Minimum Support Price (MSP) is announced by the government to provide incentives to farmers for raising production.


The Minimum Support Price (MSP) is a price set by the government to ensure that farmers receive a fair price for their agricultural produce. It is an important agricultural policy tool used by the government to incentivize farmers to increase production and ensure food security in the country. The MSP is announced for various crops before the sowing season begins and is determined based on several factors such as the cost of production, market demand, and overall agricultural scenario.

The main objectives of announcing MSP are:

1. Incentives to farmers for raising production: One of the primary objectives of announcing MSP is to provide incentives to farmers for increasing their agricultural production. By setting a minimum guaranteed price for their produce, farmers are encouraged to invest in better agricultural practices, use improved inputs, and adopt modern technologies. This, in turn, leads to increased production and productivity, ensuring food security and reducing the dependence on imports.

2. Price stability: MSP helps in maintaining price stability in the market by providing a floor price for agricultural commodities. It acts as a safety net for farmers, preventing them from selling their produce at distress prices during times of market fluctuations or oversupply. This stability also benefits consumers by ensuring a consistent supply of essential commodities at reasonable prices.

3. Income support: MSP provides income support to farmers by guaranteeing them a minimum price for their produce. This helps in improving the economic condition of farmers and ensuring a decent standard of living for them. It also reduces the income disparities between the agricultural and non-agricultural sectors.

4. Market intervention: MSP serves as a tool for market intervention by the government. In case of a fall in market prices due to excess supply, the government can procure the produce at MSP. This helps in stabilizing prices and preventing distress sales by farmers. The procured produce can be utilized for various welfare schemes like the Public Distribution System (PDS) or can be stored for future use.

In conclusion, the government announces the Minimum Support Price (MSP) to provide incentives to farmers for raising production. It aims to ensure a fair price for farmers' produce, encourage higher agricultural production, stabilize market prices, provide income support, and ensure food security in the country.