Question

Q. Which of the following factors are taken into account while deciding the Minimum support price (MSP) of agricultural produce?

Select the correct answer using the codes given below:

• A. 1 only
• B. 1 and 3 only
• C. 2 and 3 only
• D. 1, 2 and 3

Answer 1

The correct option is D 1, 2 and 3

Explanation:

Minimum Support Price (MSP) is the minimum price set by the government for certain agricultural products, at which the products would directly be bought from the farmers if the open market prices are less than the cost incurred.

The Commission for Agricultural Costs and Prices (CACP) decides the minimum support price taking into account the following factors:

• Demand and supply
• Cost of production
• Price trends in the market, both domestic and international markets
• Inter-crop price parity
• Terms of trade between agriculture and non-agriculture.
• Minimum of 50% as the margin over the cost of production
• Likely implications of MSP on consumers of that product
• Crop cycle.
• Climatic changes.
• Geographical position
• Status of rainfall
• Income gap