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CACP: Commission for Agricultural Costs and Prices Photo: Ghulam Rasool · Pexels License · source ↗

CACP: Commission for Agricultural Costs and Prices

The Commission for Agricultural Costs and Prices (CACP) is the statutory advisory body in the Department of Agriculture & Farmers Welfare (DA&FW) that recommends Minimum Support Prices (MSP) to the Cabinet Committee on Economic Affairs (CCEA). Originally established in January 1965 as the Agricultural Prices Commission, it was renamed CACP in 1985. It is headquartered in New Delhi and is the central technical authority on cost-of-cultivation analysis in India.

Mandate and composition

CACP has a chairman, a member secretary, two official members and two non-official members drawn from farming and academia. Its statutory mandate is to recommend price policy for the major agricultural commodities so as to give a remunerative price to the producer, ensure consumer access at reasonable prices and protect the inter-crop parity that influences farmer cropping decisions.

Price policy reports

Each season CACP submits two flagship reports: the Kharif Price Policy Report (typically March-April for the upcoming kharif season) and the Rabi Price Policy Report (around September for the upcoming rabi). Separate reports cover sugarcane (FRP), raw jute, copra and minor commodities. Each report sets out cost-of-cultivation estimates, demand-supply outlook, terms of trade between agriculture and non-agriculture, international price benchmarks and recommended MSPs.

How CACP arrives at MSP

CACP collects cost-of-cultivation data through the Comprehensive Scheme for the Study of Cost of Cultivation of Principal Crops (CS-CCPC) run by DA&FW, with state agricultural universities collecting plot-level input data. The Commission factors in eleven elements: paid-out costs, family labour, imputed rent, fixed costs, demand-supply, market prices, inter-crop parity, terms of trade, MSP impact on consumers, effect on environment and effect on cost of living. Final MSP is the recommendation; CCEA may modify it.

Statutory status

CACP is an advisory body, not a constitutional or statutory regulator — its recommendations are not legally binding on the Centre. The 2018-19 Union Budget announced that MSP would be fixed at 1.5 times the A2+FL cost of production for crops where it was not already at that level (see MSP formula), making the 1.5x A2+FL formula the effective floor for CACP's MSP recommendations.

Limitations

The commission has been criticised for relying on lagged three-year average cost data, for using A2+FL rather than the comprehensive C2 cost (the Swaminathan Commission benchmark), and for the absence of any legal guarantee of MSP. Procurement coverage is concentrated in paddy and wheat, leaving CACP recommendations on pulses, oilseeds and coarse cereals largely notional for most farmers.

See also: MSP — Minimum Support Price, MSP formula A2/A2+FL/C2, MSP 23-crop list, Price Support Scheme, Market Intervention Scheme.

Sources

  1. Organisation and mandate. Commission for Agricultural Costs and Prices.
  2. Price Policy Reports. CACP, DA&FW.
  3. Minimum Support Prices: from safety net to self-sufficiency. Press Information Bureau.