Minimum Support Price(MSP)Explanation.pptx

Minimum Support Price (MSP) explanation with methodology to Calculate MSP and MSP’s Debate in Farmer Protest 2020

1. COLLEGE OF AGRICULTURE,NAU,WAGHAI RAWE PROGRAMME

2. Minimum Support Price(MSP)

3. What is Minimum Support Price(MSP) ?

4. History of MSP In 1965 , the Agricultural Price Commission (APC) was set up, which introduced Minimum Support Prices (MSP) and procurement at pre-decided rates to stabilize prices and ensure food security. The Commission for Agricultural Costs and Prices (CACP) replaced APC in 1985 , with a broader mandate. Key agencies like the Food Corporation of India (FCI) and National Agricultural Co-operative Marketing Federation (NAFED) now implement MSP policies. In 1966 : First MSP announced for wheat at Rs.54 per quintal.

5. Objectives of MSP Stable Income : Ensures minimum price for farmers' produce. To encourage crop production : By providing a guaranteed price, the MSP encourages farmers to produce more crops. Reduce Distress : Provides safety net against price fluctuations. Stabilize Market : Prevents excessive price fluctuations.

6. Crops cover under MSP The MSP is currently applicable to 23 crops, including : [1] Cereals : Rice ,Wheat ,Barley, maize and millets. [2] Pulses : Chickpea, pigeon pea, black gram, and green gram. [3] Oilseeds : Groundnut, soybean, sunflower, and mustard. [4] Cotton: Cotton is also covered under MSP. [5] Other crops: Sugarcane, tobacco, and copra are also covered under MSP.

7. Process of MSP The process of MSP involves the following steps: {1} Estimation of cost of production: The CACP estimates the cost of production of each crop, taking into account various inputs like seeds, fertilizers, and labor. {2} Calculation of MSP: The CACP calculates the MSP based on the cost of production, market prices, and other factors. {3} Recommendation to the government: The CACP recommends the MSP to the government, which then finalizes the prices. {4} Announcement of MSP: The government announces the MSP before the sowing season for each crop. The Minimum Support Price (MSP) is announced twice a year, once before the Kharif season (June-July) and once before the Rabi season (October-November).

8. Determination of MSP

9. Benefits of MSP

10. Issues with MSP Low Awareness : Only 6% of Indian farmers benefits from MSP, As per the Shanta Kumar Committee. Distorted Procurement Focus : The concentrated MSP procument on select crop like wheat, rice and sugarcane has contributed to an imbalanced agricultural landscape, sidelining the cultivation of essential crops such as pulses, oilseeds, and coarse grains. This distortion not only fuels inflation but also intensifies the strains on water resources. Regional imbalance : Inadequate procurement infrastructure in eastern states contributes to regional imbalances. Economic Impact : MSP poses a significant strain on fiscal resources. Exclusion of Vegetables and Fruits : MSP is not announced for essential commodities like vegetables and fruits.

11. Farmer Protest 2020 and MSP Debate Farmers across India, especially from Punjab, Haryana, and Western Uttar Pradesh, protested against three farm laws passed by the Indian government in 2020. The protests centered around fears of reduced income security and the dismantling of the MSP system.

12. Farmer’s Demands on MSP Legal Guarantee : Farmers want MSP to be mandated by law, ensuring no sale below the minimum price. Broader Coverage : Include all 23 announced crops under MSP and expand it to more crops. Strengthen APMC Mandis : Improve and protect government-regulated markets to ensure fair trade. Nationwide Access : Ensure equitable MSP implementation across all states. Transparent Pricing : Adopt the Swaminathan Commission's recommendation of MSP at 1.5 times the cost of production. Better Infrastructure : Establish more procurement centers and storage facilities to prevent wastage.

13. Challenges to Legalizing MSP Massive Financial Burden : Procuring all crops at MSP nationwide would drastically increase government spending. Infrastructure Gaps : Limited procurement centers and storage facilities hinder effective implementation. Regional Disparities : States with weak procurement systems, like Bihar and Odisha, would lag behind. Impact on Crop Patterns : Could encourage overproduction of wheat and rice, harming crop diversity. Global Trade Concerns : Legal MSP could breach WTO norms on trade subsidies. Inflationary Impact : Higher procurement costs under MSP could lead to increased prices of food grains, causing inflation that would ultimately affect the poor. Disposal Challenges : While cereals and pulses are easily distributed via the Public Distribution System, disposing of less common crops like niger seed, sesamum, and safflower is more complex due to limited demand and market channels.

14. Conclusion on MSP

15. Thank You