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Minimum Support Prices for Agricultural Commodities in India: Do Price Floors Really Matter?

Inder Majumdar and Joe Janzen - Joe Janzen - India is an agricultural powerhouse. The country is the world’s single largest producer and consumer of milk and pulses. It is the second largest producer of rice, wheat, sugarcane, and cotton (FAO 2022). In an effort to encourage substantial domestic production, the Indian government provides annual price guidelines for a set of 23 commodities called the Minimum Support Price (MSP). The MSP is intended to provide a price floor that supports farmers producing commodities crucial to domestic food security. Proponents of the MSP claim that without federally mandated price floors, farmers who grow economically important crops would be subject to excessively volatile market prices. ....

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