Government fixes-the Minimum Support Prices (MSPs) of various agricultural crops on the recommendations of the Commission for Agricultural Costs & Prices (CACP), after ascertaining the views of State Governments and Central Ministries/ Departments concerned. While recommending MSPs, CACP considers the cost of production and host of factors such as demand-supply situation, trends in domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors and the likely impact of MSP on consumers and overall economy along with rational utilization of scarce natural resources like land and water.
National Commission on Farmers headed by Dr. M. S. Swaminathan submitted its report in 2006. One of the recommendations of Commission was that MSP should be at least 50 percent more than the weighted average cost of production. This recommendation was not incorporated in the National policy for Farmers 2007. However, recently Government has increased the MSP for all Kharif and Rabi crops and other commercial crops for the season 2018-19 with a return of atleast 50 percent over cost of production, which was a historic decision by the Government.
This information was given by Minister of State for Ministry of Agriculture & Farmers Welfare Shri Parshottam Rupala.