Which of the following factors is/are taken into consideration while deciding the minimum support price (MSP) by the Commission for Agricultural Costs and Prices (CACP)?

1. Cost of cultivation per hectare

2. Prices in the international market

3. Cost of processing of agricultural products

Select the correct answer using the code given below:

The government announces minimum support prices (MSPs) for 22 mandated crops, and fair and remunerative price (FRP) for sugarcane.

The objective is to give guaranteed prices and assured market to the farmers and to protect them from price fluctuations. In 2018- 19, the government raised the MSP of both kharif and rabi crops to ensure a return of at least 50 per cent above the cost of production to enhance farmers’ income. An increase in MSP leads to increase in production, but only about one-third of the total production of food grains are procured. The rest of the food grains are sold in the open market.

The minimum support prices are announced on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).

The Commission takes into account, apart from a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities, the following factors:

• Cost of cultivation per hectare and structure of costs in various regions of the country and changes there in;

• Cost of production per quintal in various regions of the country and changes therein;

• Prices of various inputs and changes therein;

• Market prices of products and changes therein;

• Prices of commodities sold by the farmers and of those purchased by them and changes therein;

• Supply related information – area, yield and production, imports, exports and domestic availability and stocks with the government/public agencies or industry;

• Demand related information – total and per capita consumption, trends and capacity of the processing industry;

• Prices in the international market and changes therein, demand and supply situation in the world market;

• Prices of the derivatives of the farm products, such as sugar, jaggery, jute goods, edible/non-edible oils and cotton yarn and changes therein;

• Cost of processing of agricultural products and changes therein;

• Cost of marketing – storage, transportation, processing, marketing services, taxes/fees and margins retained by market functionaries; and

• Macro-economic variables, such as general level of prices, consumer price indices and those reflecting monetary and fiscal factors.