Context: 

In a significant move to support farmers and enhance the jute industry, the Union Cabinet has approved an increase in the Minimum Support Price (MSP) for raw jute. 

·        The new MSP for the 2025-26 marketing season has been set at Rs 5,650 per quintal, reflecting a Rs 315 rise from the previous year's price.

Comparison to 2024-25 MSP:

The hike for the 2025-26 surpasses the Rs 285 increase implemented for the 2024-25 marketing season when the MSP was raised to Rs 5,335 per quintal. This latest increase is expected to further incentivize farmers to grow jute, which is seen as a crucial step to boost jute production in the country.

By raising the MSP, the government is not only providing better returns for jute farmers but is also promoting sustainability in the jute sector, which plays a vital role in the rural economy.

About Minimum Support Price (MSP)

Minimum Support Price (MSP) is the minimum price at which the government guarantees to purchase certain crops from farmers.

·        It is considered a protective measure that ensures farmers receive a price that is remunerative and protects them from market fluctuations that might lead to losses.

·        The MSP serves as a safety net for farmers, ensuring they have a guaranteed income for their produce, especially in times of market volatility.

Key Features of MSP

·         Government Procurement: The MSP is the price at which government agencies, such as the Food Corporation of India (FCI) and other state agencies, procure crops from farmers. This procurement happens if market prices fall below the MSP, ensuring farmers are not forced to sell their produce at a loss.

·         Recommendations by CACP: The Commission for Agricultural Costs and Prices (CACP), which operates under the Ministry of Agriculture, is responsible for recommending MSPs. The commission evaluates the cost of production, trends in market prices, and other factors to determine an appropriate MSP for various crops. It primarily recommends MSPs for 23 crops, including 22 mandated crops and the Fair and Remunerative Price (FRP) for sugarcane. However, MSP is declared for 25 crops, including toria and de-husked coconut.

·         No Statutory Backing: While MSP plays a critical role in safeguarding farmers’ income, there is no statutory backing or law mandating its enforcement. The government is not legally obligated to procure crops at the MSP, even if market prices fall below the announced price. Hence, the MSP acts as a guideline rather than a legally enforceable price.

The Role of MSP in Indian Agriculture

MSP is a crucial tool in India's agricultural policy, aimed at ensuring farmers receive a fair price for their produce. While it offers some financial security, the absence of legal backing means the system is dependent on the government’s willingness to intervene in the market. This makes MSP a vital, though sometimes controversial, part of the agricultural landscape, ensuring that farmers are protected from drastic price drops and encouraging them to invest in and expand crop production.