The Union Government has increased the Minimum Support Price (MSP) for Kharif and Rabi crops of 2019-20 season including Paddy, wheat, pulses and oilseeds on the line of fixing the MSP at a level of 1.5 times of the cost of production as announced in Union Budget 2018-19.
Government fixes MSPs of 22 mandated crops including wheat, pulses and oilseeds on the basis of recommendations of Commission for Agricultural Costs < Prices (CACP), after considering the views of State Governments and Central Ministries/Departments concerned < other relevant factors. In addition, MSP for Toria and De-Husked coconut is also fixed on the basis of MSPs of Rapeseed < Mustard and Copra respectively.
While recommending MSP, CACP considers various factors viz. cost of production, overall demand-supply situations of various crops in domestic and world markets, domestic and international prices, inter-crop price parity, terms of trade between agriculture and nonagriculture sector, likely effect of price policy on rest of economy, rational utilization of land, water and other production resources and a minimum of 50 percent as the margin over cost of production. The views of the farmer and farmer’s association are also considered by CACP before recommending MSP.
Government receives suggestions from state government regarding various aspect of increasing MSP. CACP seeks suggestions from different stakeholders including State Governments before recommending MSP. National Commission on Farmers (NCF) headed by Dr. M.S. Swaminathan had recommended that the MSP should be at least 50 percent more than the weighted average cost of production. The Union Budget for 2018-19 had announced the pre-determined principle to keep MSP at levels of one and half times of the cost of production. Accordingly, Government has increased the MSP for all mandated Kharif, Rabi and other commercial crops with a return of atleast 50 per cent of all India weighted average cost of production for the agricultural year 2018-19 and 2019-20.