About

• It is a price support mechanism that acts as a safety net for farmers through guaranteed prices and assured markets for their products.
• Origin: In1966-67 for wheat.
• It is fixed twice a year by the Commission for Agricultural Costs and Prices (CACP- statutory body) based on A2+FL cost incurred by the farmer.
  • The Commission for Agricultural Costs & Prices (CACP) is an attached office of the Ministry of Agriculture and Farmers Welfare. It was established in January 1965.
  • Each year, the Commission for Agricultural Costs and Prices (CACP) presents its recommendations to the government through Price Policy Reports.
  • These reports are issued separately for five categories of commodities: Kharif crops, Rabi crops, Sugarcane, Raw Jute, and Copra.
• Approved By: Cabinet Committee of Economic Affairs (CCEA).
• Crops Covered: 23 commodities namely
  • 7 cereals (Paddy, Wheat, Barley, Maize, Bajra, Jowar and Ragi)
  • 5 Pulses (Chana, Arhar/Tur, Urad, Moong and Masoor)
  • 7 Oilseeds (Groundnut, Rapeseed-Mustard, Soyabean, Sesamum, Sunflower, Safflower, Nigerseed)
  • 4 Commercial Crops (Copra, Sugarcane, Cotton and Raw Jute)
• Three Kinds of Production Cost
  • ‘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’: Includes A2 plus an imputed value of unpaid family labour.
  • ‘C2’: It is a more comprehensive cost that factors in rentals and interest for owned land and fixed capital assets, on top of A2+FL.
• The National Commission on Farmers (Swaminathan Committee) had also recommended MSP should be at least 50% more than the weighted average cost of production.

About Fair and Remunerative Price (FRP)

• It is the minimum price that mills have to pay to sugarcane growers.
• It is declared announced by the central government is decided based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).