Assessing the case for a legal MSP

Greater clarity on its precise connotation could help resolve the continuing standoff between the government and farmers

The year-long standoff between the government and the farmers ended with the government’s decision to repeal the three farm laws. However, there is now a new bone of contention: the demand for a legally guaranteed Minimum Support Price (MSP) for all 23 crops for which an MSP is announced annually by the government. In order to assess the merits of this demand, we must first try to understand the thinking behind it.

What is not widely recognised is that due to characteristics unique to farming, market failure is rampant in agriculture. Which means that unregulated free markets throw up outcomes that