Q18.What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap?

Minimum Support Price (MSP) is a government-fixed remunerative price for specified agricultural crops, announced before the sowing season. Its primary purpose is to protect farmers from market price fluctuations and ensure a minimum income for their produce.

Mechanism and Objectives of MSP

Based on recommendations from the CACP, the government procures crops at MSP, creating a floor price. This ensures price stability and certainty, preventing distress sales during bumper harvests or market gluts.

How MSP Rescues Farmers from Low-Income Trap

• It assures a predictable income, enabling farmers to plan investments in inputs, technology, and improve productivity.
• By mitigating price risk and ensuring a minimum return, MSP helps break the vicious cycle of low income, low investment, and low productivity.
• This mechanism provides economic security, fostering agricultural sustainability and enhancing farmer livelihoods.

Therefore, MSP serves as a vital policy tool, effectively rescuing farmers from the low-income trap by guaranteeing a minimum remunerative price for their produce.