Agriculture and Allied Sectors (Part – IV)

The Commission for Agricultural Costs & Prices (CACP) is mandated to recommend Minimum Support Prices (MSPs) to incentivize the cultivators to adopt modern technology, and raise productivity and overall grain production in line with the emerging demand patterns in the country. Assurance of a remunerative and stable price environment is considered very important for increasing agricultural production and productivity since the market place for agricultural produce tends to be inherently unstable, which often inflict undue losses on the growers, even when they adopt the best available technology package and produce efficiently. Public procurement of foodgrains on the basis of MSPs also ensures the food stocks for public distribution to protect the interest of consumers by providing essential agricultural commodities at reasonable rate through public distribution system. Towards this end, MSP for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission.

The Commission for Agricultural Costs & Prices (CACP) is mandated to recommend Minimum Support Prices (MSPs) to incentivize the cultivators to adopt modern technology, and raise productivity and overall grain production in line with the emerging demand patterns in the country. Assurance of a remunerative and stable price environment is considered very important for increasing agricultural production and productivity since the market place for agricultural produce tends to be inherently unstable, which often inflict undue losses on the growers, even when they adopt the best available technology package and produce efficiently. Public procurement of foodgrains on the basis of MSPs also ensures the food stocks for public distribution to protect the interest of consumers by providing essential agricultural commodities at reasonable rate through public distribution system. Towards this end, MSP for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission.

Minimum Support Price promotes food security as well as ensures minimum fixed price for the farmers' produce. It encourages farmers to increase agricultural production. The farmers will sell their produce to the government only if market price is below the MSP. Therefore the purpose of MSP is to provide minimum fixed value of the produce to the farmer and not to increase the profit. MSP helps in food security because MSP is the basis of determining procurement prices for the PDS which helps in the food security.

The Minimum Support Price for wheat was Rs. 1350 per quintal when this question was asked. For the Rabi marketing season (RMS) 2024-25 the MSP of wheat has been increased to Rs. 2275 per quintal which is Rs. 150 more than the MSP (Rs. 2125 per quintal) for the RMS 2023-24.

The Minimum Support Price (MSP) during 2018-19 for paddy (common) per quintal was at Rs. 1750 (för Grade A Rs. 1770). The Cabinet Committee on Economic Affairs (CCEA) in June, 2024 increased the MSP of paddy (common) to Rs. 2300 (for Grade ARs. 2320) per quintal for the 2024-25 crop year. It was an increase of Rs. 117 per quintal over the MSP of paddy in 2023-24.

In a move to encourage the State to become self-reliant with its fruit and vegetable production, the Kerala government has decided in October, 2020 to support farmers with a fixed Minimum Support Price (MSP) for their produce. This decision came into effect from November 1, 2020. By this decision Kerala became the first State in India to create an MSP-based system for 16 commodities which span vegetables, fruits and tubers.

The Minimum Support Price of groundnut was declared Rs. 900 per quintal by the Government of India for the year 1995-96. The Minimum Support Price of groundnut for the year 2024-25 has been declared Rs. 6783 per quintal which was at Rs. 6377 per quintal for the year 2023-24.

Government purchases the agricultural produce from the farmers at Procurement Price. Procurement Price are generally higher than the MSP.

Among the given options tobacco, cotton and rubber are in the category of cash crop whereas soyabean is not a cash crop.

Government purchases the agricultural produce from the farmers at Procurement Price. Procurement Price are generally higher than the MSP.