Minimum support price (India)

The minimum support price (MSP) is the minimum price for select crops raised in kharif and rabi seasons that the Government of India considers as remunerative for farmers and hence deserves support. This is different from procurement price and issue price. It is generally announced before the sowing/planting season.^[1] It is approved by the government and aims to safeguard the farmer to a minimum profit for the harvest while at the same time increasing food security in the country.^[2][3] MSP was initially an incentive for farmers to adopt technology with an aim of increasing the productivity of agricultural land in the 1960s, however in the 2000s it is seen as a market intervention and farmer income scheme.^[4][5] The effectiveness of such a price policy has varied widely between states and commodities.^[6][7] Awareness among farmers of the existence of an MSP is poor at 23%, while awareness of MSP procurement agencies is also poor with only about 20–25% of wheat and paddy produce being sold at MSP.^[8][9]

The Indian government sets the price for about two dozen commodities twice a year.^[10][11] MSP is fixed on the recommendations of the Commission for Agricultural Costs and Prices (CACP),^[12][13] an apex advisory body for pricing policy under the Ministry of Agriculture.^[14] CACP in turn recommends the pricing according to a diverse range of factors including national requirements, available resources, farmer wages, cost of living and product competitiveness.^[15] However, not all recommendations of CACP are adopted, sometimes, there can be significant difference with the price approved by the government.^[16] Food Corporation of India (FCI) and the National Agricultural Co-operative Marketing Federation (NAFED) are involved in implementing the MSP at the state level.^[16] While providing a support price to farmers, MSP also supports the public distribution system which provides subsided food.^[8]