IE Analysis:
JN Analysis: https://youtu.be/d_6V10-bJZo?si=SNR5ZWWZ-A4Wh4fe
1 . Minimum Support Price: Minimum Support Price (MSP) is a price set by the government for certain agricultural products. It acts as a safety net for farmers, ensuring they receive a fair price for their produce, even if market prices fall below the cost of production
How MSP Works:
Price Floor: The government announces the MSP for specific crops before the sowing season.
Market Monitoring: Government agencies monitor market prices throughout the season.
Procurement: If market prices fall below the MSP, the government, through agencies like the Food Corporation of India (FCI), purchases the produce from farmers at the guaranteed MSP.
CACP stands for the Commission for Agricultural Costs and Prices.
It is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India.
Key Functions of CACP:
Recommending Minimum Support Prices (MSPs): CACP is responsible for suggesting MSPs for various agricultural crops. MSP is a guaranteed price set by the government to protect farmers from price fluctuations in the market.
Importance of CACP:
Farmer Welfare: CACP's recommendations help ensure that farmers receive a fair price for their produce, safeguarding their livelihoods.
Food Security: By promoting sustainable agricultural practices and ensuring remunerative prices, CACP contributes to food security.
Economic Growth: A thriving agricultural sector is crucial for overall economic growth, and CACP plays a vital role in its development
Determinants:
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
1) demand and supply;
2) cost of production;
3) price trends in the market, both domestic and international;
4) inter-crop price parity;
5) terms of trade between agriculture and non-agriculture;
6) a minimum of 50 percent as the margin over cost of production; and
7) 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 determination of MSP, but it is certainly not the only factor that determines MSP.
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