A study of Minimum Support Price Trends & Issues in India

Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 48 A study of Minimum Support Price Trends & Issues in India Dr. Pandurang Sudamrao Dabhade Email: rjdabhad[email protected] Manuscript ID: JRD -2025(I)-170911 ISSN: 2230-9578 Volume 17 Issue 9(I)| Pp. 48-52 Sept. 2025 Submitted: 9 Aug. 2025 Revised: 20 Aug. 2025 Accepted: 20 Sept. 2025 Published: 30 Sept. 2025 Abstract: The central government has implemented the Minimum Support Price Policy to provide a reasonable price to the farmers from their farms. The government had adopted the Minimum Support Price Policy to supply the food grains that were in short supply due to the Green Revolution in 1960. While deciding this policy, the government considered all aspects of the farmers, but the needs of the farmers were confused, will the goods produced by the farmers in large quantities get a fair footing? This question was before the farmers. The farmers felt that the farmers should get the minimum cost of production for the goods produced by the farmers. To resolve the problems of the farmers, the government appointed a committee under the chairmanship of L. K. ZA in August 1964. This committee submitted its report to the government. The government implemented the recommendations of this committee and accepted the Minimum Support Price from 1964. World Wide Any country implements the Minimum Support Price Policy at the international level and no laws have been made to determine the support price. If we consider developed countries, we see that in America, agricultural products are insured to help farmers, and 80% to 90% of the cost of this insurance is borne by the government. If there is a drought in the country, the government purchases agricultural products from farmers through government agencies at the fixed price of agricultural products. According to international rules, any country can provide 90% subsidy of its agricultural production GDP, in European countries, subsidies are given to farmers on the condition of eco-friendly farming. In China, farmers are given subsidies for seeds, water, and agricultural equipment. In the United States, income support is given to farmers, that is, a certain amount is given to farmers. India and 54 other countries in the world only provide subsidies to farmers. Key Word: minimum Support price, Trends, Issues. Introduction The Indian economy is mainly based on agriculture. The largest number of people are engaged in agriculture, with the proportion of people engaged in agriculture being about 48.718. In India, cotton, sugarcane, sesame, wheat, jowar, tur etc. are produced in agriculture on a large scale. In India, a large number of farmers sell their goods in various markets such as weekly markets, mandis, and agricultural produce markets. Sell. Farmers' goods get a price according to the season. In the early period of India, many natural disasters like droughts and floods occurred, due to which there was a large shortage of food grains in India, and people started dying due to lack of food. It was against this background that the Minimum Support Price System emerged in India. Due to droughts and changes in import-export policies, the prices of agricultural goods change. These changed prices of agricultural goods were not affordable for the common man. As a solution to this, the government adopted the Public Distribution System to provide food grains to all and adopted the Minimum Support Price (MSP) to provide price support. Quick Response Code: Website: https://jrdrvb.org/ DOI: 10.5281/zenodo.16885235 Creative Commons (CC BY-NC-SA 4.0) This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Public License, which allows others to remix, tweak, and build upon the work noncommercially, as long as appropriate credit is given and the new creations ae licensed under the idential terms. Address for correspondence: Dr. Pandurang Sudamrao Dabhade How to cite this article: P. S.Dabhade. (2025). A study of Minimum Support Price Trends & Issues in India . Journal of Research & Development, 17(9(I)),48-52 Original Article Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 49 'Using new technology for the agricultural sector and fixing prices for agricultural goods were included in the Minimum Support Price Policy. Research Methodology: This research is based on secondary data. Government reports, research papers, etc. have been used as secondary data. Descriptive and analytical methods have been used for this research. Minimum support price of Chartrestics: No market organization can purchase the produce of the farmers at the minimum support price fixed by the government, but the Food Corporation of India helps the farmers in purchasing it. This provides financial assistance to the farmers. Importance of Minimum Support Price: Globalization and privatization have freed up the market. This makes it important to fix a fixed price for farmers' produce. If the prices of agricultural produce are fixed, it helps in protecting the interests of farmers. The minimum support price takes care of price fluctuations. The direct impact of price fluctuations on farmers and their produce is due to market imperfections, because the market works according to rising and falling prices. If the minimum support price is fixed, the farmers are fully assured of getting a guaranteed price for their crop. Due to this assurance, the produce is sold in the market. The government's objective behind fixing the minimum support price: The minimum support price is fixed by the central government to ensure that farmers do not suffer any loss even if the prices of agricultural produce decrease in the local market organization or market. The main purpose of the government in fixing the minimum support price is that after fixing the minimum support price, the government purchases the produce of farmers at that price. Factors determining minimum Support price: "Minimum Support Price" i.e. minimum support price is what we call the guaranteed price. The Agricultural Price Commission has been established to determine the minimum support price. However, the Agricultural Price Commission only makes recommendations. The minimum support price is determined by the government. The minimum support price is announced by the central government every year in the month of October. Agricultural Prices Commission of India: The Commission for Agricultural Costs and Prices (Commission for Agricultural Costs and Prices) is an attached wing of the Ministry of Agriculture of India. The Commission for Agricultural Prices was established in 1965. The main objective of the Commission for Agricultural Prices was to use modern technology in the agricultural sector of the country and increase productivity. The Commission for Agricultural Prices performs the important task of encouraging farmers and recommending to the government to fix the price of agricultural produce. The Commission for Agricultural Prices recommends to the government to fix the minimum support price of a total of 23 crops. This includes 7 cereals, 5 pulses, 7 pulses and 4 cash crops/commercial crops. Commission for Agricultural Prices. The Commission on Agricultural Prices (CARP) prepares a comprehensive questionnaire before making its recommendations and sends it to all the states, as well as to the Food Corporation of India (FCD), National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), Cotton Corporation of India (CCI), Jute Corporation of India (JCI), traders. After considering the suggestions made by the states and the institutions, it prepares a report and places it before the Cabinet Committee on Economic Affairs (CCEA). The committee makes some suggestions on this report and after that a final decision is taken. After that, the CARP publishes the minimum support price on its website. The salient factors that determine the minimum support price are as follows. 1. Demand and supply. 2. Production expenses. 3. Fluctuations between domestic and international market prices are taken into account. 4. Terms and trade in agriculture and non-agriculture sectors. 5. Price at least 50 percent more than the cost of production. 6. Impact of production on minimum support price. The process of determining the minimum support price in India is carried out by the Indian Agricultural Prices Commission. While determining the minimum support price of Indian agricultural products, the government mainly includes the cost of farming from tillage to harvesting and increases the minimum support price by 50 percent on the cost of production. Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 50 The Central Agricultural Prices Commission has determined three formulas to determine the cost of production of farmers. A2 the first formula for determining the minimum support price is 42 thousand. According to this formula, the farmer incurs production costs for agriculture. For this, the direct costs on seeds, pesticides, chemical fertilizers, medicines, labor, irrigation, fuel are taken into account. However, if we look at reality, apart from these costs, farmers incur various costs for agricultural production, but these are not included as production costs. A2+ FL (Family Labor) A2 + FL (Family Labor) is the second formula for determining the minimum basic wage. According to this formula, the value of the labor of the farmer and his family members working with him is taken into account. However, in reality, it is difficult to measure the value of the labor of each family member working in the agricultural sector. And does each person working in his own farm get paid for his labor? This is an important question. Therefore, we see a large amount of hidden unemployment in the agricultural sector. C2 Agricultural expert Shri. M.S Swami Nathan presented this concept. According to him, if farmers want to get a fair minimum basic price for their agricultural produce, then C2 formula should be adopted. This will increase the sale of farmers' agricultural produce and benefit the farmers. C2 Comprehensive means that the production cost of farmers has been considered in a comprehensive manner. This includes seeds, pesticides, chemical fertilizers, medicines, labor, irrigation, fuel, family labor, interest on investment, and rent of agricultural land and based on that, the production cost should be determined. If the government uses this formula, farmers' goods can get a better price. However, in reality, the Indian Agricultural Prices Commission is determining the minimum support price of agricultural goods by considering both A2 + FL (Family Lever).After determining the minimum support price, the government does not actually purchase the farmers' goods. Instead, the government purchases food grains through local government institutions, in which food grains are stored in the go downs of government institutions such as FCI Food Corporation Of India, National Agricultural Cooperative of India Limited. In the year 2019-20, the total rice production was 118.43 million tons. Only 43.26 percent of this rice production was purchased. Wheat production was 107.59 million tons. However, in reality, the government purchased only 38.99 million tons of wheat. Compared to the total production of tur and moong, the government purchased only 5.69 percent. Minimum Support /Fair Remunerative Prices Recommended by CACP and Fixed by Government (Crop Year) (₹/qtl) Updated on18.10.2022 Commodity 201 3-14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20 2020 -21 2021 -22 2022 -23 Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Rec o Fixe d Kharif Crops Paddy Common 131 0 1310 136 0 1360 141 0 1410 147 0 1470 155 0 1550 174 5 1750 181 5 1815 186 8 1868 194 0 1940 204 0 2040 Paddy(F)/Gra de'A' 134 5 1345 140 0 1400 145 0 1450 151 0 1510 159 0 1590 177 0 1770 183 5 1835 188 8 1888 196 0 1960 206 0 2060 Jowar-Hybrid 150 0 1500 153 0 1530 157 0 1570 162 5 1625 170 0 1700 243 0 2430 255 0 2550 262 0 2620 273 8 2738 297 0 2970 JowarMaldandi 152 0 1520 155 0 1550 159 0 1590 165 0 1650 172 5 1725 245 0 2450 257 0 2570 264 0 2640 275 8 2758 299 0 2990 Bajra 117 5 1250 125 0 1250 127 5 1275 133 0 1330 142 5 1425 195 0 1950 200 0 2000 215 0 2150 225 0 2250 235 0 2350 Maize 131 0 1310 131 0 1310 132 5 1325 136 5 1365 142 5 1425 170 0 1700 176 0 1760 185 0 1850 187 0 1870 196 2 1962 Ragi 150 0 1500 155 0 1550 165 0 1650 172 5 1725 190 0 1900 289 5 2897 315 0 3150 329 5 3295 337 7 3377 357 8 3578 Tur (Arhar) 385 0 4300 435 0 4350 442 5 4625 § 462 5 5050 ℭ 525 0 5450 § 567 5 5675 580 0 5800 600 0 6000 630 0 6300 660 0 6600 Moong 450 0 4500 460 0 4600 465 0 4850 § 480 0 5225 ℭ 537 5 5575 § 697 5 6975 705 0 7050 719 6 7196 727 5 7275 775 5 7755 Urad 430 4300 435 4350 442 4625 457 5000 520 5400 560 5600 570 5700 600 6000 630 6300 660 6600 Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 51 0 0 5 § 5 ℭ 0 § 0 0 0 0 0 Groundnut 400 0 4000 400 0 4000 403 0 4030 412 0 4220 ¤ 425 0 4450 § 489 0 4890 509 0 5090 527 5 5275 555 0 5550 585 0 5850 SunflowerSe ed 370 0 3700 375 0 3750 380 0§ 3800 385 0§ 3950 ¤ 400 0§ 4100 ¤ 538 5 5388 565 0 5650 588 5 5885 601 5 6015 640 0 6400 Soyabean Black 250 0 2500 250 0 2500 - - - - - - - - - - - - - - Soyabean Yellow 256 0 2560 256 0 2560 260 0 2600 267 5 2775 ¤ 285 0 3050 § 339 0 3399 371 0 3710 388 0 3880 395 0 3950 430 0 4300 Sesamum 450 0 4500 460 0 4600 470 0 4700 480 0 5000 § 520 0 5300 ¤ 623 0 6249 648 5 6485 685 5 6855 730 7 7307 783 0 7830 Nigerseed 350 0 3500 360 0 3600 365 0 3650 372 5 3825 ¤ 395 0 4050 ¤ 586 0 5877 594 0 5940 669 5 6695 693 0 6930 728 7 7287 Medium Staple Cotton ^ 370 0 3700 375 0 3750 380 0 3800 386 0 3860 402 0 4020 515 0 5150 525 5 5255 551 5 5515 572 6 5726 608 0 6080 Long Staple Cotton ^^ 400 0 4000 405 0 4050 410 0 4100 416 0 4160 432 0 4320 545 0 5450 555 0 5550 582 5 5825 602 5 6025 638 0 6380 Rabi Crops Wheat 140 0 1400 145 0 1450 152 5 1525 162 5 1625 173 5 1735 184 0 1840 192 5 1925 197 5 1975 201 5 2015 212 5 2125 Barley 110 0 1100 115 0 1150 122 5 1225 132 5 1325 141 0 1410 144 0 1440 152 5 1525 160 0 1600 163 5 1635 173 5 1735 Gram 310 0 3100 317 5 3175 342 5 3500 $ 380 0 4000 § 425 0 4400 µ 462 0 4620 487 5 4875 510 0 5100 523 0 5230 533 5 5335 Lentil (Masur) 295 0 2950 307 5 3075 332 5 3400 $ 380 0 3950 µ 415 0 4250 ¤ 447 5 4475 480 0 4800 510 0 5100 550 0 5500 600 0 6000 Rapeseed/ mustard 305 0 3050 310 0§ 3100 335 0§ 3350 360 0§ 3700 ¤ 390 0§ 4000 ¤ 420 0§ 4200 442 5 4425 465 0 4650 505 0 5050 545 0 5450 Safflower 300 0 3000 305 0 3050 330 0 3300 360 0 3700 ¤ 400 0 4100 ¤ 494 5 4945 521 5 5215 532 7 5327 544 1 5441 565 0 5650 Commercial Crops Jute* 230 0 2300 240 0 2400 270 0 2700 320 0 3200 350 0 3500 370 0 3700 395 0 3950 422 5 4225 450 0 4500 475 0 4750 SugarcaneФ 210 210 220 220 230 230 230 230 255 255 275 275 275 275 285 285 290 290 305 305 Copra (Milling) 525 0 5250 555 0 5550 595 0 5950 650 0 6500 750 0 7511 952 0 9521 996 0 9960 103 35 1033 5 105 90 1059 0 Copra (Ball) 550 0 5500 583 0 5830 624 0 6240 678 5 6785 775 0 7750 992 0 9920 103 00 1030 0 106 00 1060 0 110 00 1100 0 Source: Commission for Agriculture Cost & Prices Ministry of Agriculture. & Farmers Welfare, Government of India *: MSP for TD5 variety of jute till 2014-15, and TDN3 (equivalent of TD5) variety of jute from 2015-16. £: Bonus of ₹40 per quintal subject to liquidation of 15 million tons of Central Pool Stocks. #:10 percent bonus if exports are banned. ¤: Including bonus of ₹100 per quintal. µ: Including bonus of ₹150 per quintal. $: Including bonus of ₹75 per quintal. ℭ: Including Bonus of₹425 per quintal. §: Including Bonus of₹200 per quintal. Ф: FRP at 9.5% recovery rate for years from 2012-13 to 2017-18 and at 10% recovery rate from year 2018-19 to 2021-22 and at 10.25% from 2022-23. §: Corresponding to oil content of 35 percent. : Staple length (mm) of 24.5-25.5 and micronize value of 4.3-5.1. ^^: Staple length (mm) of 29.5-30.5 and microware value of 3.5-4.3.1. Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 52 Minimum Support Price and Issues: The main reason for purchasing wheat and rice in large quantities is that the government provides food grains to the poor at cheap prices, which is why the government does not purchase other agricultural products in large quantities. According to the Shantakumar Committee, only 6 percent of farmers in the country benefit from the minimum support price. According to this committee, 86 percent of small farmers do not go to any market committee to sell their farm produce. It was announced in the 2018 budget that farmers would be given a guaranteed price of two and a half times the cost of production. However, agricultural experts have raised doubts about this costing method that the government uses to cover production costs. According to agricultural experts, the government should adopt M.S. Swami Nathan’s C-2 formula for covering production costs. Minimum support price is a declaration adopted by the government. To implement this policy, the government cannot force any market organization or the trading class to purchase farmers' goods at the price fixed. If the sellers do not purchase farmers' goods at the minimum support price, there is no constitutional way for farmers to go to court, because the minimum support price is a declaration and no constitutional provision has been made for it in India. Due to this, the minimum support price policies do not benefit farmers to a large extent. If a farmer gets a good minimum support price for a crop in a particular period, the farmers produce the same crop in large quantities, due to which the prices received for other crops do not increase. This has an adverse effect on other agricultural production. Conclusion: Comparing the prices of agricultural commodities in the world market and the minimum support price of agricultural commodities in India, it is seen that there is a difference in the prices of food grains in the last 75 years. The minimum support price policy is constitutionally weak, due to which the farmers cannot appeal to any court or government to get the minimum support price for their goods. The minimum support price and the price of chemical fertilizers are at the same level in relation to Indian agricultural commodities. This does not benefit the farmers. The government has reduced the subsidy on chemical fertilizers from 2010 to 2021. This has increased the production cost of farmers. There are fluctuations in the prices of chemical fertilizers such as N. P. K. These prices are increasing and decreasing at certain times. Even though there is no basis for the prices of agricultural commodities at the international level, the prices of agricultural commodities are higher than these Indian agricultural commodities. The minimum support price policy is limited to India only. Other countries do not implement the minimum support price policy at the international level. The prices of agricultural commodities are determined by supply and demand. At the international level, only 54 countries provide subsidies to farmers. In India, the subsidies provided to farmers include financial assistance to farmers in the form of chemical fertilizers, irrigation, Thibak irrigation schemes, digging wells, and farm ponds. No subsidies are provided for selling agricultural produce in the market. Reference 1. Report The Jha Committee on Food grain Prices for 1964-64 season, Department of Agriculture Ministry of food and Agriculture Government of India 2. Zee News Nov-222021 DNA How Does American Farmers Earn Corers 3. Ramesh Singh (2020) Indian Economy, Mc Graw Hill Publication,Chennai, Page no 8.2 4. Extension Of MSP: Fiscal And welfare implications A study of the Planning Commission October-2007 5. Commission for Agriculture Cost & Prices Ministry of Agriculture. & Farmers Welfare, Government Of India 6. Extension Of MSP: Fiscal And welfare implications A study of the Planning Commission October-2007 7. S. Mohanakumar, Premkumar Economic & Political Weekly December 1, 2018 vol no 47 8. . The Hindu New Delhi | September 25, 2020 05:02 ISTMSP, government procurement key to India’s food security: Narendra Modi the Prime Minister 9. Released a Commemorative coin on the 75th anniversary of the Food and Agriculture Organization (FAO). October 16, 2020 12:59 pm | Updated 11:57 pm ISTNew Delhi