Commission for Agricultural Costs & Prices (CACP)
Why in news?
On February 3, 2026, the Indian government announced MSPs for 22 mandated crops, directly based on CACP recommendations, covering cereals, pulses, oilseeds, and commercial crops like paddy, wheat, and cotton.
About
The Commission for Agricultural Costs & Prices (CACP) is an expert advisory body under the Ministry of Agriculture & Farmers Welfare, Government of India, responsible for recommending Minimum Support Prices (MSPs) for major agricultural crops. It was established in 1965 as the Agricultural Prices Commission and renamed CACP in 1985.
Key Facts about CACP
- Established: January 1965 (as Agricultural Prices Commission)
- Renamed: March 1985 to Commission for Agricultural Costs & Prices (CACP)
- Parent Ministry: Ministry of Agriculture & Farmers Welfare
- Headquarters: New Delhi
- Current Chairperson: Vijay Paul Sharma (as of latest update)
Functions of CACP
- Recommends MSPs for 23 major crops including cereals, pulses, oilseeds, and commercial crops.
- Analyzes cost of production using data from states, farmer surveys, and agricultural universities.
- Considers multiple factors before recommending MSPs:
- Cost of cultivation and input prices
- Demand and supply situation
- Market price trends (domestic & international)
- Inter-crop price parity
- Impact on consumers and overall economy
- Submits reports to the Government of India, which then decides the final MSPs announced before each sowing season.
Importance of CACP
- Farmer Protection: Ensures farmers get remunerative prices for their produce.
- Food Security: Stabilizes production of essential crops by incentivizing cultivation.
- Market Stability: Helps prevent distress sales and price crashes in agriculture.
- Policy Input: Provides evidence-based recommendations for agricultural pricing policy.
Terms of Reference
The commission’s mandate includes:
- Advising on MSPs for crops grown during both Kharif and Rabi seasons.
- Reviewing price policy for agricultural commodities.
- Suggesting non-price measures to improve efficiency and competitiveness in agriculture.
Criticisms & Challenges
- Implementation Gap: MSP recommendations are not legally binding; government may accept or reject them.
- Limited Coverage: MSP benefits often reach only a fraction of farmers, mainly those with access to procurement centers.
- Regional Imbalance: Procurement is concentrated in states like Punjab and Haryana, leaving others underserved.
- Market Distortion: Long-term reliance on MSPs for certain crops (like wheat and rice) can discourage diversification.
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