♦ Minimum Support Price (MSP) is the price at which the government buys crops from farmers.
♦ It is based on a calculation of at least one-and-a-half times the farmers’ production costs.
♦ The Commission for Agricultural Costs and Prices (CACP) recommends minimum support prices (MSPs) for 22 mandated crops, as well as a fair and remunerative price (FRP) for sugarcane.
♦ CACP is a branch of the Ministry of Agriculture and Farmers Welfare.
♦ The mandated crops include 14 kharif crops, 6 rabi crops, and two other commercial crops.
♦ The MSPs for toria and de-husked coconut are based on the MSPs for rapeseed/mustard and copra, respectively.
CACP fixes MSP based on:
♦ The commodity’s supply and demand situation
♦ Market price trends (domestic and global)
♦ Consumer implications (inflation)
♦ The environment (soil and water use)
♦ Trade terms between the agricultural and non-agricultural sectors.