Solution:The objective of the price policy underlying MSP is to bring a balanced and integrated price structure for agricultural commodities and not to ensure maximum price for the farmers.Production Costs and CACP
The CACP considers three types of production costs:
- A2
- A2+FL
- C2
- A2 covers direct costs incurred by farmers, including expenses on seeds, fertilizers, pesticides, labor, and more.
- A2+FL includes A2 costs and the value of unpaid family labor.
- C2 is a more comprehensive cost that also considers rentals and forgone interest on owned land and capital assets, on top of A2+FL.
As of now, CACP recommends MSPs of 23 commodities, which comprise 7 cereals (paddy, wheat, maize, sorghum, pearl millet, barley and ragi), 5 pulses (gram, tur, moong, urad, lentil), 7 oilseeds (groundnut, rapeseed-mustard, soyabean, seasmum, sunflower, safflower, nigerseed), and 4 commercial crops (copra, sugarcane, cotton and raw jute).