Key Concepts & Self-Assessment15 Key Facts
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#1
The Agricultural Prices Commission was instituted in January 1965 based on recommendations of the Foodgrains Prices Committee chaired by L. K. Jha.
#2
In 1985, the Agricultural Prices Commission was officially re-designated as the Commission for Agricultural Costs and Prices (CACP).
#3
The CACP functions as an attached statutory advisory agency under the Ministry of Agriculture and Farmers Welfare, Government of India.
#4
The CACP recommends MSP for 22 mandated crops: 14 Kharif season crops, 6 Rabi season crops, and 2 commercial crops (jute and copra).
#5
For sugarcane, the Fair and Remunerative Price (FRP) is determined under the Sugarcane (Control) Order, 1966, instead of a standard Minimum Support Price.
#6
In addition to the 22 mandated crops, MSP for de-husked coconut is fixed based on the MSP of copra.
#7
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.
#8
Cost A2+FL encompasses Cost A2 plus the imputed economic value of unpaid family labor engaged in farm cultivation activities.
#9
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.
#10
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.
#11
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.
#12
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.
#13
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.
#14
The National Agricultural Cooperative Marketing Federation of India (NAFED) acts as the central nodal agency for procurement of oilseeds and pulses under MSP operations.
#15
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).
Subject Specialist Commentary
Analytical perspective & practical exam advice from the Master10 academic board
The Minimum Support Price serves as a public safety net ensuring farmers do not suffer catastrophic losses during bumper harvest gluts. Originally conceived in 1965 on the advice of the L.K. Jha Committee, price recommendations are prepared by the Commission for Agricultural Costs and Prices before every sowing season. The system covers twenty-two mandated crops across foodgrains, pulses, and oilseeds, with procurement handled by government agencies like the Food Corporation of India and NAFED.
For UPSC and State PSC exams, always distinguish between the recommending body and the approving authority. CACP only recommends prices, whereas the Prime Minister-headed Cabinet Committee on Economic Affairs takes the final decision. A frequent exam trap confuses cost metrics: the central formula guarantees fifty percent returns over Cost A2+FL (paid costs plus family labour), whereas the National Commission on Farmers led by M. S. Swaminathan advocated fifty percent above the broader comprehensive Cost C2.
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