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Which of the following factors are considered by Commission for ‘Agricultural Costs and Prices’ (CACP) while determining MSP for crops? I. Price trend in the domestic and international markets. II. Inter-crop price parity. III. Terms of trade between agricultural and non-agricultural sectors. IV. Cost of production.

Which of the following factors are considered by Commission for ‘Agricultural Costs and Prices’ (CACP) while determining MSP for crops? I. Price trend in the domestic and international markets. II. Inter-crop price parity. III. Terms of trade between agricultural and non-agricultural sectors. IV. Cost of production. Correct Answer I, II, III, IV 

The correct answer is I, II, III, IV .

Key Points

  • The Commission for Agricultural Costs & Prices (CACP) is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India.
  • It came into existence in January 1965. It is mandated to recommend minimum support prices (MSPs) to incentivize the cultivators to adopt modern technology and raise productivity and overall grain production in line with the emerging demand patterns in the country. 
  • Determinants Of MSP While recommending price policy of various commodities under its mandate, the Commission keeps in mind the various Terms of Reference (ToR) given to CACP in 2009.
  • Accordingly, it analyzes
    • demand and supply
    • cost of production
    • price trends in the market, both domestic and international
    • inter-crop price parity
    • terms of trade between agriculture and non-agriculture
    • a minimum of 50 percent as the margin over the cost of production likely implications of MSP on consumers of that product.
  • It may be noted that cost of production is an important factor that goes as an input in the determination of MSP, but it is certainly not the only factor that determines MSP.

Related Questions

Commission for Agriculture Costs and Prices (CACP) submits its recommendation for MSPs of agricultural commodities in form of Price Policy Reports. Consider the following statements: 1. CACP is a statutory body formed under Agriculture Price Commission Act, 1962. 2. Currently MSP is devoid of any legal backing except for Sugarcane to some extent. 3. Before submitting a Price Policy Report for any crop, CACP also analyses demand and supply and the implications of MSP on consumers of that product along with the costs of production. Which among the following statements is/are incorrect?
With regard to the Commission for agricultural costs and Prices (CACP) which of the given statements is FALSE? 1. CACP was established with a view to evolve a balanced and integrated structure and is mandated to advice on the price policy (MSP) of 23 crops 2. CACP submits its recommendation in the form of price policy reports every year
Which of the following factors are considered by the 'Commission for Agricultural Costs and Prices (CACP) while determining Fair and Remunerative Price (FRP) for sugarcane? I. Availability of sugar to consumers at a fair price. II. Price at which sugar produced from sugarcane is sold by sugar producers. III. Recovery of sugar from sugarcane. IV. Return to the growers from alternative crops and the general trend of prices of agricultural commodities
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