What are ‘Minimum support Prices’ in agricultural products?


(a) Minimum Support Price is that price at which government is ready to purchase the crop from the farmers directly if crop price becomes lower than MSP.

Its main objectives are:

i. To prevent fall of prices in the situation of over production


ii. To protect the interest of farmers by ensuring them a minimum price for their crops in the situation of a price fall in the market.

The policy of minimum support price had its beneficial consequences like income security to farmer bringing investment into agriculture, building up buffers, a large network of FP shops, ‘stabilizing price line and consumer welfare. At the sometime it is also criticized for the 60 mf of cereal stock that the government buildup. Farmer choose cereal over other crop as there is assured income. MSP also benefits only the farmers with surplus who make up a minority of the Indian farming community.

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