For Prelims: Minimum Support Price (MSP), Commission for Agricultural Costs and Prices (CACP), A2+FL Cost, PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan), Full form of CACP, Nodal Ministry, MSP Approval Date, Total Estimated Payment (RMS 2027-28)
For Mains: "Price assurance mechanism", "Crop diversification incentive", "Technology-enabled delivery for transparency"
Source:
Why in the news?
The government has approved enhanced Minimum Support Prices (MSPs) for all six mandated Rabi crops for the 2027-28 marketing season, ensuring a minimum 50% margin over cost of production. An estimated ₹90,962 crore will be paid to farmers for procuring 324 lakh metric tonnes. This policy, supported by digital platforms like e-Samriddhi and e-Samyukti, aims to provide price assurance, encourage crop diversification, and strengthen agricultural income stability.
Summary
- The Commission for Agricultural Costs and Prices (CACP) recommended MSPs for 22 mandated crops, with the recent announcement covering six Rabi crops for the 2027-28 marketing season.
- The highest absolute MSP increase is for safflower (₹675/quintal), and wheat provides the highest estimated margin over cost at 106%.
- Procurement for pulses, oilseeds, and copra is undertaken under the PM-AASHA scheme by agencies like NAFED and NCCF, with digital and biometric authentication enhancing transparency.
Highlights
Enhanced MSPs Announced
The Cabinet approved increased Minimum Support Prices for all six mandated Rabi crops for the 2027-28 marketing season, with safflower seeing the highest absolute increase.
Massive Financial Outlay
An estimated ₹90,962 crore will be paid to farmers for procuring 324 lakh metric tonnes of Rabi produce during RMS 2027-28.
Digital Procurement Push
Platforms like e-Samriddhi and e-Samyukti, along with mandatory biometric authentication, are making MSP procurement more transparent and accessible.
Context / Background
The Minimum Support Price (MSP) is a longstanding policy instrument to protect farmers from price volatility and ensure remunerative returns. Based on recommendations from the Commission for Agricultural Costs and Prices (CACP), MSPs are announced for 22 mandated crops. The policy has evolved with expanded procurement volumes and payments, reflecting increased government support to agriculture over the years, particularly post-2014-15.
Core Analysis & Implications
The MSP increase for RMS 2027-28 continues the policy of ensuring a minimum 50% margin over the comprehensive cost of production (A2+FL). The varying increases (e.g., high for safflower and mustard) signal an intent to incentivize crop diversification towards oilseeds and pulses, reducing import dependence. The integration of digital platforms (e-Samriddhi, e-Samyukti) and biometric authentication under PM-AASHA aims to reduce leakages, ensure direct benefit transfer, and make the procurement process more farmer-centric. The estimated procurement of 324 LMT worth ₹90,962 crore underscores the scale of government intervention in agricultural markets.
Future Outlook / Way Forward
The focus will likely remain on strengthening the procurement infrastructure and expanding the reach of digital systems to more farmers and crops. The success of MSP in ensuring income security hinges on effective procurement at the announced prices, especially when market prices dip. Continued emphasis on crop diversification through differential MSP increases, coupled with missions like 'Aatmanirbharta in Pulses', will be crucial for long-term agricultural sustainability and food security.
Examiner's Angle: Data & Institutional Recall
Exams frequently test the role of CACP, the calculation of MSP (A2+FL cost with 50% margin), the agencies involved (FCI for cereals, NAFED/NCCF for pulses/oilseeds under PM-AASHA), and the digital initiatives (e-Samriddhi, e-Samyukti). The comparative data on procurement volumes and payments between different periods (2004-14 vs 2014-26) is a ready-made source for statement-based questions.
Background GK
Textbook concepts you need to understand this news
- Minimum Support Price (MSP)
- A form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. It is announced at the beginning of the sowing season for certain crops.
- Commission for Agricultural Costs and Prices (CACP)
- A statutory body attached to the Ministry of Agriculture and Farmers Welfare. It recommends Minimum Support Prices (MSPs) for key agricultural commodities.
- A2+FL Cost
- The cost calculation method used for MSP. A2 covers all paid-out expenses, including seeds, fertilizers, hired labour, etc. FL is the imputed value of family labour. MSP is set at least 50% above this cost.
- PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan)
- A scheme launched in 2018 comprising three components: Price Support Scheme (PSS), Price Deficiency Payment Scheme (PDPS), and Pilot of Private Procurement & Stockist Scheme (PPPS). It aims to ensure remunerative prices for farmers.
Facts to remember
Tap a card to see the answer. Try to recall it first.
How exams will ask this
- Data: ₹90,962 crore estimated payment for 324 LMT in RMS 2027-28.
- Nodal Body: Commission for Agricultural Costs and Prices (CACP) under Ministry of Agriculture.
- Legal/Scheme Point: PM-AASHA scheme for procurement of pulses, oilseeds, and copra.
Don't make this mistake!
They may swap the agencies: asking about FCI's role in procuring pulses (FCI procures cereals) or NAFED's role in procuring wheat (NAFED procures under PM-AASHA for pulses/oilseeds). They may also confuse the cost formula (A2+FL vs C2) or the minimum margin (50% over A2+FL).
Write these in mains answers
- "Price assurance mechanism", "Crop diversification incentive", "Technology-enabled delivery for transparency"
Practice questions
Pick an answer, then read the explanation.
- Q1Easy
Which statutory body is responsible for recommending Minimum Support Prices (MSPs) for agricultural crops?
Explanation: The Commission for Agricultural Costs and Prices (CACP), attached to the Ministry of Agriculture and Farmers Welfare, is the statutory body that recommends MSPs for 22 mandated crops. NITI Aayog is a policy think tank, and FCI is a procurement agency.
- Q2Hard
Consider the following statements regarding the recently announced MSPs for Rabi Marketing Season 2027-28:
- 1.The highest absolute increase in MSP has been announced for safflower.
- 2.The MSP for wheat provides an estimated margin of over 100% above its cost of production.
- 3.The procurement of pulses and oilseeds is primarily undertaken by the Food Corporation of India under the PM-AASHA scheme.
Which of the statements given above is/are correct?
Explanation: Statement 1 is correct: The article states the highest absolute increase is for safflower at ₹675 per quintal. Statement 2 is correct: Wheat records an estimated margin of 106% over cost. Statement 3 is incorrect: Procurement of pulses and oilseeds is undertaken by NAFED and NCCF under PM-AASHA, not FCI (which handles cereals).
- Q3Medium
For the Rabi Marketing Season 2027-28, what is the estimated total payment (in ₹ crore) to farmers for procurement as per the article?
Explanation: The article explicitly states: "an estimated ₹90,962 crore to be paid to farmers for 324 lakh metric tonnes (MT) of produce" for RMS 2027-28. ₹8.36 lakh crore is the cumulative MSP payment for six rabi crops from 2014-15 to 2025-26, and ₹92,432 crore is the MSP value for wheat procurement in RMS 2026-27.
- Q4Medium
What is a primary objective of the government's decision to announce increased MSPs for Rabi crops, as indicated in the article?
Explanation: The article states that MSP provides price assurance and remunerative returns. It also specifically mentions that "enhanced MSPs for rabi crops are intended to ensure remunerative prices for farmers while incentivizing crop diversification." The other options are not supported by the article's content.
Frequently asked questions
1. What is the full form of CACP?
Commission for Agricultural Costs and Prices
2. What is the nodal Ministry?
Ministry of Agriculture and Farmers Welfare
3. What is the mSP Approval Date?
30 September 2026
4. What is the total Estimated Payment (RMS 2027-28)?
₹90,962 crore
5. What is the total Estimated Procurement (RMS 2027-28)?
324 lakh metric tonnes
6. What is the crop with Highest Absolute MSP Increase?
Safflower (₹675/quintal)
7. What is the crop with Highest Margin Over Cost?
Wheat (106%)
8. What is the key Procurement Agency for Pulses/Oilseeds?
NAFED (National Agricultural Cooperative Marketing Federation of India Ltd.)
9. What is the digital Platform by NAFED?
e-Samriddhi
10. What is the digital Platform by NCCF?
e-Samyukti
11. What is the scheme for Pulses/Oilseeds Procurement?
PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan)
12. What is the minimum Margin Over Cost?
50%
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- Original29 October 2026 · Read story
