Understanding terms and formulas used to decide the MSP by CACP & Government of India

Cost of production of a Crop while deciding Minimum Support Price ( MSP ) is categorised into 3 major categories as,

  • A2  => Actual paid out cost
  • A2 +FL => Actual paid out cost plus imputed value of family labour
  • C2 => Comprehensive cost including imputed rent and interest on owned land and capital

A2 cost => includes all expenses in cash and kind on account of hired human labour, bullock labour, machine labour, seed, insecticides & pesticides, manure, fertilizers, irrigation charges and miscellaneous expenses.

A2+FL cost => A2 + family labour.

C2 cost => includes A2+FL cost, rental value of owned land, interest on fixed capital etc.

As per price policy 2014-2015, This projected cost is excluding the cost of marketing, transportation and crop insurance premium.

Reference – Cost Concepts http://eands.dacnet.nic.in/Cost_Concept/Cost_Con.pdf

Manual on Cost of Cultivation Surveys. – http://mospi.nic.in/publication/manual-cost-cultivation-surveys-0

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