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    Question

    In the context of Minimum support Price, consider the

    following Statements: 1. Value of unpaid family labour is not factored in while computing the production cost of a crop. 2. The CACP does not do any field-based cost estimates itself. 3. MSP is available for Raw cotton, Moong, Raw jute, Copra, Soyabean and De-husked coconut. Which of the statements given above is/are correct?
    A 1 and 3 only Correct Answer Incorrect Answer
    B 1 and 2 only Correct Answer Incorrect Answer
    C 2 only Correct Answer Incorrect Answer
    D 2 and 3 only Correct Answer Incorrect Answer

    Solution

    ● Statement 1 is incorrect: The Swaminathan Committee prescribed three variables to determine the production cost. These three variables are: ‘A2’-Covers all paid-out costs directly incurred by the farmer in cash and kind on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc. A2+FL that Includes A2 plus an imputed value of unpaid family labour and ‘C2’ which is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets, on top of A2+FL. Swaminathan Commission recommended a 50% margin over C2 At present, The CACP considers both C2 and A2+FL costs to determine the MSP. CACP considers the A2+FL formula for return and C2 formula as a benchmark reference costs to make sure that the MSP covers the production cost. The Government announce the MSP on recommendation of CACP. ● Statement 2 is correct: 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 which are generally available with a three-year lag. ● Statement 3 is correct: The Commission for Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.The list of crops are - Paddy, wheat, barley, jowar, bajra, maize and ragi,Gram, arhar/tur, moong, urad and lentil,Groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and niger seed,Raw cotton, Raw jute, Copra, De-husked coconut, and Sugarcane (Fair and remunerative price).

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