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Minimum Support Price & CACP GK Questions & Answers
The Minimum Support Price (MSP) mechanism serves as India's primary agricultural market intervention framework, engineered to guarantee assured floor remuneration to agricultural producers and protect farm income against market gluts. Institutional price recommendations are formulated by the Commission for Agricultural Costs and Prices (CACP), established in January 1965 as the Agricultural Prices Commission following the L. K. Jha Committee report and restructured under its current nomenclature in 1985. The CACP currently recommends MSPs for twenty-two mandated agricultural commodities—encompassing fourteen Kharif crops, six Rabi crops, and two commercial crops—alongside the statutory Fair and Remunerative Price (FRP) for sugarcane determined under the Sugarcane (Control) Order, 1966. Pricing assessments evaluate three standardized cost methodologies: A2 (direct operational expenses on seeds, chemical inputs, fuel, and hired labor), A2+FL (incorporating the imputed economic value of unpaid family labor), and Comprehensive Cost C2 (integrating imputed rental value of owned land and interest on fixed capital). Although the National Commission on Farmers chaired by Professor M. S. Swaminathan recommended setting MSP at least fifty percent over Cost C2, the Union Government adopted fifty percent over Cost A2+FL beginning with the 2018–19 Union Budget. Final statutory price determinations are formally approved by the Cabinet Committee on Economic Affairs (CCEA).
High-yield conceptual summaries for competitive exams and rapid revision.
The Agricultural Prices Commission was instituted in January 1965 based on recommendations of the Foodgrains Prices Committee chaired by L. K. Jha.
In 1985, the Agricultural Prices Commission was officially re-designated as the Commission for Agricultural Costs and Prices (CACP).
The CACP functions as an attached statutory advisory agency under the Ministry of Agriculture and Farmers Welfare, Government of India.
The CACP recommends MSP for 22 mandated crops: 14 Kharif season crops, 6 Rabi season crops, and 2 commercial crops (jute and copra).
For sugarcane, the Fair and Remunerative Price (FRP) is determined under the Sugarcane (Control) Order, 1966, instead of a standard Minimum Support Price.
In addition to the 22 mandated crops, MSP for de-husked coconut is fixed based on the MSP of copra.
Cost A2 covers all paid-out expenses incurred by the farmer on seeds, fertilizers, chemical pesticides, hired labor, diesel, machinery fuel, and leased land rent.
Cost A2+FL encompasses Cost A2 plus the imputed economic value of unpaid family labor engaged in farm cultivation activities.
Cost C2 (Comprehensive Cost) represents total economic cost, including Cost A2+FL plus the imputed rental value of owned land and interest on fixed capital assets.
The National Commission on Farmers (2004–2006), headed by Professor M. S. Swaminathan, recommended setting MSP at a minimum of 50% above the comprehensive cost C2.
In the Union Budget 2018–19, the Government announced the policy benchmark of fixing MSP at a minimum of 1.5 times (50% margin) the Cost A2+FL.
The final decision on fixing the MSP for each agricultural crop is undertaken by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.
The Food Corporation of India (FCI), established under the Food Corporations Act, 1964, acts as the nodal agency for procurement of food grains at MSP.
The National Agricultural Cooperative Marketing Federation of India (NAFED) acts as the central nodal agency for procurement of oilseeds and pulses under MSP operations.
Pradhan Mantri Annadata Aay Sanraksan Abhiyan (PM-AASHA), launched in 2018, integrates the Price Support Scheme (PSS), Price Deficiency Payment Scheme (PDPS), and pilot Private Procurement and Stockist Scheme (PPSS).
The Minimum Support Price (MSP) for mandated agricultural commodities in India is announced by the Central Government on the recommendations of which expert statutory/attached body?
Verified Explanation
The Commission for Agricultural Costs and Prices (CACP), established in 1965 as the Agricultural Prices Commission, submits price policy reports recommending MSPs for 22 mandated crops and FRP for sugarcane.
2ID: GK-AGRI-00596
mediumRural Credit, NABARD & Agro-Schemes
The National Commission on Farmers, chaired by Dr. M. S. Swaminathan (2004-2006), famously recommended that the Minimum Support Price (MSP) should be set at least at what level?
Verified Explanation
The Swaminathan Commission in its fifth and final report (October 2006) recommended that the Minimum Support Price (MSP) should be at least 50% more than the comprehensive cost of production (C2).
3ID: GK-AGRI-00537
hardRural Credit, NABARD & Agro-Schemes
Which National Commission on Farmers (NCF), chaired by Dr. M.S. Swaminathan, recommended that the Minimum Support Price (MSP) should be at least 50% more than the weighted average cost of production (C2)?
Verified Explanation
The Swaminathan Commission's Fifth Report submitted in October 2006 recommended fixing MSP at a minimum of 50% above the comprehensive cost of production (C2 + 50%).
4ID: GK-AGRI-00057
hardRural Credit, NABARD & Agro-Schemes
In the calculation of Minimum Support Price (MSP) in India, what does the 'C2' cost formula advocated by the National Commission on Farmers encompass?
Verified Explanation
Comprehensive Cost (C2) includes all paid-out expenses in cash and kind (A2), family labour value (FL), plus the rental value of owned land and interest forgone on owned fixed capital assets.
5ID: GK-AGRI-00225
hardRural Credit, NABARD & Agro-Schemes
The National Commission on Farmers, headed by Dr. M.S. Swaminathan, recommended in its 2006 report that the Minimum Support Price (MSP) should be set at what minimum formula?
Verified Explanation
The Swaminathan Commission recommended that the MSP should be at least 50% more than the comprehensive weighted average cost of production (Cost C2 + 50%).
6ID: GK-AGRI-00418
hardRural Credit, NABARD & Agro-Schemes
In the calculation of Minimum Support Price (MSP) in India, what does the Comprehensive Cost metric 'C2' include over and above the Paid-out Cost + Family Labour (A2 + FL)?
Verified Explanation
Cost C2 is a comprehensive cost concept that includes all actual paid-out costs (A2), imputed value of unpaid family labor (FL), plus the rental value of owned land and interest on owned fixed capital assets.
7ID: GK-AGRI-00421
hardRural Credit, NABARD & Agro-Schemes
The National Commission on Farmers, constituted in February 2004 under the chairmanship of Dr. M. S. Swaminathan, famously recommended that the Minimum Support Price (MSP) should be at least how much above the weighted average cost of production (C2)?
Verified Explanation
The National Commission on Farmers (NCF, Swaminathan Commission) in its 5th and final report in October 2006 recommended that MSP should be at least 50% more than the weighted average cost of production (C2).
8ID: GK-AGRI-00538
hardRural Credit, NABARD & Agro-Schemes
What is the cost concept A2+FL utilized by CACP when calculating the benchmark for fixing the Minimum Support Price (MSP)?
Verified Explanation
A2+FL includes all actual paid-out expenses incurred by farmers on seeds, fertilizers, pesticides, labor, fuel, and irrigation (A2) plus the imputed value of unpaid Family Labor (FL).
9ID: GK-AGRI-00411
mediumRural Credit, NABARD & Agro-Schemes
Which statutory committee established in 1965 (originally as the Agricultural Prices Commission) recommends the Minimum Support Prices (MSP) for mandated agricultural crops in India?
Verified Explanation
The Commission for Agricultural Costs and Prices (CACP), an attached office of the Ministry of Agriculture and Farmers Welfare, recommends MSPs for 22 mandated crops and Fair and Remunerative Price (FRP) for sugarcane.
10ID: GK-AGRI-00049
easyRural Credit, NABARD & Agro-Schemes
Which body recommends the Minimum Support Prices (MSP) for mandated agricultural crops to the Government of India?
Verified Explanation
The Commission for Agricultural Costs and Prices (CACP), an attached office of the Ministry of Agriculture established in 1965, recommends Minimum Support Prices (MSP) for 22 mandated crops plus FRP for sugarcane.