Ever wondered how MSP for crops is calculated ?

Below is an attempt to present a simplified view, followed by some pertinent questions (just to have better understanding, not taking sides)&

The MSP is usually based on the recommendations by the Commission for Agricultural Costs and Prices (CACP

This estimation is usually done based on three types of calculation methods. These are A2 method, A2+FL method and C2 method.
As per the A2 method, MSP is set 50% higher than the amount farmer spends on farming including spending on seeds, fertilisers, pesticides, and labour.
C2 method includes A2 factors + economic value of the efforts of family members working on the farm + the value of other spending including rent and other assets. After calculating these, MSP is set at 50% above the derived amount.
A2+FL method is middle ground between the other methods were the MSP is set 50% higher than the amount that derives the amount farmer spend on farming on seeds, fertilisers, pesticides, and labour and the value of labour provided by the family members for agriculture.
The present MSP has been calculated based on the A2+FL method
Now some questions ...

With such varied geography, which requires different inputs, labour, methods... and hence different costs of growing same crop, how do you define a single MSP for a crop across nation ?
MSP without quality attached to it cannot be transacted in market. How do you go about ‘freshness’ of vegetables?
How do we go about ‘oil content’ in peanut 🥜 which often dictates prices by bulk commodity purchases. ?
How does government go about procuring ALL crop at MSP where crop production is in huge surplus (more than we need). Note that we have ~ 95 million tonnes of grain rotting in FCI

More from Farmer protest

MyGov has released an excellent booklet "Putting Farmers First" which not only covers in detail the current #FarmLaws2020 but also lays out in structured summarized format the work done by the Modi government in the last 6 years.
Some snippets.


On the current #FarmLaws2020, there is much debate as to what may or may not happen.

WHAT WILL NOT HAPPEN
MSP will not go away; APMC Mandis will not close; Farmers land cannot be taken way

WHAT WILL HAPPEN
Farmers can sell in Mandis & outside; More income; More jobs. 2/10


So what was the need for #FarmLaws2020 reforms when as per Left groups all was well?

1) Fragmented markets
2) Insufficient markets
3) Inadequate Infra
4) Inadequate credit

While rest of the economy was opening up, farmers were restricted. Result - Huge Income Disparity. 3/10


What about the charge that there has not been adequate consultation before #FarmLaws2020 were passed?

THE TRUTH: Two decades of consultation. Farm Reforms are perhaps the only policy reforms where there has been consensus movement in SAME DIRECTION by multiple governments. 4/10


So what are the benefits of the law that allows the farmers to sell in APMC Mandis as at present but also, and importantly, anywhere outside?

1) Better price discovery for farmer
2) Converts present buyers market to sellers (farmer) market
3) Better logistics in rural areas
5/10

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