The price declared by the Government every year before the sowing season to provide incentives to the farmers is called

Correct — C, minimum support price. The minimum support price is announced before the sowing season precisely so that it can influence what farmers decide to plant — a price floor known in advance, at which government agencies will buy if the market falls below it. The Commission for Agricultural Costs and Prices recommends the level after weighing cost of production, demand and supply, price trends and terms of trade, and the Cabinet Committee on Economic Affairs approves it. Support prices are announced for 22 mandated crops of the kharif and rabi seasons, with a fair and remunerative price set separately for sugarcane, and since the 2018-19 budget the declared benchmark has been at least one and a half times the A2 plus family labour cost.

• (a)buffer price — Not a price the government declares. A buffer stock is the reserve of foodgrain held for price stabilisation and food security, and the norms attached to it are quantities in tonnes, not a rate per quintal.
• (b)issue price — The price at which grain is released from public stocks to the public distribution system — a consumer-side price, set after procurement rather than before sowing.
• (d)fair sustenance price — No such term exists in Indian agricultural price policy. The comparable real term is the fair and remunerative price, which applies to sugarcane and is paid by mills to growers.

India runs a chain of administered prices. The minimum support price is announced before sowing and functions as a floor. The procurement price is what agencies actually pay when they buy for the public distribution system and for buffer stocks, and in practice it has converged with the support price. The issue price is the subsidised rate at which that grain is released to consumers. The gap between what the state pays and what it charges is the food subsidy.

The institutional details recur in questions. The Commission for Agricultural Costs and Prices began in 1965 as the Agricultural Prices Commission and took its present name in 1985. It recommends; the Cabinet Committee on Economic Affairs decides. Three cost concepts underlie the recommendation — A2, paid-out costs; A2 plus FL, paid-out costs plus imputed family labour; and C2, the comprehensive cost including rent and interest on owned assets. The Swaminathan Commission's recommendation of fifty per cent above C2 remains a live demand, and the difference between C2 and A2 plus FL is the heart of the dispute.

• The minimum support price is announced before the sowing season and works as a price floor.
• The Commission for Agricultural Costs and Prices recommends it; the Cabinet Committee on Economic Affairs approves it.
• Support prices cover 22 mandated crops, with a fair and remunerative price for sugarcane.
• The Commission began as the Agricultural Prices Commission in 1965 and was renamed in 1985.
• Cost concepts used are A2, A2 plus family labour, and the comprehensive C2.

• Reading procurement price and support price as interchangeable; the timing and purpose differ.
• Assuming procurement at the support price is unlimited for every crop.
• Accepting invented terms such as 'fair sustenance price' because they sound plausible.

A definition item where the timing phrase in the stem — before the sowing season — is the discriminator.

• practice — not a real PYQ

  The Minimum Support Price is recommended by

  • (a)the Food Corporation of India
  • (b)the Commission for Agricultural Costs and Prices
  • (c)the NITI Aayog
  • (d)the Reserve Bank of India

  Answer(b) the Commission for Agricultural Costs and Prices — and approved by the Cabinet Committee on Economic Affairs.

• practice — not a real PYQ

  The Fair and Remunerative Price applies to

  • (a)wheat
  • (b)paddy
  • (c)sugarcane
  • (d)cotton

  Answer(c) sugarcane — the statutory minimum that mills must pay growers.