Commission for Agricultural Costs and Prices (CACP)

The Commission for Agricultural Costs and Prices (CACP, since 1985; earlier named the Agricultural Prices Commission) came into existence in January 1965. The Commission comprises a Chairman, a Member Secretary, one Member (Official) and two Members (Non-Official). The non-official members are representatives of the farming community and usually have an active association with it.

The MSP Mandate

The Commission is mandated to recommend minimum support prices (MSPs) to incentivize cultivators to adopt modern technology and raise productivity and overall grain production in line with emerging demand patterns in the country. Assurance of a remunerative and stable price environment is considered very important for increasing agricultural production and productivity, since the marketplace for agricultural produce tends to be inherently unstable, which often inflicts undue losses on growers even when they adopt the best available technology package and produce efficiently. Towards this end, MSP for major agricultural products are fixed by the government each year after taking into account the recommendations of the Commission. CACP recommends MSPs of 23 commodities, comprising cereals, pulses and commercial crops including cotton and raw jute.

How the Recommendations Are Prepared

CACP submits its recommendations to the government in the form of Price Policy Reports every year, separately for five groups of commodities: Kharif crops, Rabi crops, sugarcane, raw jute and copra. Before preparing the reports, the Commission draws up a comprehensive questionnaire and sends it to all state governments and concerned national organizations and ministries to seek their views. Separate meetings are held with farmers from different states, state governments, and national organizations like FCI, NAFED, the Cotton Corporation of India (CCI) and the Jute Corporation of India (JCI), as well as traders' organizations, processing organizations and key central ministries. The Commission also visits states for on-the-spot assessment of the constraints farmers face in marketing their produce or raising productivity.

Based on all these inputs, the Commission finalizes its recommendations and submits them to the government, which circulates the CACP reports to state governments and concerned central ministries for their comments. After receiving the feedback, the Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by CACP. Once the decision is taken, CACP puts all its reports on its website for stakeholders to see the rationale behind its price and non-price recommendations.

Cotton Resources for India

The cotton chain behind the textile industry is covered across five connected pages: cotton in India gathers the resources, the Cotton Corporation of India (CCI) carries out price support operations in the market yards, the Commission for Agricultural Costs and Prices (CACP) recommends the prices, the minimum support price (MSP) itself is explained on its own page, and the Department of Agriculture and Cooperation (DAC) administers the agricultural programmes behind them.