Updated By: LatestGKGS Desk
Formula used to calculate MSP by CACP (Commission for Agricultural Costs and Prices)
Formulas for Minimum Support Price (MSP) calculation used by Commission for Agricultural Costs and Prices (CACP)
Commission for Agricultural Costs and Prices (CACP) keeps following three main factors in calculations while making the decision against the Minimum Support Price (MSP) as per Government of India directions.
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Cost A2 - All those types of expenses that a farmer expends from his pocket falls under Cost A2 category. Cost A2 covers from seeds, fertilizers, labor, machinery, and land taken on lease for agriculture.
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Cost A2 + FL - Family Labor (FL) comes under Cost A2 category. Farmers family members also do a lot of direct and indirect help in the agriculture. CACP considers family labor too in deciding MSP.
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Cost C2 - Cost C2 is the comprehensive costing of the agriculture. CACP calculates everything involved in the agriculture direct or indirect including interest on the loan taken from government bodies for agriculture by farmers.
At present government using Cost A2+FL formulae to determine the MSP which includes real cost plus family labor costing involved in the production.
