Q27. Consider the following statements with regard to Minimum Support Price (MSP).
1. MSP is price fixed by the Commission for Agricultural Costs and Prices (CACP).
2. The change in input prices is not included while considering the MSP.
Which of the above statement(s) is/are correct?
Q27. Consider the following statements with regard to Minimum Support Price (MSP).
1. MSP is price fixed by the Commission for Agricultural Costs and Prices (CACP).
2. The change in input prices is not included while considering the MSP.
Which of the above statement(s) is/are correct?
The correct option is D (d) None of the above
Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
MSP is price fixed by Government of India to protect the producer - farmers - against excessive fall in price during bumper production years.
The minimum support prices are a guarantee price for their produce from the Government.
The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
Minimum support prices are currently announced for 25 commodities including seven cereals (paddy, wheat, barley, jowar, bajra, maize and ragi); five pulses (gram, arhar/tur, moong, urad and lentil); eight oilseeds (groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed); copra, raw cotton, raw jute, sugarcane and virginia flu cured (VFC) tobacco.
In formulating the recommendations in respect of the level of minimum support prices and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
Other Factors include cost of production, changes in input prices, input output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.
The Commission makes use of both micro-level data and aggregates at the level of district, state and the country.
Supply related information - area, yield and production, imports, exports and domestic availability and stocks with the Government/public agencies or industry, cost of processing of agricultural products, cost of marketing - storage, transportation, processing, marketing services, taxes/fees and margins retained by market functionaries; etc. are also factored in.
Report of National Commission for Farmers (NCF) had recommended that MSP should be at least 50% more than the weighted average cost of production.
However, this had not been accepted by the Government.
MSP protects farmers from any sharp fall in the market price of a commodity.
Sharp and frequent increases in MSP can lead to inflation.
In case of scarcity the market price may be higher than the declared MSP.
(d) None of the above
Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
MSP is price fixed by Government of India to protect the producer - farmers - against excessive fall in price during bumper production years.
The minimum support prices are a guarantee price for their produce from the Government.
The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
Minimum support prices are currently announced for 25 commodities including seven cereals (paddy, wheat, barley, jowar, bajra, maize and ragi); five pulses (gram, arhar/tur, moong, urad and lentil); eight oilseeds (groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed); copra, raw cotton, raw jute, sugarcane and virginia flu cured (VFC) tobacco.
In formulating the recommendations in respect of the level of minimum support prices and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
Other Factors include cost of production, changes in input prices, input output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.
The Commission makes use of both micro-level data and aggregates at the level of district, state and the country.
Supply related information - area, yield and production, imports, exports and domestic availability and stocks with the Government/public agencies or industry, cost of processing of agricultural products, cost of marketing - storage, transportation, processing, marketing services, taxes/fees and margins retained by market functionaries; etc. are also factored in.
Report of National Commission for Farmers (NCF) had recommended that MSP should be at least 50% more than the weighted average cost of production.
However, this had not been accepted by the Government.
MSP protects farmers from any sharp fall in the market price of a commodity.
Sharp and frequent increases in MSP can lead to inflation.
In case of scarcity the market price may be higher than the declared MSP.
