Minimum Support Price And Facts About Minimum Support Price For UPSC Exam | IAS Target IAS Target

Minimum Support Price (MSP)

23 Dec 2021

Category : Social justice

Topic: Minimum Support Price (MSP)

What does Minimum Support Price or MSP mean?

MSP is the lowest price the government pays for farmer's goods at the time of procurement. Designed to protect crops from market price fluctuations. The MSP set by the government is considered rewarding for farmers. However, the MSP does not have legal support.

History of MSP

MSP was first introduced in 1966-67 when the country introduced the Green Revolution technology. The government turned to MSP to promote domestic production and encourage farmers to grow high-yielding varieties. The lowest sponsor price is guaranteed.

How can the MSP be fixed?

The centre will decide based on the Commission for Agricultural Costs and Prices (CACP) recommendations, which is a public corporation. CACP provides two separate reports on the Harif and Rabbi seasons, based on which the Center resolves MSPs twice a year.

Why do you need MSP?

  • To save farmers from instabilities in market prices.
  • The price of agricultural products depends on various factors, such as good harvest time, which leads to a decline in prices.
  • In such cases, farmers may not prefer to sow the above crops next season.
  • The MSP encourages farmers to sow these crops and maintain a healthy supply.

Facts you need to know about minimum support price for UPSC exam

  • The government has announced MSPs for 23 plants, but only 23 plants are effectively procured.
  • Rice and wheat production surged at the expense of other crops, such as legumes. Significant increases in buffer inventory lead to enormous storage and shipping costs. Getting rid of MSP without losing farmers' trust is not the right step.
  • In addition, further steps are needed to make agriculture more profitable for farmers, such as improving irrigation systems, implementing land reforms and accessing technology.

Market intervention program

  • This is a price support mechanism for gardening products that MSP does not support.
  • The recorded goods are mainly of perishable nature. The scheme is similar to MSP but temporary.
  • At the request of the relevant state governments, it will be implemented for a limited time.
  • The objective of this regulation is to safeguard growers of horticultural crops from emergency sales in the event of price declines.

Main features of the agricultural bill

The first Bill gives farmers more choices regarding agricultural products. This allows farmers to sell their produce outside the government-regulated Mandis or the Agricultural Produce Marketing Committee (APMC). APMC as an institution has been discontinued, and product prices have been set lower. This will allow farmers to rely on emergency sales when bumpers are produced. Therefore, this system allows farmers to choose the best price for their product and sell it accordingly.
The second bill, the Bill on Price Guarantees and Agricultural Services for Farmers, includes provisions for contract farming. This allows farmers to sign contracts with companies before production. This shifts the risk from the farmer to the entrepreneur and guarantees a fixed price for the farmer as well.

Benefits of Farm Bill

  • Farmers' product prices have risen as restrictions on sales on Mandis' physical premises have been lifted.
  • They provide a three-stage arbitration committee, subordinate judges, and an adorable body. Guaranteed price of the product.
  • This should be stated in the agreement between the farmer and the entrepreneur. Direct sales of products in e-commerce are also permitted.
  • The state government is prohibited from charging market fees for transactions outside the trade area. The bill includes strict rules and fines for violating the agreement.

Disadvantages of the Agricultural Bill

  • There is no clarity or reference to the MSP of the proposed law
  • There is no judicial involvement in the dispute resolution process.
  • Farmers' concerns may be ignored in conflicts with large corporations.
  • You risk becoming a slave to corporate buyers on your land in contract farming.