Minimum Support Prices: From Safety Net to Self-Sufficiency

KEY TAKEAWAYS

• MSP forRabi Marketing Season (RMS) 2026–27 has been approved;procurement estimated at297 Lakh MT, and farmers to receive about₹84,263 croreat MSP.
• ForRMS 2026–27, margins over cost of production peak at109% for wheat
• MSP payoutsof foodgrains more than tripled from₹1.06 lakh crore(2014-15) to₹3.33 lakh crore(July 2024–June 2025),procurementincreased from761.40 LMTto 1,175 LMTover same period,benefitting1.84 crore farmers
• For self-sufficiency in pulses,100% production of tur (arhar), urad, masoor to be procuredup to 2028–29; with2.46 LMT turalreadyprocuredby March, 2025.

Introduction

Each cropping season, India’s farmers work tirelessly in their fields – butuncertainties in weatherand markets can wipe out their gains. Unseasonal rains, droughts, or floods can destroy months of hard work in a matter of days. Even when crops are harvested successfully,volatile market pricescan push farmers into distress sales, forcing them to sell at rates far below the cost of production. For small and marginal farmers, who depend entirely on agriculture for their livelihood, these risks can mean spiralling debts, loss of income, and even abandonment of farming altogether.

This is where the Minimum Support Price (MSP) becomes a lifelineMinimum Support Price (MSP) is a crucial mechanism through which the government supports farmers by purchasing their crops at a pre-determined price.For example, a wheat grower can be assured of₹2,585 per quintalfor his crop (MSP for 2026‑27), even if open-market prices dip. Similarly, a paddy farmer can sell to government agencies at₹2,369/quintal(MSP for 2025‑26) for common paddy. This assured price encourages farmers to invest in quality seeds and technology without fear of distress sales.

MSP Policy and Determination

Annually, Government announces Minimum Support Prices (MSPs) for22 mandated agricultural cropsbased on the recommendations of theCommission for Agricultural Costs & Prices(CACP), after considering the views of the concerned State Governments and Central Ministries/Departments. In addition, MSP for Toria and de-husked coconut is also fixed on the basis of MSPs of rapeseed & mustard, and copra, respectively.

While recommending MSP, CACP considers important factors, i.e., cost of production, overall demand-supply situations of various crops in domestic and world markets, domestic and international prices, inter-crop price parity, terms of trade between agriculture and non-agriculture sector, likely effect of price policy on rest of economy and a minimum of 50 per cent as the margin over the cost of production.

Further, theproduction costcomputed by CACP includesall paid out costs such as those incurred on account ofhired human labour, bullock labour/machine labour, rent paid for leased land, expenses incurred on use of material inputs like seeds, fertilizers, manures, irrigation charges, depreciation on implements and farm buildings, interest on working capital, diesel/electricity for operation of pump sets etc, miscellaneous expenses and imputed value of family labourThe cost formula used for calculating MSP is uniform for all 22 mandated crops and states. Notably, this calculation includes considerations such as family labour, acknowledging the collective efforts of entire farming households rather than solely focusing on individual farmers.

Since 2018-19, Government has been increasing MSPs for all mandated crops in line with the Union Budget 2018-19 announcement for setting upMSP at least 1.5 times the cost of production. This ensuresa minimum return of 50%over the all-India weighted average cost of production for all crops.

Data on MSP: Rabi Marketing Season 2026-27 andKharif Marketing Season2025-26

The Cabinet has approved the increase in the Minimum Support Prices (MSP) for all mandatedRabi Crops for Marketing Season 2026-27 on 1^stOctober 2025. Further, the government has increased the MSP of mandated Crops forKharif Marketing Season2025-26to ensure remunerative prices to the growers for their produce.

For Kharif crops Marketing Season 2025-26:

Thehighest absolute increase in MSPover the previous yearhas been recommended fornigerseed (₹820 per quintal)followed byRagi (₹596 per quintal),Cotton (₹589 per quintal)andSesamum (₹579 per quintal).

Themargin to farmers over their cost of productionare estimated to be highest in case ofbajra (63%)followed bymaize (59%),tur (59%) and urad (53%). For rest of the crops, margin to farmers over their cost of production is estimated to be at 50%. In the recent years, Government has beenpromoting the cultivation of crops, other than cereals such aspulses, oilseeds, and Nutri-cereals/ Shree Anna, by offering a higher MSP for these crops.

For Rabi crops Marketing Season 2026-27:

Theabsolute highest increase in MSPhas been announced forSafflower at ₹600 per quintalfollowedby Lentil (Masur) at ₹300 per quintal. For Rapeseed & Mustard, gram, barley, and wheat, there is an increase of₹250 per quintal, ₹225 per quintal, ₹170 per quintal and ₹160 per quintal respectively.

Thehighestexpected margin over All-India weighted average cost of production is 109% for wheat, followed by93% for rapeseed & mustard; 89% for lentil; 59% for gram; 58 percent for barley; and 50% for safflower. This increased MSP of rabi crops ensures remunerative prices to the farmers and incentivise crop diversification.

During RMS 2026–27, procurement is estimated at about297 Lakh MT, for which farmers are expected to receive approximately₹84,263 croreat the proposed MSP.

Procurement Mechanisms

The Government's proactive measures have ensured enhanced procurement and timely payments to farmers, ensuring that the benefits of MSP hikes translate into tangible support. Over the years, procurement mechanisms have been strengthened, leading to greater participation by farmers across states and commodities.

Cereals and coarse cerealsare procured by theFood Corporation of India (FCI) and designated State AgenciesThe procurement estimates forwheat and paddyare finalized by the Government of India in consultation with State Governments and FCI before each marketing season. These estimates are based on factors like estimated production, marketable surplus, and crop patterns.

Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)

Objective:

PM-AASHA aims to ensure that farmers receive remunerative prices for their produce while making essential commodities available to consumers at affordable rates

Components & Functioning:

One of the key components is thePrice Support Scheme (PSS). It is activated when market prices ofnotified pulses, oilseeds, and coprafall below MSP during peak harvest. Eligible produce meetingFair Average Quality(FAQ) standards is procureddirectly from pre-registered farmers possessing valid land recordsvia National Agricultural Cooperative Marketing Federation of India Ltd(NAFED)and National Cooperative Consumers’ Federation of India Ltd(NCCF)This eliminates intermediaries and safeguards farmers from distress sales.

Continuity:

During the15th Finance Commission Cycle, the Government of India has approved the continuation of PM-AASHA scheme up to2025-26.

Pulses, oilseeds, and copraare procured under thePrice Support Scheme (PSS)of the umbrella schemePradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), in consultation with the concerned State Government. Procurement is triggered when the market price of these crops falls below MSP. The main agencies for procurement under PM-AASHA are theNational Agricultural Cooperative Marketing Federation of India Ltd. (NAFED)and theNational Co-operative Consumers’ Federation of India Ltd. (NCCF).

Cotton and juteare procured at MSP through theCotton Corporation of India (CCI)and theJute Corporation of India (JCI)respectively. There is no maximum limit on the quantity of jute and cotton procured from farmers.

From MSP to Atmanirbharta

India has witnessed significant growth in pulses production. However, Prime Minister Narendra Modi has set an ambitious goal of achieving self-sufficiency in pulses by 2027, thereby eliminating the need for imports. It has been emphasized that with the cooperation of farmers, India will become ‘Atmanirbhar’ inpulses before December 2027.

To achieve this, the Government announced in Budget 2025 that100% of the state’s productionoftur (arhar), urad, and masoorwill be procured forfour years, up to 2028–29. In line with this commitment, the Government has also enhanced thePM-AASHA guarantee for procurement ofpulsesat MSP from₹45,000 crore to ₹60,000 crore.

By 25 March 2025,a total of 2.46 lakh metric tonnes of Tur (Arhar) has been procured from farmers in five states(Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Telangana), benefitting 1,71,569 farmers.

Impact of MSP Procurement

(i) Pulses and Oilseeds

The last eleven years have witnessed a remarkable turnaround in the pulses sector. Once marked by low cultivation, limited procurement, high import dependence, and elevated consumer prices, the sector now reflects higher production, greater procurement at increased MSPs, reduced import reliance, and improved price stabilityProcurement of pulses at MSP rose significantly by 7,350%, from 1.52 lakh metric tonnes during 2009–14 to 82.98 lakh metric tonnes during 2020–25.

Similarly,oilseeds procurement at MSP increased by more than 1,500% in the last 11 years, reflecting the government’s strong support for oilseed farmers.

(ii) Paddy and Kharif Crops

The procurement ofpaddyhas also expanded significantly. Between2004–14,procurementstood at4,590 lakh metric tonnes, which rose to7,608 lakh metric tonnes during 2014–25. For14 Kharif cropstaken together,procurementincreased from4,679 lakh metric tonnes during 2004–14 to 7,871 lakh metric tonnes during 2014–25.

This growth is reflected in theMSP paymentsmade to farmers, which forpaddyaloneincreased from ₹4.44 lakh crore during 2004–14 to ₹14.16 lakh crore during 2014–25. Similarly, for all14 Kharif crops, MSP payments rose from₹4.75 lakh crore to ₹16.35 lakh croreover the same periods.

(iii) Wheat

During the Rabi Marketing Season (RMS) 2024-25, the Food Corporation of India (FCI) procured266 Lakh Metric Tonnes (LMT) of wheat, surpassing previous year’s procurement of262 LMTand well above the188 LMTrecorded in RMS 2022-23. This achievement has helped secure the nation’s food grain sufficiency.

Over22 lakh farmersbenefitted from the procurement, with about₹0.61 lakh croredirectly credited to their bank accounts as payment for wheat purchased at the Minimum Support Price (MSP).

Overall, procurement of foodgrains has grown steadily, increasing from761.40 lakh metric tonnes in 2014–15to 1,175 lakh metric tonnes in 2024-25 (from July to June). This expansion benefitted1.84 crore farmers. The expenditure incurred on procurement at MSP valuesmore than tripled, rising from₹1.06 lakh croreto₹3.33 lakh croreover the same period

(v) Farmer Benefits

The benefits of enhanced procurement at MSP have directly translated into wider farmer coverage and higher income support. Thenumber of farmers benefittingfrom MSP procurement increased from1.63 crore in 2021–22 to 1.84 crore during 2024-25 (from July to June). Over the same period, the MSP valuedisbursed to farmersrose significantly, from ₹2.25 lakh crore to ₹3.33 lakh crore. This steady rise in both farmer participation and procurement expenditure reflects the government’s commitment to ensuring fair returns to farmers and strengthening their economic security.

Technology and Transparency in MSP Procurement

To improvetransparency, efficiency, and ease of operations, the Government has introduced several digital platforms:

• Under Price Support Scheme (PSS):

e-Samriddhi (developed by NAFED)ande-Samyukti (developed by NCCF):

Streamline procurement processfrom farmer registration to final payment. Farmers register online withAadhaar, land records, bank details, and crop information. Post-registration, farmers willing to offer their stock under the scheme can choose thenearest purchase centre, receive digitally scheduled slots for visit, and get direct MSP payments credited to their bank accounts,thereby eliminating intermediaries and delays.

For Cotton Procurement:

Kapas Kisan App (developed by Cotton Corporation of India, Ministry of Textiles):

Dedicated mobile app for cotton farmers under MSP. It offersself-registration; slot booking; real-time updates on quality assessment, payment processing and accepted quantities; and multilingual supportIt reduces paperwork, waiting time, and distress sales while ensuring faster, transparent procurement.

Conclusion

The MSP framework continues to safeguard farmer incomes by assuring at least 50% margin over cost, a principle in place since 2018-19. Over time, this has been reinforced through higher procurement volumes, rising disbursements, and wider farmer coverage. The focus on pulses, oilseeds and nutri-cereals/shri anna, coupled with targeted procurement and digital reforms, is steering Indian agriculture towards greater diversification and reduced import dependence. Together, these measures underline the government’s long-term strategy of using MSP not only as a safety net for farmers but also as a driver of national self-sufficiency in key crops.