MINIMUM SUPPORT PRICE (MSP)

About:

• The Central Government sets a minimum support price (MSP) for 23 crops every year, based on a formula of one-and-a-half times production costs.
  
  
• This takes into account both paid-out costs (A2) such as seeds, fertilizers, pesticides, fuel, irrigation, hired workers and leased-in land, as well as the imputed value of unpaid family labour (FL).
  
  
• Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land as recommended by the National Commission for Farmers.
  
  
• There is currently no statutory backing for these prices, nor any law mandating their enforcement. The government only procures about a third of wheat and rice crops at MSP rates (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds.