NEWS – The Cabinet Committee on Economic Affairs (CCEA) has raised the minimum support price (MSP) for rabi crops for the 2025-26 marketing season. The MSP for wheat has increased by ₹150 per quintal.

HIGHLIGHTS

What is Minimum Support Price (MSP)?

• MSP is the guaranteed price paid to farmers by the government for their produce.

Determination of MSP

• Based on recommendations from the Commission for Agricultural Costs and Prices (CACP).
• Factors considered: production cost, demand and supply, market trends, and inter-crop price parity.
• CACP is part of the Ministry of Agriculture and Farmers Welfare and was established in January 1965.
• Final MSP decisions are made by the CCEA, chaired by the Prime Minister.

Purpose of MSP

• Ensures remunerative prices for farmers.
• Encourages crop diversification.

Crops Covered Under MSP

• CACP recommends MSP for 22 crops and Fair and Remunerative Price (FRP) for sugarcane.
• Includes 14 kharif crops, 6 rabi crops, and 2 commercial crops.

Cost Classifications by CACP

• A2: Covers direct costs incurred by farmers (e.g., seeds, fertilizers, hired labor).
• A2 + FL: Includes A2 plus imputed value of unpaid family labor.
• C2: Comprehensive cost including rentals and interest on owned land.

Cost Considerations

• CACP uses A2+FL and C2 costs for MSP recommendations.

C2 serves as a benchmark to ensure MSPs cover major producing states’ costs.

Need for MSP

• Declining commodity prices following the twin droughts of 2014 and 2015 severely impacted farmers.
• Economic challenges from demonetization and GST rollout exacerbated rural distress.
• Rising input costs for diesel, electricity, and fertilizers intensified farmers’ hardships.
• MSP helps reduce farm distress and poverty, especially in agriculture-dependent states.