Crop-wise, Market-wise and Minimum Support Prices

Crop-wise and Market-wise Prices

The prices of agricultural commodities are usually determined by market factors of demand and supply. If there are many farmers producing the same commodity then they will fetch a lesser price for their produce. If there is great demand from consumers for a certain commodity then farmers can expect to get a higher price. These prices keep changing daily. Other factors that determine the price of the product are its quality, yield and pest free status. Climatic conditions, international prices, cost of production and new laws may also affect the prices of agricultural commodities. The price at different markets may be different. The government has fixed minimum support prices for certain agricultural products. Farmers also have the option to sell their produce to private dealers if they stand to get a better profit.

crop-wise and market-wise prices of different agricultural commodities (External website that opens in a new window).

Minimum Support Prices

The main reason why the government fixes minimum support prices or MSPs is to ensure remunerative prices to farmers to encourage higher investment and production of agricultural commodities. Every year MSPs for major agricultural products are announced which are fixed after taking into account the recommendations of the Commission for Agricultural Costs and Prices (CACP). The CACP while recommending MSPs takes into account factors such as cost of production, change in prices of inputs, demand and supply, market price trends and cost of living among other factors.

Government organises Price Support Schemes as PSS of commodities through various public and cooperative agencies such as Food Corporation of India (FCI) (External website that opens in a new window), Cotton Corporation of India Ltd. (CCI) - External website that opens in a new window, Jute Corporation of India Ltd. (JCI) - External website that opens in a new window, National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) - External website that opens in a new window and Tobacco Board (External website that opens in a new window) for which the MSPs are fixed. For commodities not covered under PSS, the government arranges for market intervention on specific request from the States for a specific quantity at a mutually agreed price. The losses, if any, are borne by the Centre and State on a 50:50 basis.

MSP for Various Commodities (767 KB) (PDF file that opens in a new window) as on 22.03.2007.