ECONOMY

 3 PRODUCTION VARIABLES OF   MINIMUM    SUPPORT PRICE

WHY IN NEWS?

PIB: Government announces minimum support price for copra.

 ABOUT

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

DETERMINATION OF MSP

MSP is announced by the Cabinet committee on Economics based on the recommendation of Commission for Agricultural Costs and Prices(CACP)

CACP considers various factors like demand and supply situation, inflation, parity with other crops etc.

CACP considers 3 kinds of production costs for every crop

A2: Covers all paid out costs directly incurred by farmer like money spent on seeds, irrigation, hired labour, fertilizers etc.

A2+FL: Includes A2+ imputed value of unpaid family labour.

C2: includes A2+ FL and interest forgone on owned land and fixed capital assets

Currently on A2 + FL is considered for calculating return by CACP.

However farmers have long been demanding use of C2 for calculating returns