What Is MSP? Law in detail

You may have heard the terms like 3 Farm Laws, people often call them the 3 Black Laws. We will get a brief about these laws, MSP, APMC, and the solutions people have been talking about.


  •  It is also known as the core of agriculture revolutions.
  • It ensures farmers with a minimum and worthy price at which they can sell their produce.
  • This ensures they get paid well enough.
  • It was introduced at the time of Independence when it was observed that the exploitation of farmers was increasing.
  • Example – When it was introduced first the price for wheat was fixed at Rs 54 per quintal. I am a farmer and going to sell my potato to a trader so I am aware of the minimum price of my potato in the market.

How did MSP start?

 The story goes at the time of the 1950s when the country got freedom. During the time farmers had no resources and knowledge about selling their produce directly to the consumers. That was a reason why they were exploited by money lenders and traders who were believed to be the center of the distribution system at that time.

 Hence the farmers were being exploited and the suicide ratio was increasing, the government of India thought of a way where they introduced (APMC) Agriculture Produce Market Committee to the distribution system.

 The committee was formed at the state level where the farmers could sell their products to the market and they were offered MSP which ensured the minimum payment they would receive. 


  • It is a committee working under state government since agriculture marketing is a subject of the state that includes markets/mandis.
  • The mandis help in regulating the notified agricultural produce and livestock.
  • APMC was introduced to control the exploitation and distress sale by the moneylenders and traders.
  • It ensures a worthy price and timely payments to the users.
  • They also ensure farmers with (MSP)Minimum Support Price.


  • It was observed that APMC was a bit overpowered when it comes to providing licenses to the traders which resulted in the “License Raj”.
  • Licensed commission agents started forming their cartels.
  • It resulted in farmers with no choice rather than selling their produce to that specific trader.
  • There were also rumors that the flaws also included the formation of mafias in some places and cartelization.


 At the time MSP covers 23 crops which includes cereals such as bajra, wheat, maize, paddy barley, ragi, and jowar; pulses like tur, chana, Masur, urad, and moong; oilseeds such as safflower, mustard, niger seed, soya bean, groundnut, sesame, and sunflower. It also includes some commercial crops like jute, cotton, copra, and sugarcane.

  • The government examines the production and demand for a crop at the starting of every cropping season and that is when it announces the MSP for each crop.
  • The recommendation for choosing MSP is based on some pre-fixed formulae.
  • Some of these variables are also known as A2, FL, and C2.
  • One can also say the MSP is calculated after adding all of these.


  • The biggest advantage that MSP ensures is that it guarantees farmers that they will get a fair price.
  • It opens up the path for farmers to sell their produce.
  • At the time of payment, the farmers get their wages transferred directly to their bank account which helps to protect them from middlemen and other corruption.
  • If the production of a certain crop is higher that year then APMC guarantees that the farmers will get the MSP.
  • Another advantage is that MSP is decided at the start of every cropping season so the government also gets the idea about other factors and considers them.

India Govt and MSP

To look into this topic we have to take a look back into the year 2020 when the Farm act was introduced.

  • Back in June 2020, the government made 3 ordinances related to agriculture and farmers.
  • The laws aimed to change the way agricultural produce was marketed, sold, and stored.
  • These three ordinances were named as 3 Farm Laws. In September 2020 the law was successfully asserted by the president.
  • Since then there has been a protest against the farm laws by the farmers of Punjab, Haryana, and other states. 

Following were the three laws passed-

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
  • This law allows farmers to engage and trade outside the physical markets, allowing them to sell their produce wherever they want in the country.
  • This law faced the drawback that outside the physical market there won’t be any governing body like APMC so it will be easier to exploit farmers.

       2.  Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

  • This act seeks to provide farmers with outlines to buy and engage in contract farming.
  • There is no mention of MSP that the farmer will be offered.

        3.   Essential Commodities (Amendment) Act, 2020

This law seeks to restrict the power and involvement of the government with the production, supply, and distribution of the produce.

The act removes some food items from the essential commodities list. It includes pulses, cereals, edible oils, potatoes, and onions.

Farm Laws Repealed!

Recently in an announcement, Prime Minister Narendra Modi repealed the Farm Laws. On the occasion of Gurupurab, 19th November 2022, Prime Minister Narendra Modi made this announcement to the people apologizing to the farmers.

He also requested the farmers protesting to go back to their families and farms and stop protesting.

The repeal bill was signed off by the president of India after passing by both houses.



On 24th November 2020 almost after a year, the farm laws were passed and it was announced by the honorable PM Narendra Modi about the rollback of the farm laws.


Agriculture comes into the hands of the state list under the Indian constitution. But, entry 33 in the concurrent list empowers both central and state governments to conduct the production and supply of produce.

Leave a Reply

Your email address will not be published.