Q. Consider the following:

  1. Areca nut
  2. Barley
  3. Coffee
  4. Finger millet
  5. Groundnut
  6. Sesamum
  7. Turmeric

The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above?

  • 1, 2, 3 and 7 only
  • 2, 4, 5 and 6 only
  • 1, 3, 4, 5 and 6 only
  • 1, 2, 3, 4, 5, 6 and 7

Answer: (b) 2, 4, 5 and 6 only

Notes:
  • Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
  • The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
  • MSP is price fixed by Government of India to protect the producer – farmers – against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the Government.
  • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.
  • The Commission for Agricultural Costs and Prices (CACP) decides the minimum support price taking into account the following factors:
    • The entire structure of the economy of a particular commodity or group of commodities
    • Cost of production
    • Changes in input prices
    • Input-output price parity
    • Trends in market prices
    • Demand and supply
    • Inter-crop price parity
    • Effect on industrial cost structure
    • Effect on the cost of living
    • Effect on the general price level
    • International price situation
    • Parity between prices paid and prices received by the farmers
    • Effect on issue prices and implications for subsidy
  • Government announces minimum support prices (MSPs) for 22 mandated crops and fair and remunerative price (FRP) for sugarcane. The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops. In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.
  • The list of crops are as follows.
    • Cereals (7) – paddy, wheat, barley, jowar, bajra, maize and ragi
    • Pulses (5) – gram, arhar/tur, moong, urad and lentil
    • Oilseeds (8) – groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed
    • Raw cotton
    • Raw jute
    • Copra
    • De-husked coconut
    • Sugarcane (Fair and remunerative price)
    • Virginia flu cured (VFC) tobacco.
  • Food grains offered by farmers within the stipulated period & conforming to the specifications prescribed by Government are purchased at MSP by the State Government agencies and FCI for Central Pool.
  • Oilseeds, pulses and copra of Fair Average Quality (FAQ) are procured from registered farmers under Price Support Scheme under Umbrella Scheme of PM-AASHA, as per its guidelines at MSP in consultation with the concerned State Governments, when market price of these produce fall below the MSP.
  • Cotton and Jute are procured by Government at MSP through Cotton Corporation of India (CCI) and Jute Corporation of India (JCI), respectively.
PM AASHA Scheme
  • Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM AASHA) is a scheme that aims at ensuring fair price for farmers and their produce.
  • By strengthening the procurement process, the PM-AASHA scheme will improve the income of the farmers to a greater extent.
  • Components of PM-AASHA:
    • Price Support Scheme (PSS)
      • Under the PSS, Central nodal agencies will procure pulses, oilseeds and copra with proactive role of state governments.
      • The Food corporation of India (FCI) and the National Agricultural Cooperative Marketing Federation of India (NAFED) will help implement the scheme.
      • The procurement expenditure and losses due to procurement will be borne by Central Government as per norms.
      • The government will procure 25% of the marketable surplus of farmers for eligible crops.
      • The Centre has made a provision of about Rs 16,000 crores to be provided as bank guarantee for the agencies to procure from farmers.
    • Price Deficiency Payment Scheme (PDPS)
      • Under the PDPS, the state will provide the difference between the prices prevailing in mandis and the MSP.
      • All oil-seeds are to be covered under PDPS.
      • This scheme is modelled on the Bhawantar Bhugtan Yojana that has been implemented by the Madhya Pradesh state government as well as Bhavantar Bharpai Yojana of Haryana Government.
      • There will be no physical procurement of crops.
    • Pilot of Private Procurement & Stockist Scheme (PPPS)
      • In lieu of PSS and PDPS, in certain pilot districts the PPPS will be tried out.
      • Private agencies will procure oilseeds in coordination with the government.
      • The selected private agency shall procure the commodity at MSP in the notified markets during the notified period from the registered farmers in consonance with the PPSS Guidelines, whenever the prices in the market fall below the notified MSP and whenever authorized by the state/UT government.