Agricultural market

Minimum Support Price (MSP) is a form of market intervention by the Government of India to keep a fixed price on agricultural products to protect producers from any sharp fall in farm prices. Government announces MSP 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).The minimum support prices are a guarantee price for farmer’s produce from the Government. The major objectives of government behind introducing MSP is to support the farmers from distress sales and store 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.