Increase in Minimum Support Prices (MSP) for Agricultural CropsIntroduction

In News: Increase in Minimum Support Prices (MSP) for Agricultural CropsIntroduction

The Government of India has announced revised Minimum Support Prices (MSPs) for 22 mandated agricultural crops for the 2025–26 marketing season, based on recommendations of the Commission for Agricultural Costs and Prices. The revision continues the policy of ensuring at least 50% return over the cost of production, a principle adopted since the Union Budget 2018–19.

ANALYSIS

The recent increase in MSP reflects the government’s continued emphasis on income support to farmers and price assurance mechanism. MSPs are fixed annually after consulting states and relevant ministries, ensuring a uniform national price floor for key crops.

The data indicates a substantial rise in MSPs between 2015–16 and 2025–26, demonstrating a policy push toward improving farm profitability. For instance, paddy (common) increased from ₹1410 to ₹2369 per quintal, while pulses like moong rose significantly from ₹4850 to ₹8768. Similarly, nutri-cereals like ragi saw a sharp rise, reflecting policy alignment with nutritional security and crop diversification goals.

A major highlight is that MSPs are maintained at 1.5 times the all-India weighted average cost of production, ensuring minimum assured returns. This is crucial in the context of rising input costs and climate uncertainties.

The procurement data further reinforces the policy’s impact. During the 2024–25 crop year, total procurement stood at 1,223 LMT, with an MSP payout of ₹3.47 lakh crore, indicating strong government intervention in agricultural markets. This not only stabilizes farmer income but also supports the Public Distribution System (PDS) and food security framework.

From a structural perspective, MSP increases also reflect a shift towards encouraging pulses, oilseeds, and coarse cereals, which are vital for reducing import dependence and improving soil health. Crops like sesamum and nigerseed have seen steep increases, signaling policy prioritization of oilseed production.

However, MSP benefits are largely concentrated in a few crops (like rice and wheat) and regions, raising concerns about regional imbalance and limited crop coverage in procurement operations. Additionally, the fiscal burden of large-scale procurement and storage remains a challenge.

Overall, the MSP revision continues to play a dual role—income support mechanism and agricultural policy tool—but requires complementary reforms in market access, diversification, and procurement expansion.

Key MSP Trends (Illustrative Comparison)

Implications

• Income Security: Ensures remunerative prices and reduces farmer distress.
• Crop Diversification: Higher MSP for pulses, oilseeds, and millets encourages sustainable agriculture.
• Food Security: Strengthens buffer stock and PDS operations.
• Fiscal Pressure: Increased procurement leads to higher subsidy burden.
• Regional Disparity: Benefits remain skewed toward states with strong procurement infrastructure.
• Market Distortion: Over-reliance on MSP may discourage open market efficiency.

Static Part

• Commission for Agricultural Costs and Prices (CACP)

  Establishment & Evolution
  • Established: 08 January 1965 as Agricultural Prices Commission
  • Renamed: 18 March 1985 as CACP
  • Revisions in Terms of Reference: 1980 and 2009 resolutions
• Institutional Status
  • Attached office under the Department of Agriculture & Farmers Welfare, Ministry of Agriculture & Farmers Welfare
  • Functions as an advisory body to the Government of India on agricultural price policy
• Composition
  • Chairman
  • One Official Member
  • Two Non-Official Members (representing farming community)
  • Member Secretary

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  Mandate & Functions

  • Recommends:
    • Minimum Support Price (MSP) for 22 agricultural crops
    • Fair and Remunerative Price (FRP) for sugarcane
  • Aims to:
    • Ensure balanced and integrated price structure
    • Protect interests of farmers (producers) and consumers
    • Promote adoption of modern technology
    • Encourage optimal resource use (land, water, inputs)
    • Align production with national requirements
  • Suggests non-price measures (e.g., procurement, marketing reforms, infrastructure)

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  Coverage of Crops under MSP Recommendation

  • Cereals (7): Paddy, Wheat, Maize, Jowar, Bajra, Barley, Ragi
  • Pulses (5): Gram, Arhar/Tur, Moong, Urad, Masur
  • Oilseeds (7): Groundnut, Mustard, Soyabean, Sesamum, Sunflower, Safflower, Nigerseed
  • Commercial Crops (3): Cotton, Copra, Jute

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  Reports Published by CACP

  CACP submits five Price Policy Reportsannually:
  • Kharif Crops Report
  • Rabi Crops Report
  • Copra Report
  • Raw Jute Report
  • Sugarcane Price Policy Report

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  Data Sources & Methodology

  • Uses cost data from:
    • Comprehensive Scheme for Cost of Cultivation of Principal Crops
    • Prepared by Economics, Statistics & Evaluation Division (ES&E Division)
  • Consultative Process Includes:
    • State Governments
    • Central Ministries
    • Farmer organizations & unions
    • Industry bodies & research institutions
  • Engages with procurement agencies:
    • Food Corporation of India
    • NAFED
    • Cotton Corporation of India
    • Jute Corporation of India

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  Decision-Making Process

  1. CACP prepares recommendations based on data & consultations
  2. Reports circulated to stakeholders for feedback
  3. Final decision taken by:
     • Cabinet Committee on Economic Affairs
  4. MSP announced by Government

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  Field Engagement & Ground Assessment

  • Conducts regional meetings with farmers & states
  • Undertakes field visits to understand production & marketing constraints
  • Ensures evidence-based policymaking

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  Transparency & Accessibility

  • All reports published in Hindi & English on official website
  • Enables wide stakeholder access and policy transparency

Updated - 09 December 2025 ; 6:36 PM | PIB