CACP is an agency of the government of India which was founded in year 1965, earlier it was named as Agricultural Prices and Commission. It works in coordination with the Ministry of Agriculture and Farmers Welfare. 

Commission of Agricultural Costs and Prices was established to encourage the farmers and the cultivators to get used to the latest developments and technologies leading to an increase in productivity. 

About CACP:

The main mission to introduce CACP was to initiate the use of Minimum Support Prices (MSPs). It is an initiative taken by the Government of India to make sure that the profits of the farmers are not depleted. MSP is fixed by the Indian Government for a particular figure so that the farmers are well protected against any fall in farm prices. 

The Minimum Support Prices were introduced by the Government of India especially for the Wheat crop during the time of the Green Revolution. Through MSP initiated by the CACP farmers are getting a guaranteed price for their product from the Government. 

The CACP comprises only five members:

  • Chairman 
  • Secretary 
  • Official member
  • Two members who are un-official

Among the above-mentioned panel, the non-official members are the ones who are the middle man. They represent the farmer’s community and are in direct contact with them. 

Responsibilities of CACP:

The major role of CACP is to handle the market; some of its responsibilities are discussed below:

  • To run the agricultural market efficiently, CACP functions with a stable price strategy. It gives assurance of remuneration which indirectly helps with the agricultural production and productivity simultaneously. 
  • This Commission is very useful for the farmers in drawing a fair minimum price for their crop production. Sometimes the condition of the market is unstable which can cause loss to the farmers but CACP has come as a rescue for the farmers helping them earn a particular figure every time from the government. 
  • It is not like the government sets the MSP by itself, but a series of discussions take place by the committee before setting the MSP. The CACP gives MSP for nearly 23 commodities including different types of grains, four commercial crops, five types of pulses, and seven types of seed oils. 
  • CACP has the right to make surprise visits to different states for assessing the products and pricing and their crops. 
  • One of the objectives of CACP is to analyze the economic status of the country and submit the price for the crop in the form of Price Policy Reports (PPR) every year to the Government. 
  • The report submitted must comprise of the commodities like the Rabi crops, Kharif crops, Sugarcane, Copra, and Raw Jute.

How to determine MSP:

To determine the MSP for a particular crop there goes in a lot of analysis and study considering many commodities, few of them are discussed below:

  1. Considering the Cost of Production is very essential to set an MSP for the product, if there is no profit and the production cost is high then it leads to loss for the farmers. 
  2. The input prices of the product will change accordingly hence making a fine report is essential.
  3. Considering the ratio of Input and Output prices based on the expenditure.
  4. Keeping you updated on the current trends regarding the market prices of the product.
  5. Taking into account the cost of industrial structure.
  6. Considering the cost of living and general price level.
  7. However, the panel must take into account the international situation of the price as well. 
  8. How the set price will affect the subsidy will be studied thoroughly by the commission.
  9. Analysis of the amount paid and received by the farmers will be done to ensure there is no loss to the farmers. 

MSP Facts:

As mentioned above, the Government of India has announced MSP for a total of 23 crops but it seems that only two to three crops are procured effectively. The recent survey showed that there is increased production of Rice and Wheat compared to other crops like Pulses and Legumes.

When there is an increase in the buffer stocks that will eventually add up to more storage and cost of transportation. 

Setting a standard MSP without the knowledge of Farmers is considered unethical. To make MSP an effective measure for both farmers and the Government of India all the steps must be taken to improve irrigation facilities. 

The other way which makes a huge difference is by implementing land reforms and making the technology accessible to make farming remunerative to the farmers. 

Importance of MSP:

For every state MSP has proven to be beneficial, for smooth functioning of the country, every sector must oblige to the MSP set by CACP.

  • MSP is a way to safeguard the farmers and agricultural activists from the ups and downs of the market.
  • Through MSP, the basic farm commodities will be set considering different factors like harvest season which may have an indirect impact on the price of the crop.
  • When such a thing happens, farmers will be hesitant in sowing the crop for the next season. But with the existence of MSP, all the farmers are encouraged to continue sowing and harvesting as they will get a fixed income from the government for their product. 

Hence, to conclude CACP has made a great initiative by launching MSP for the benefit of farmers and maintaining agricultural productivity.