across the nation. The policy protects farmers from making desperate sales and enables them to regain their production investment. MSP amounts that the government purchases from farmers are processed through the Food Corporation of India (FCI) agencies for stock maintenance and nutrition purposes. Furthermore, the government policy motivates farmers to plant important crops and maintain food supply chains while promoting rural economic development.
The government establishes MSP levels each year before the sowing season. It is done through recommendations by the Commission for Agricultural Costs and Prices (CACP). Of the 23 commodities under consideration, the MSP applies to cereal crops, pulses, and oilseeds alongside selected commercial crops. The farmers’ compensation through this established price aims to motivate them to cultivate these specific crops while covering all their agricultural costs and allowing them to maintain a living.
Role of MSP in Supporting Farmers and Ensuring Stability:
- Protection from Price Volatility: Farmers benefit from MSP as this policy offers stability against market price fluctuations by giving them guaranteed minimal income.
- Ensuring Food Security and Self-Sufficiency: The nation achieves food security and domestic self-reliance through MSP because it stimulates farmers to plant strategic crops for stable food production.
- Income Support: This system provides farmers fair market rates to protect them from market injustice and generate steady income equality.