SYLLABUS
GS-3: Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers.
Context: The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved an increase in the Minimum Support Prices (MSP) for 14 Kharif crops for the Marketing Season (MS) 2026-27.
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• MSPs for Kharif crops were increased to ensure remunerative prices to farmers and maintain MSP at least 1.5 times the all-India weighted average cost of production, in line with the Union Budget 2018-19 announcement.
• The highest absolute increase in MSP was announced for sunflower seed (₹622 per quintal), followed by cotton (₹557), nigerseed (₹515), and sesamum (₹500).
• The expected margin over cost of production is highest for moong (61%), followed by bajra and maize (56%) and tur/arhar (54%), while the remaining crops are estimated to provide a 50% margin.
• The government stated that higher MSPs for pulses, oilseeds, and nutri-cereals (Shree Anna) are aimed at promoting crop diversification and reducing dependence on cereals.
Minimum Support Price (MSP)
• The MSP is a form of market intervention by the Government to protect agricultural producers against any sharp fall in farm prices.
• MSPs are announced by the Cabinet Committee on Economic Affairs (CCEA) at the beginning of the sowing season for certain crops based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
• The major objectives of MSP are:
- Providing remunerative prices to farmers.
- Ensuring food security through procurement for the Public Distribution System (PDS).
- Encouraging production of essential crops.
• In formulating the recommendations for minimum support prices, the CACP takes into account various factors such as –
- cost of production (A2+FL method),
- demand and supply conditions,
- inter-crop price parity,
- effect on the general price level,
- domestic and international prices, etc.
• Currently, the government announces minimum support prices (MSPs) for 22 Mandated Crops and FRP (fair and remunerative price) for sugarcane.
- In addition, the MSPs of toria and de-husked coconut are fixed based on the MSPs of rapeseed/mustard and copra, respectively.
About Commission for Agricultural Costs & Prices (CACP)
• CACP is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India.
• It came into existence in January 1965 as the Agricultural Prices Commission. It was later renamed as CACP in 1985.
• Currently, the Commission comprises a Chairman, a Member Secretary, one Member (Official), and two Members (Non-Official).
- The non-official members are representatives of the farming community and usually have an active association with the farming community.
About the Pricing Policy for Sugarcane
• Sugarcane pricing is governed under the Sugarcane (Control) Order, 1966, issued under the Essential Commodities Act.
• Before 2009-10, the government fixed the Statutory Minimum Price (SMP) for sugarcane.
• In 2009, SMP was replaced with the Fair and Remunerative Price (FRP) system after amendments to the Sugarcane (Control) Order.
• FRP includes “reasonable margins for growers on account of risk and profits” as a statutory factor.
• Factors Considered While Fixing FRP: The Commission for Agricultural Costs and Prices considers:
- Cost of sugarcane production
- Returns from alternative crops
- Availability of sugar to consumers at fair prices
- Sugar prices
- Recovery rate from sugarcane
- Value of by-products such as molasses, bagasse, and press mud
- Reasonable profit margins for farmers
- States may also announce a State Advisory Price (SAP), which is generally higher than the FRP fixed by the Centre.