MINIMUM SUPPORT PRICE Remunerative Price Fixing For Farm Commodities

Abstract

Minimum Support Price (MSP) is the assurance of remunerative price given to farmers for their farm commodities in the beginning of each sowing season. The government essentially guarantees to buy any of the harvest at this price. If the market price is more than the MSP, farmers are free to sell and get higher return. The MSP is thus a safeguard against the prices falling too low. The government has notified MSP for 23 commodities. These 23 crops are listed in table-5. Close to 90 per cent of area under cultivation is covered by these crops. The MSP is fixed at 50 per cent higher than the cost of production. This cost is computed in the following manner