Farming is a business of risk and rewards. Natural calamities, demand and supply disruptions can cause heavy losses for the hard-working and dedicated farmers. 

Therefore, in the 1960s, agricultural price policy was formulated to ensure food security & provide fair prices to the farmers irrespective of fluctuations in prices in the market.

The Commission of Agricultural Costs and Prices considers, production cost, input price, market trends, demand & supply, etc. for recommending fair prices. 

CACP recommends MSP (Minimum Selling Price) for various crops in the country to ensure farmer's safety. Because of this crops can not be sold below the recommended price. 

CACP recommends MSPs for 14 Kharif crops, 7 Rabi crops and 4 Calender year crops such as Copra, De-husked coconut, Jute, and Sugarcane. 

It prevents fall in prices due to overproduction, provides price stability in the market, ensures minimum selling price, increases food production and exports. 

As prices cannot fall, therefore poorest section of the society can not afford food easily, it penalizes consumers with higher prices and creates malpractices in the market.