Ensuring livelihoods: A critical review of the minimum support price's impact on small and marginal farmers

Abstract

The Minimum Support Price (MSP) policy is a vital government intervention to safeguard the income and livelihoods of small and marginal farmers, ensuring economic stability and food security. This paper examines the historical evolution of MSP in India, its operational mechanisms, and the significant impact on agricultural sustainability and farmer welfare. MSP guarantees a price floor for agricultural produce, encouraging crop diversification and mitigating risks such as market volatility, input costs, and climatic challenges. While the system has positively impacted agricultural production, particularly in rice and wheat surplus regions like Punjab and Andhra Pradesh, its effectiveness is inconsistent across regions. Kerala’s decentralized procurement system serves as a model for other states, emphasizing the importance of regional adjustments in policy implementation. Despite the benefits of MSP, various challenges, such as limited awareness among farmers, logistical bottlenecks, and market distortions caused by bonuses, limit its efficacy. This paper suggests reforms to enhance MSP's coverage and efficiency through better awareness, infrastructure investments, and policy restructuring to ensure that the benefits reach a wider segment of the farming community.