MSP, the minimum support price, is the price per quintal that the Government of India announces for 22 mandated crops ahead of each season, and at which public agencies buy when they procure. For the 2027-28 rabi marketing season, wheat is set at INR 2,610 a quintal; for the 2026-27 kharif season, common paddy is INR 2,441, according to the Cabinet decisions published by the Press Information Bureau.
For traders, millers and processors, the support price matters twice over. It is a reference price in crops the government buys at scale, and it drives the cost of the grain the state holds and later sells. This explainer covers how the rates are set, the notified prices, how procurement works, what it costs and the argument over a legal guarantee. All figures are as officially published up to 31 October 2026.
What MSP is and which crops it covers
The Economic Survey 2025-26 lists the 22 mandated crops: 14 kharif crops (paddy, jowar, bajra, ragi, maize, arhar or tur, moong, urad, cotton, groundnut, sunflower seed, soybean, sesamum and nigerseed), six rabi crops (wheat, barley, gram, masur, rapeseed and mustard, and safflower) and two commercial crops, jute and copra.
PIB has used a different total: a release of 18 December 2024 says the government fixes MSP for 24 crops. The mandated list is 22. A Lok Sabha answer of 19 July 2022 explains that MSPs for toria and de-husked coconut are also announced, based on the rates for rapeseed and mustard and for copra, and that sugarcane has a separate fair and remunerative price (FRP). Counting the two derived prices gives 24, which on our reading explains the higher figure.
The Commission for Agricultural Costs and Prices (CACP) recommends the rates, and the Cabinet Committee on Economic Affairs, chaired by the Prime Minister, approves them. PRS Legislative Research describes MSP as the assured price announced by the Centre at which foodgrains are procured from farmers by central and state governments and their agencies.
That definition is the heart of the matter. It is what public agencies pay when they buy. It does not oblige a private trader to pay the same, and in most crops the government buys only a small share of the harvest. Down To Earth, reporting on a parliamentary committee in December 2024, put it plainly: the Centre usually fixes support prices for 22 commodities, but assured procurement mostly happens only for rice and wheat.
How the minimum support price is calculated: A2+FL and C2
Since 2018-19 the government has followed the Union Budget 2018-19 announcement that the minimum support price should be at least 1.5 times the all-India weighted average cost of production. Each Cabinet release repeats that principle and prints a cost column beside the new rates.
The cost in that column is defined in a footnote: all paid-out costs, such as hired labour, bullock or machine labour, rent for leased land, seed, fertiliser, manure, irrigation charges, depreciation, interest on working capital and pump-set fuel or electricity, plus the imputed value of family labour. The releases do not use a label, but this is the cost measure known as A2+FL, defined below.
According to PRS Legislative Research’s analysis of the 2026-27 agriculture budget, A2 is the cost actually incurred, FL is the value of family labour, and C2 is a fuller cost that adds the rental value of owned land and interest on fixed capital. PRS notes that the National Commission on Farmers recommended in 2006 that support prices be at least 50% above the weighted average cost of production, and that the ministry adopted the 50% return in 2018-19.
Which cost the margin sits on changes the answer a great deal. Using CACP data, PRS calculates that the 2025-26 paddy rate was 1.5 times A2+FL but 1.1 times C2, and that wheat was 2.1 times A2+FL and 1.4 times C2. On our arithmetic from PRS’s figures (an MSP of INR 23.7 a kg against INR 15.8 for A2+FL and INR 20.9 for C2), the same paddy rate is a 50% margin on one cost base and about 13% on the other, which is why the formula is contested.
MSP for kharif 2026-27: the notified rates
The Cabinet Committee on Economic Affairs approved higher support prices for 14 kharif crops for the 2026-27 marketing season on 13 May 2026. The rates, in INR per quintal with the increase over 2025-26, are:
- Cereals: paddy (common) 2,441 (up 72); paddy (Grade A) 2,461 (up 72); jowar (hybrid) 4,023 (up 324); jowar (maldandi) 4,073 (up 324); bajra 2,900 (up 125); ragi 5,205 (up 319); maize 2,410 (up 10).
- Pulses: tur or arhar 8,450 (up 450); moong 8,780 (up 12); urad 8,200 (up 400).
- Oilseeds: groundnut 7,517 (up 254); sunflower seed 8,343 (up 622); soybean (yellow) 5,708 (up 380); sesamum 10,346 (up 500); nigerseed 10,052 (up 515).
- Cotton: medium staple 8,267 (up 557); long staple 8,667 (up 557).
The release says the expected margin over cost is highest for moong (61%), followed by bajra and maize (56% each) and tur (54%); its table puts urad at 51% and the other crops at 50%. The cost of production it gives for common paddy is INR 1,627 a quintal. The largest absolute increases went to sunflower seed, cotton, nigerseed and sesamum, in line with the government’s stated aim of steering growers towards pulses, oilseeds and nutri-cereals.
Maize stands out for the opposite reason: its rate rose by only INR 10. TAD lists every notified rate for both seasons on its support price board for kharif 2026-27 and rabi 2027-28.
MSP for rabi 2027-28: the notified rates
On 30 September 2026 the Cabinet approved higher prices for all six mandated rabi crops for the 2027-28 marketing season, according to the PIB release on the 2027-28 rabi prices. The rates in INR per quintal, with the increase over 2026-27 and the margin over cost, are:
- Wheat: 2,610, up 25, margin 106%.
- Barley: 2,286, up 136, margin 58%.
- Gram: 5,958, up 83, margin 59%.
- Lentil (masur): 7,390, up 390, margin 92%.
- Rapeseed and mustard: 6,613, up 413, margin 96%.
- Safflower: 7,215, up 675, margin 50%.
Wheat’s cost of production for the season is given as INR 1,264 a quintal, which is why its margin is more than double the 50% floor even though the increase was the smallest of the six. Our report on the rabi price decision for 2027-28 covers the announcement in more detail.
The two decisions bracket the trading year. Kharif rates were approved on 13 May 2026, ahead of sowing, and rabi rates on 30 September 2026, the same week states were asked to finalise rabi crop plans. Wheat at INR 2,610 applies to grain procured in the 2027-28 rabi marketing season, so it is the floor that flour millers and traders will be bidding against when that crop is marketed.
How procurement at MSP works: FCI, the states and PM-AASHA
Wheat and rice
Wheat and paddy for the public distribution system are bought at notified prices by the Food Corporation of India or by state governments under the decentralised procurement scheme, according to PRS’s analysis of the 2026-27 food budget. Decentralised procurement covered about 65% of wheat and rice procurement in 2024-25. As of December 2025, 17 states ran it for paddy and seven for wheat.
Buying is heavily concentrated. In 2024-25, 92% of wheat procurement came from Punjab, Haryana and Madhya Pradesh, and 65% of paddy procurement from Punjab, Chhattisgarh, Telangana, Odisha and Uttar Pradesh. PRS also reports that the government procured 23% of the wheat and 49% of the rice produced in 2024-25. Punjab’s paddy procurement for 2026-27 shows how the season runs on the ground.
Pulses, oilseeds and copra
For pulses, oilseeds and copra, the vehicle is PM-AASHA, launched in September 2018. In September 2024 the Cabinet approved its continuation with three components, according to a PIB release on PM-AASHA: the Price Support Scheme (PSS), the Price Deficiency Payment Scheme (PDPS) and the Market Intervention Scheme (MIS). Central nodal agencies NAFED and NCCF buy alongside state agencies.
- PSS: physical procurement at MSP, on a state’s request, where the state exempts the purchases from mandi tax. Sanctions start at up to 25% of a state’s production; the ceiling was lifted for tur, urad and masoor for 2024-25.
- PDPS: for oilseeds, the Centre pays pre-registered farmers the gap between MSP and the selling or modal price, up to 15% of the support price, on up to 40% of production.
- MIS: for perishables not covered by MSP, such as tomato, onion and potato, when prices fall at least 10% below the previous normal season.
PIB says that between 2018-19 and December 2024 about 195.39 lakh tonnes of pulses, oilseeds and copra were bought at a support-price value of INR 1,07,433.73 crore from 99,30,576 farmers. PRS puts procurement under PSS at about 3% of pulses production in 2024-25.
Approvals for the 2026-27 kharif crop are under way. On 30 September 2026 the Centre approved INR 5,547.99 crore of PSS procurement in Uttar Pradesh, Karnataka and Telangana, All India Radio reported, including 4.66 lakh tonnes of tur in Uttar Pradesh; TAD’s report on the approval has the detail. Two days earlier the agriculture minister, Shivraj Singh Chouhan, told states that NAFED and NCCF would buy directly from farmers where states cannot procure on time, according to a PIB release of 28 September 2026.
What the minimum support price costs the exchequer
The Cabinet releases give the scale of payments. Between 2014-15 and 2025-26, the MSP amount paid to growers of the 14 kharif crops was INR 18.99 lakh crore, of which INR 16.08 lakh crore went to paddy growers. Over the same years, INR 8.36 lakh crore was paid to growers of the six rabi crops, INR 7.31 lakh crore of it for wheat.
Paddy procurement in that period was 8,418 lakh tonnes and wheat 3,715 lakh tonnes. For 2004-05 to 2013-14 the releases give INR 4.75 lakh crore for the kharif crops and INR 2.65 lakh crore for the rabi crops; neither series is adjusted for inflation.
Most of the cost lands in the food budget, because procured grain is distributed free. PRS reports that the Department of Food and Public Distribution has been allocated INR 2,35,047 crore for 2026-27, of which INR 2,27,429 crore is for the Pradhan Mantri Garib Kalyan Anna Yojana. PM-AASHA has INR 7,200 crore in the agriculture budget for 2026-27.
In 2024-25 the Food Corporation of India’s economic cost, the full cost of procuring, storing and distributing grain, was INR 28.5 a kg for wheat and INR 40.4 a kg for rice (revised estimates). About 80% of that is the pooled cost of grain, mainly MSP payments to farmers, and PRS says the rise in economic cost has mainly been driven by higher support prices.
Stocks add to the bill. PRS, citing the Department of Food and Public Distribution, says that on 1 January 2026 wheat stocks were about twice the buffer norms and rice about four times. The Economic Survey 2025-26 says procurement of rice and wheat has grown faster than food security requires, leaving persistently high buffer stocks and rising carrying costs.
The debate over a legal MSP guarantee
The case for. A legally binding minimum support price has been a long-standing demand of farmer unions, which were protesting at the Shambhu and Khanauri border points between Punjab and Haryana when Parliament’s Standing Committee on Agriculture, Animal Husbandry and Food Processing reported on 17 December 2024. The committee, chaired by Charanjit Singh Channi, recommended a legally binding MSP and asked the department to publish a roadmap, Down To Earth reported.
The committee argued that assured income would encourage farmers to invest, steady production and support rural growth. It also pointed to how little is bought outside wheat and rice, citing procurement of 0.37% for gram against 23% for wheat in its example.
The case for caution. PRS notes that the Committee on Doubling Farmers’ Income (2018) warned that legalising MSP for all crops could raise retail inflation, as the higher cost of crops sold at that price is passed on to consumers. The Economic Survey 2025-26 goes a different way from both camps: rather than altering MSP or weakening procurement, it proposes using savings from better stock management to pay for voluntary diversification away from rice and wheat.
The Survey also suggests that, over time, public support could shift from physical procurement towards price-deficiency payments, bonuses and assured offtake for a wider range of crops. None of the 2026 Cabinet price releases mentions a legal guarantee; the government’s approach in 2026 has been annual increases at or above 1.5 times cost plus case-by-case PSS sanctions.
What MSP means for traders, millers and processors
What follows is our analysis, based on the official figures above. The first point is that MSP is a strong price floor only where the state buys in bulk, which in practice means wheat and paddy in the main procuring states. Elsewhere it is a reference price that markets can and do undercut: PIB said in December 2024 that soybean prices were well below MSP at the start of that kharif season, prompting record PSS buying.
Rice and flour millers
For rice millers, the paddy MSP of INR 2,441 sets the floor in procuring states, and milling charges are part of the statutory charges in the Food Corporation of India’s economic cost. For flour millers, the INR 25 rise in the 2027-28 wheat MSP is small, and with wheat stocks at about twice the norms on 1 January 2026, how and when the government releases grain into the open market matters as much as the support price itself.
Oilseed crushers, pulse processors and traders
The larger increases for safflower, mustard, masur, sunflower seed and the pulses favour growers of crops India imports, which our edible oil explainer covers. For crushers and dal millers, the practical issue is PSS: purchases by NAFED and NCCF at MSP can be large next to local arrivals, as the September 2026 sanction of 4.66 lakh tonnes of tur in Uttar Pradesh shows. Traders should track state-wise sanctions, not just the headline rate.
Warehousing, logistics and agri-fintech
Procurement moves large volumes through a few states and into storage. PRS reports that the Food Corporation of India owned 154 lakh tonnes of storage capacity in December 2025 and hired 327 lakh tonnes. For warehouse operators listed in our post-harvest and storage supplier guide, that hired capacity is a business line. PSS payments go directly to farmers’ bank accounts, All India Radio reported, much like PM Kisan transfers, which makes procurement season a high-liquidity window for rural lenders.
MSP: frequently asked questions
What is the MSP of wheat for 2027-28?
The MSP of wheat for the 2027-28 rabi marketing season is INR 2,610 a quintal, up INR 25 from INR 2,585 for 2026-27. The Cabinet Committee on Economic Affairs approved it on 30 September 2026. The release gives a cost of production of INR 1,264 a quintal and a margin over cost of 106%, the highest of the six rabi crops.
What is the MSP of paddy for 2026-27?
For the 2026-27 kharif marketing season, the MSP of common paddy is INR 2,441 a quintal and Grade A paddy INR 2,461, both up INR 72 on 2025-26. The Cabinet approved the rates on 13 May 2026. The release gives a cost of production of INR 1,627 a quintal for common paddy, a margin of 50%.
How is the minimum support price calculated?
The CACP recommends rates and the Cabinet decides. Since 2018-19 the government has set MSP at least 1.5 times the all-India weighted average cost of production, using a cost that covers paid-out costs plus the imputed value of family labour, known as A2+FL. Critics compare the rates with C2, a fuller cost that adds owned land rent and interest on fixed capital.
Which crops have an MSP?
There are 22 mandated crops: 14 kharif crops, including paddy, maize, tur, moong, urad, groundnut, soybean and cotton; six rabi crops, which are wheat, barley, gram, masur, rapeseed and mustard, and safflower; and two commercial crops, jute and copra. MSPs for toria and de-husked coconut are derived from the mustard and copra rates, and sugarcane has a separate FRP. Large-scale procurement at MSP is mostly of wheat and rice.
Is MSP legally guaranteed?
No. MSP is announced by the Cabinet and paid when public agencies procure, but no law makes it binding on all buyers. A parliamentary standing committee recommended a legally binding MSP in December 2024, echoing farmer unions. Others, including the Committee on Doubling Farmers’ Income, have warned that legalising it for all crops could raise retail inflation.
Who buys crops at MSP?
The Food Corporation of India and state agencies buy wheat and paddy, with decentralised procurement covering about 65% of the total in 2024-25. NAFED and NCCF buy pulses, oilseeds and copra under PM-AASHA’s Price Support Scheme at the request of states. On 30 September 2026 the Centre approved INR 5,547.99 crore of such purchases in three states.
