Government MSP Procurement and Policy Framework
The Ministry of Agriculture & Farmers Welfare has detailed India's Minimum Support Price (MSP) mechanism for 22 mandated agricultural crops, which is determined annually based on recommendations from the Commission for Agricultural Costs & Prices (CACP) after consulting State Governments and Central Ministries. Since the Union Budget 2018-19, MSPs have been set at levels providing at least a 50% margin over the all-India weighted average cost of production.
Procurement Mechanism and Agencies
Government procurement occurs when market prices fall below MSP levels. Cereals and coarse cereals are procured through Food Corporation of India (FCI) and designated State Agencies, while pulses, oilseeds, and copra are procured under the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) scheme through National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) and National Co-operative Consumers' Federation of India Ltd. (NCCF). Cotton and jute are procured by Cotton Corporation of India (CCI) and Jute Corporation of India (JCI), respectively.
Operational Improvements and New Initiatives
Procurement operations have been enhanced with adequate procurement centers established by State Governments, including temporary purchase centers at key points. The process now ensures direct payment to farmers' bank accounts with Aadhaar and land record linkages. From 2024-25, a new Price Differential Payment (PDP) component under the Market Intervention Scheme (MIS) allows direct payment of the difference between Market Intervention Price and selling price to farmers of perishable crops. Additionally, storage and transportation costs for TOP crops (Tomato, Onion, Potato) are reimbursed to central nodal agencies and State designated agencies when transported from producing to consuming states.
Procurement Statistics and Impact
From 2021-22 to 2025-26 (up to June 2026), total procurement reached 5,781 Lakh Metric Tonnes (LMT) with MSP value of ₹14.58 lakh crore. Comparing historical periods, procurement increased from 6,987 LMT during 2004-14 to 12,819 LMT during 2014-26 (up to June 2026), while MSP payments to farmers grew from ₹7.41 lakh crore to ₹27.80 lakh crore over the same periods. The government is implementing Mission for Aatmanirbharta in Pulses till 2030-31 to reduce import dependence and achieve self-sufficiency, with procurement of Tur, Urad, and Masur undertaken through NAFED and NCCF.