MSP Committee Formed to Improve Efficiency and Transparency

On the basis of the recommendations of the CACP, the center publishes the MSP (which is not legally guaranteed) for 22 mandatory crops (Fair and Remunerative Price, FRP for sugarcane).

Table of Contents

MSP Committee- Relevance for UPSC Exam

GS Paper 3: Indian Agriculture- Issues related to direct and indirect farm subsidies and minimum support prices.

MSP Panel in News

Recently, the Union Government notified a committee to Minimum Support Price (MSP) Committee to Improve Efficiency and Transparency of Agriculture and welfare of Farmers.

MSP for All Rabi Crops Increased

MSP Committee- Key Details

Background: MSP Committee was established by the Ministry of Agriculture and Farmers’ Welfare in response to Prime Minister Narendra Modi’s declaration that the government intended to repeal the three farm laws by November 19, 2021.
- Government repealed the three laws after protest by farm unions led by the Samyukta Kisan Morcha (SKM) had wanted a legislative guarantee on MSP.
Demand of the Farmers: Demands of the protesting farmer organizations were based on Swaminathan Commission’s ‘C2+50% formula’ (C2 is a type of cost incurred by farmers).
- This was in addition to their demand for repeal of the three farm laws.
Mandate of the Committee: The MSP Committee’s mandate are as follows-
- To “promote zero budget based farming”,
- To “change” crop patterns keeping in mind the changing needs of the country, and t
- To make MSP (minimum support price) more “effective and transparent”.
MSP Committee Membership: The government has named 26 members including the chairman of the committee and kept three places for representatives of the Samyukta Kisan Morcha (SKM).

MSP Committee Recommendations on Minimum Support Price (MSP)

Suggestions to make available MSP to farmers of the country by making the system more effective and transparent
Suggestions on practicality to give more autonomy to Commission for Agricultural Costs and Prices (CACP) and measures to make it more scientific
To strengthen the Agricultural Marketing System as per the changing requirements.
To ensure higher value to the farmers through remunerative price by taking advantage of the domestic and export opportunities.

MSP Committee Recommendation Regarding Natural Farming

Strategies for transforming research and development facilities into knowledge hubs and implementing a natural farming system curriculum in educational facilities.
Recommending a farmer-friendly alternative certification programme and distribution network for natural farming practices and products
Examining several concerns, including those pertaining to the chain of laboratories used to certify natural farming products as organic.

MSP Committee Recommendation Regarding Crop Diversification

Mapping of cropping pattern of agro-ecological zones.
Plan for a diversification strategy to alter cropping practices in response to changing needs
System to secure profitable prices for the sale of new crops, as well as arrangements for agricultural diversification.

How MSP is Fixed?

CACP’s Role: On the basis of the recommendations of the CACP, the center publishes the MSP (which is not legally guaranteed) for 22 mandatory crops (Fair and Remunerative Price, FRP for sugarcane).
Crops Included: These comprise-
- Six rabi crops (wheat, barley, gramme, masur/lentil, rapeseed and mustard, and safflower),
- 14 Kharif crops (jowar, bajra, maize, ragi, tur/arhar, moong, urad, soyabean, sunflower, sesame, cotton), and
- Two commercial crops (jute and copra).
Variables covered by CACP: The CACP considers a number of variables, such as demand and supply, production costs, market trends, a minimum profit margin of 50% above production costs, and potential consumer effects of MSP.
Costs Considered for MSP Calculation: The CACP calculates three types of costs- A2, A2+FL and C2- for each mandated crop for different states.
- A2 is the lowest among all. which is the actual paid-out cost incurred by a farmer.
- The A2+FL, the actual paid-out cost plus imputed value of family labor.
- C2 is the highest among all and defines as ‘Comprehensive Cost including Rental Value of Own Land (net of land revenue and interest on value of own fixed capital assets (excluding land))’.
Despite the fact that all three costs are assessed, the CACP ultimately recommends—and the government ultimately announces—MSP based on A2+FL.
- Additionally, protesting farmers are calling for a legal guarantee and MSP based on C2.