Consider the following statements regarding Minimum Support Price…Consider the following statements regarding Minimum Support Price. 1. Commission for Agricultural Costs & Prices CACP) mandated to recommend minimum support prices is chaired by Union Minister. 2. CACP came into existence after LPG reforms, before reforms, it was the sole responsibility of the state government to recommend a Minimum Support Price for crops.Which of the above statements is/are correct?

🔑 Key Points
→ Commission on Agricultural Costs and Price:
→ 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. LPG reforms happened in 1991. Hence, statement 2 is incorrect.
→ The Commission for Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
→ The mandated crops include 14 crops of the Kharif season, 6 rabi crops, and 2 other commercial crops.
→ In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.
→ It is an advisory body whose recommendations are not binding on the Government.
→ It is not headed by Union Minister. Hence, statement 1 is incorrect.
→ So, the correct answer is option 4.

📝 Additional Information
→ Minimum Support Price (MSP):
→ MSP is a “minimum price” for any crop that the government considers as remunerative for farmers and hence deserving of “support”.
→ It is also the price that government agencies pay whenever they procure a particular crop.

→ Mechanism of arriving at Production Cost:
→ The CACP does not do any field-based cost estimates itself.
→ It makes projections using state-wise, crop-specific production cost estimates provided by the Directorate of Economics & Statistics in the Agriculture Ministry. The latter is generally available with a three-year lag.
→ The CACP projects three kinds of production costs for every crop, both at the state and all-India average levels:
→ ‘A2' – Covers all paid-out costs directly incurred by the farmer in cash and kind on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
→ ‘A2+FL’ – Includes A2 plus an imputed value of unpaid family labour.
→ ‘C2’ – It is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets, on top of A2+FL.