CACP Guide — Commission for Agricultural Costs and Prices: 1965 Origin, the A2, A2+FL and C2 Cost Concepts, the 150%-of-A2+FL Benchmark, the Kharif and Rabi Price Policy Reports and How CACP Actually Recommends MSP to the Cabinet
Canonical reference: https://agri.bot/cacp
The Commission for Agricultural Costs and Prices (CACP) is the statutory advisory body of the Government of India that recommends the Minimum Support Price (MSP) for notified crops each Kharif and Rabi season, the statutory Fair & Remunerative Price (FRP) for sugarcane, and the procurement price for copra under PM-AASHA. CACP is the analytical engine behind the price-side spine of India's farmer-income policy — its Kharif and Rabi price policy reports are the authoritative reference for cost-of-cultivation data, the 150%-of-A2+FL benchmark and the recommended MSP that the Cabinet Committee on Economic Affairs (CCEA) then notifies for each marketing season. This deep-dive explains CACP's January 1965 origin as the Agricultural Prices Commission, the March 1985 rebranding, the A2, A2+FL and C2 cost concepts, the Kharif and Rabi price policy report cycle, the sugarcane FRP methodology, the Swaminathan Commission C2+50% recommendation and how CACP fits alongside FCI, NAFED and the state procurement agencies that operationalise its recommendations.
At a glance
- Body type: statutory advisory Commission attached to the Department of Agriculture & Farmers Welfare (DA&FW).
- Founded: 1 January 1965 as the Agricultural Prices Commission (APC) on the recommendation of the L.K. Jha Committee on Foodgrains Prices Policy (1964); reconstituted and renamed Commission for Agricultural Costs and Prices (CACP) in March 1985.
- Recommends: MSP for 22 notified crops (7 cereals, 5 pulses, 7 oilseeds, cotton and raw jute); statutory Fair & Remunerative Price (FRP) for sugarcane under the Sugarcane (Control) Order 1966; copra procurement price under PM-AASHA.
- Composition: Chairman, Member Secretary, one official member and two non-official members from the farmer community.
- Cost concepts: A2 (paid-out costs), A2+FL (paid-out plus imputed family labour — the CACP recommendation base) and C2 (comprehensive cost including imputed rent on owned land and interest on owned fixed capital).
- Formula benchmark: not less than 150% of A2+FL, per Union Budget 2018-19.
- Data spine: Comprehensive Scheme for the Study of Cost of Cultivation of Principal Crops (CS), run by the Directorate of Economics & Statistics (DES) of DA&FW.
- Decision route: CACP recommends → DA&FW places before CCEA → CCEA notifies MSP / FRP → procurement operationalised by FCI, NAFED, SFAC, CCI, JCI and state agencies.
- Portals: cacp.dacnet.nic.in, agriwelfare.gov.in, pib.gov.in.
Origin — from the 1964 Jha Committee to APC to CACP
The mid-1960s food crisis and the associated foodgrain price volatility prompted the Government of India to constitute the L.K. Jha Committee on Foodgrains Prices Policy in 1964. The committee recommended a permanent standing body to advise Government on farm-price policy, insulated from the political cycle and drawing on a coherent evidence base. On the strength of that recommendation the Agricultural Prices Commission (APC)was set up on 1 January 1965. APC's founding brief was to advise Government on price policy for agricultural commodities so as to secure remunerative prices for producers, ensure stable prices for consumers, and align farm prices with national food-security priorities.
Over the next two decades, the Comprehensive Scheme for the Study of Cost of Cultivation of Principal Crops (CS), run by the Directorate of Economics & Statistics of the then Ministry of Agriculture, built a state-representative panel of cost-of-cultivation data. That maturation of cost data made a cost-anchored MSP recommendation possible. In March 1985, the APC was reconstituted and renamed the Commission for Agricultural Costs and Prices (CACP), explicitly signalling that cost-of-cultivation data — not pure market-price policy — would be the analytical spine of MSP recommendations from that point onwards.
Composition — a slim advisory Commission
CACP is a slim body by design. The Commission has a Chairman, a Member Secretary, one official member and two non-official members drawn from the farmer community. The Chairman and members are appointed by the Government of India, typically from senior agricultural economists, retired IAS officers with an agriculture and prices background, or serving officers on deputation. The Member Secretary runs the Commission's secretariat. Non-official members bring the farmer voice into deliberations on cost estimation, procurement realities and season-specific market conditions.
The analytical heavy lifting is not done inside CACP itself — it is done by the Directorate of Economics & Statistics (DES)of DA&FW, which runs the CS cost survey through state-level agricultural universities and supplies CACP with state-representative A2, A2+FL and C2 estimates for each notified crop. CACP's value-add is in weighting, projecting and applying the statutory Terms of Reference factors on top of the raw cost data.
The three cost concepts — A2, A2+FL and C2
CACP works with three cost concepts drawn from the CS surveys:
- A2 — all paid-out costs incurred by the farmer in cash and kind: seed, fertiliser, manure, pesticides, hired human labour, hired bullock and machine labour, fuel, irrigation charges, interest on working capital and land revenue.
- A2+FL — A2 plus the imputed value of family labour. This is the cost concept CACP uses as the base for its MSP recommendation.
- C2 — the comprehensive cost: A2+FL plus the imputed rental value of owned land, imputed interest on owned fixed capital and imputed rent on owned farm buildings. C2 is the concept the Swaminathan Commission recommended as the base for a 50%-margin MSP.
The gap between A2+FL and C2 is not uniform — it varies by state and crop and depends materially on land tenure structure, imputed rental benchmarks and the share of family labour in total labour input. For the same crop, C2 can exceed A2+FL by 20-40% in owner-cultivator heartlands where imputed land rent is substantial. This gap is the technical heart of the long-running MSP-formula debate.
The 150%-of-A2+FL benchmark and the Terms of Reference factors
Union Budget 2018-19 formalised the commitment that MSP would be fixed at not less than 150% of A2+FL — a 50% margin over the CACP recommendation base. In practice CACP builds the recommendation as follows. It weights state-representative A2+FL estimates by state production shares to construct an all-India projected A2+FL for the upcoming marketing year, applies a projection for input-price movement between the survey year and the coming season, and lands on the recommended MSP at not less than 1.5x projected A2+FL. Beyond this margin CACP weighs a set of statutory Terms of Reference factors:
- Demand and supply — projected sowing area, expected yield, carry-in stocks with FCI / NAFED, and import parity.
- Input-output price parity — movement in fertiliser, diesel, seed and labour costs relative to farm-gate output prices.
- Terms of trade between agriculture and non-agriculture — the wholesale-price-index ratio for agri output vs manufactured inputs.
- Effect on consumer prices and general price level — pass-through to retail food inflation and the impact on public distribution outlay.
- Likely implications for exports and imports — WTO Agreement on Agriculture Amber Box constraints, world price signals for cotton, sugar, oilseeds.
- Inter-crop price parity — to avoid distorting sowing decisions between competing Kharif or Rabi crops in the same agro-climatic zone.
In several recent seasons the recommended MSP has exceeded 1.5x A2+FL for specific pulses and oilseeds where the crop-choice signal was judged inadequate; the CACP price policy report lists the effective margin for every notified crop.
The Kharif and Rabi price policy report cycle
CACP publishes two flagship reports each year, plus dedicated reports for sugarcane, raw jute and copra:
- Kharif Price Policy Report — covers paddy, tur/arhar, moong, urad, jowar, bajra, maize, ragi, groundnut, soyabean, sunflower, sesamum, niger and cotton. Submitted to DA&FW by around March; CCEA approves the Kharif MSPs by early June, ahead of the sowing window.
- Rabi Price Policy Report — covers wheat, barley, gram, masur, rapeseed-mustard and safflower. Submitted by August-September; CCEA approves the Rabi MSPs by October, before Rabi sowing.
- Sugarcane FRP report — notified by CCEA before the sugar season starts on 1 October.
- Raw jute report — announced ahead of the March-May jute sowing.
- Copra report — announced ahead of the coconut harvest cycle, for procurement under PM-AASHA.
Each price policy report is published on cacp.dacnet.nic.in after the CCEA decision and is the authoritative reference for the season's cost estimates and recommended MSPs. This deep-dive deliberately avoids reproducing rupees-per-quintal figures — MSPs change every season and the CACP report plus the pib.gov.in CCEA press release are the reference of record.
The decision route — from CACP recommendation to Cabinet notification
CACP's recommendations do not become law directly. The sequence is:
- CACP submits the price policy report to DA&FW.
- DA&FW places the recommendation before the Union Cabinet — specifically the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.
- CCEA notifies the final MSP — sometimes at the CACP-recommended level, sometimes revised upwards.
- The CCEA notification is published as a press release at pib.gov.in and operationalised for procurement.
- Procurement is executed by FCI (paddy and wheat), NAFED and SFAC (pulses, oilseeds, copra under PM-AASHA), CCI (cotton) and JCI (raw jute), with state civil supplies corporations and cooperative federations acting as procurement partners.
Sugarcane FRP — the one statutory minimum price
Sugarcane is the one crop with a statutory minimum price. Under the Sugarcane (Control) Order, 1966 issued under the Essential Commodities Act, 1955, the Government of India notifies a Fair & Remunerative Price (FRP) that sugar mills are legally obliged to pay to cane farmers within 14 days of delivery. CACP recommends the FRP on a cost-plus methodology linked to a benchmark sugar recovery rate — currently notified at around 10.25%, with a proportionate premium for every 0.1 percentage-point above the benchmark and a proportionate deduction below a floor. Because FRP is statutory, the CCEA notification is a legal instrument rather than a procurement commitment — mills, not the state, are the buyer. Several state governments additionally notify a higher State Advised Price (SAP) on top of the FRP — Uttar Pradesh, Punjab, Haryana and Uttarakhand routinely do so.
Swaminathan C2+50% vs CACP's A2+FL+50% — the formula debate
The National Commission on Farmers (NCF), chaired by Dr. M.S. Swaminathan, in its Fifth Report (October 2006), recommended that MSP be fixed at a level at least 50% above the C2 cost of production — the comprehensive cost that includes imputed rental value of owned land and interest on owned fixed capital. The Swaminathan formulation is C2+50%, not A2+FL+50%. The Government's stated formula since Union Budget 2018-19 is 150% of A2+FL — a 50% margin over A2+FL rather than over C2 — which yields a smaller absolute MSP than the Swaminathan formula for most crops in most states, because C2 exceeds A2+FL by the imputed cost of owned land and capital.
The C2+50% demand has been at the centre of every major farmer protest since 2017, including the 2020-21 protest against the (subsequently repealed) three farm laws and the 2024-25 SKM-plus-KMSC Delhi Chalo protests. Government-side objections rest on fiscal cost (a C2+50% floor would raise procurement outlay materially), methodological questions on imputed land rent (C2 relies on a reference rental value that varies widely across regions), and WTO Agreement on Agriculture Amber Box constraints. The Committee on MSP, Zero Budget Natural Farming and Crop Diversification constituted in July 2022 under Sanjay Agrawal was mandated to make recommendations on MSP transparency and effectiveness; a legal-MSP framework has not been delivered as of the last public update.
How CACP fits into the wider farmer-scheme architecture
CACP is the price-recommending head of a much larger price-support and farmer-income tree:
- MSP — the Cabinet-approved floor price on 22 notified crops that operationalises the CACP recommendation.
- PM-AASHA — the umbrella price-support scheme (PSS + PDPS + PPSS) for pulses, oilseeds and copra, with a ₹35,000 crore continuation approved by CCEA in September 2024.
- Food Corporation of India (FCI) — the statutory PSU that runs open-ended MSP procurement of paddy and wheat, holds central-pool buffer stocks and moves grain to the PDS.
- PM-KISAN — direct income support of ₹6,000 per year per landholding farmer family, decoupled from crop or output.
- PMFBY — crop insurance yield-shortfall cover, independent of MSP.
- e-NAM — the National Agriculture Market, the digital price-discovery layer that lets CACP's modal-mandi-price data feed into PDPS deficiency payments.
- Kisan Credit Card (KCC) — working-capital loan against the growing crop, unlocked further on MSP-linked yield expectations.
- India crop calendar — aligns CACP's Kharif and Rabi announcement calendar with the sowing and harvest schedule for each crop.
Where to read CACP's authoritative reports
- CACP portal — cacp.dacnet.nic.in — Kharif and Rabi price policy reports, sugarcane FRP reports, raw jute and copra reports, with state-representative A2, A2+FL and C2 estimates and the effective margin for every notified crop.
- CCEA press releases — pib.gov.in — official Cabinet notification of each season's MSP and FRP.
- DA&FW — agriwelfare.gov.in — implementation notifications, procurement guidelines and state-agency lists.
- Directorate of Economics & Statistics (DES) — Cost of Cultivation survey publications and the Comprehensive Scheme methodology notes that anchor CACP's cost estimates.
- FCI deep-dive — how MSP for paddy and wheat is actually procured through open-ended procurement and Decentralised Procurement (DCP) states.
- AGMARKNET — agmarknet.gov.in — daily wholesale mandi prices, to compare against CACP-recommended MSP for realization tracking.
- Field-level guidance — the nearest Krishi Vigyan Kendra and the closest State Agricultural University or ICAR institute keep copies of the latest CACP price policy documents for farmer walk-ins.
Frequently asked questions
- What is the Commission for Agricultural Costs and Prices (CACP) and which ministry does it sit under?
- The Commission for Agricultural Costs and Prices (CACP) is a statutory advisory body of the Government of India that recommends the Minimum Support Price (MSP) for notified crops each Kharif and Rabi season, the statutory Fair & Remunerative Price (FRP) for sugarcane, and the procurement price for copra under PM-AASHA. It is attached to the Department of Agriculture & Farmers Welfare (DA&FW) in the Ministry of Agriculture & Farmers Welfare, Government of India, with offices at Shastri Bhawan and Krishi Bhawan, New Delhi, and the official portal at cacp.dacnet.nic.in. CACP is advisory — its price recommendations are placed before the Cabinet Committee on Economic Affairs (CCEA) through DA&FW, and CCEA is the final approving authority. The Government has, in the past, both accepted CACP recommendations without change and revised them upwards; the CCEA press release each season records the final Cabinet-approved MSP.
- When was CACP set up and why is it a rebrand of the Agricultural Prices Commission?
- CACP began life on 1 January 1965 as the Agricultural Prices Commission (APC), constituted on the recommendation of the L.K. Jha Committee on the Foodgrains Prices Policy (1964). APC's founding brief was to advise Government on price policy for agricultural commodities so as to secure remunerative prices for producers, ensure stable prices for consumers, and align farm prices with national food-security priorities in the wake of the mid-1960s food crisis. In March 1985 the APC was reconstituted and renamed the Commission for Agricultural Costs and Prices (CACP), explicitly signalling that cost-of-cultivation data — rather than pure market-price policy — would be the analytical spine of MSP recommendations. The rebrand followed the maturation of the Comprehensive Scheme for the Study of Cost of Cultivation of Principal Crops (CS) run by the Directorate of Economics & Statistics (DES) of DA&FW, which by the mid-1980s had a decade of state-representative cost data to draw on.
- How is CACP composed — who chairs it and how are members appointed?
- CACP has a compact structure: a Chairman, a Member Secretary, one official member and two non-official members drawn from the farmer community (a representative each from a farmer producer / farmer union side). The Chairman and members are appointed by the Government of India, typically from senior agricultural economists, retired IAS officers with a background in agriculture and prices, or serving officers on deputation. The Member Secretary is a serving Government of India officer who runs the Commission's secretariat. Non-official members bring the farmer voice into deliberations on cost estimation, procurement realities and season-specific market conditions. The Commission is a slim body by design — the analytical heavy lifting is done by the Directorate of Economics & Statistics, which supplies the cost-of-cultivation data.
- What are A2, A2+FL and C2 — the three cost concepts CACP uses?
- CACP works with three cost concepts derived from the Comprehensive Scheme (CS) cost surveys. A2 is all paid-out costs incurred by the farmer in cash and kind — seed, fertiliser, manure, pesticides, hired human labour, hired bullock and machine labour, fuel, irrigation charges, interest on working capital and land revenue. A2+FL is A2 plus the imputed value of family labour, and this is the cost concept CACP uses as the base for its MSP recommendation. C2 is the most comprehensive concept — A2+FL plus the imputed rental value of owned land, imputed interest on owned fixed capital and imputed rent on owned farm buildings. C2 is the concept the Swaminathan Commission (National Commission on Farmers, 2004-06) recommended as the base for a 50%-margin MSP. The Government's stated formula since Union Budget 2018-19 is not less than 150% of A2+FL — a 50% margin over A2+FL rather than over C2.
- How is the 150%-of-A2+FL benchmark applied in practice?
- The Union Budget 2018-19 formalised the commitment that MSP would be fixed at not less than 150% of A2+FL cost of production, and every subsequent CCEA MSP announcement has been framed with reference to this benchmark. In practice CACP does the following. It takes state-representative A2+FL estimates for each notified crop from the CS surveys, weights them by state production shares to build an all-India projected A2+FL for the upcoming marketing year, applies a projection for input-price movement between the survey year and the coming season, and lands on a projected A2+FL against which the recommended MSP is set at not less than 1.5x. Beyond this margin CACP weighs a set of statutory Terms of Reference factors — demand and supply, input-output price parity, terms of trade between agriculture and non-agriculture, effect on general price level and cost of living, and likely implications for consumer prices, exports and imports. In several recent seasons the recommended MSP has exceeded 1.5x A2+FL for specific pulses and oilseeds where the crop-choice signal was judged inadequate; the CACP price policy report lists the effective margin for every notified crop.
- What is the Kharif and Rabi price policy report cycle?
- CACP publishes two flagship reports each year. The Kharif Price Policy Report covers Kharif crops (sown in the south-west monsoon, June-July, harvested October-November) — paddy, tur/arhar, moong, urad, jowar, bajra, maize, ragi, groundnut, soyabean, sunflower, sesamum, niger and cotton — and is submitted to DA&FW by around March, so that CCEA can approve the Kharif MSPs by early June, ahead of the sowing window. The Rabi Price Policy Report covers Rabi crops (sown post-monsoon, October-December, harvested March-April) — wheat, barley, gram, masur, rapeseed-mustard, safflower — and is submitted by August-September, so that CCEA can approve the Rabi MSPs by October. Separate price policy reports are prepared for sugarcane (FRP, notified before the sugar season starts on 1 October), raw jute (ahead of March-May sowing) and copra (ahead of the coconut harvest cycle). Each price policy report is published on cacp.dacnet.nic.in after the CCEA decision and is the authoritative reference for the season's cost estimates and recommended MSPs.
- How is sugarcane different — the FRP methodology and why it is a statutory price?
- Sugarcane is the one crop with a statutory minimum price. Under the Sugarcane (Control) Order, 1966 issued under the Essential Commodities Act, 1955, the Government of India notifies a Fair & Remunerative Price (FRP) that sugar mills are legally obliged to pay to cane farmers within 14 days of delivery. CACP recommends the FRP on the same cost-plus methodology but linked to a benchmark sugar recovery rate (currently 10.25% per the last CCEA notification, with a proportionate premium for every 0.1 percentage-point above the benchmark and a proportionate deduction below a floor). Because FRP is statutory, the Cabinet decision is a legal notification rather than a procurement commitment — mills, not the state, are the buyer. Several state governments additionally notify a higher State Advised Price (SAP) — Uttar Pradesh, Punjab, Haryana and Uttarakhand routinely do so. This is why sugarcane is often described as a 23rd MSP-notified crop even though it is not on the CACP's 22-crop MSP list.
- Why did the Swaminathan Commission recommend C2+50% — and where does policy stand today?
- The National Commission on Farmers (NCF) chaired by Dr. M.S. Swaminathan, in its Fifth Report (October 2006), recommended that MSP be fixed at a level at least 50% above the C2 cost of production — that is, a 50% margin over comprehensive cost including imputed rental value of owned land and interest on owned fixed capital. The Swaminathan formulation is C2+50%, not A2+FL+50%; the difference between C2 and A2+FL is the imputed cost of owned land and capital, which for a small owner-cultivator can be a material fraction of total cost. The Government's own stated formula since Union Budget 2018-19 is 150% of A2+FL — a 50% margin over A2+FL rather than over C2 — which yields a smaller absolute MSP than the Swaminathan formula for most crops in most states. The C2+50% demand has been at the centre of every major farmer protest since 2017 and continues to shape CACP's public perception. The Committee on MSP, Zero Budget Natural Farming and Crop Diversification constituted in July 2022 under Sanjay Agrawal was mandated to make recommendations on MSP transparency and effectiveness; a legal-MSP framework has not been delivered as of the last public update.
- Where are CACP's authoritative reports published, and how should farmers, researchers and traders use them?
- CACP publishes each Kharif and Rabi Price Policy Report, the sugarcane FRP report, the raw jute report and the copra report on its official portal at cacp.dacnet.nic.in as soon as the CCEA decision is announced. Each report includes state-representative A2, A2+FL and C2 cost estimates, projections for input-price movement, the recommended MSP, the effective margin over A2+FL, and the analytical rationale under the statutory Terms of Reference factors. The CCEA press release announcing each season's MSP is published at pib.gov.in and is the legal reference for procurement operations. For farmers, the CACP report is the reference for the price signal before sowing — it lets crop-choice decisions be made against the announced MSP rather than against uncertain post-harvest prices. For researchers, CACP reports are the authoritative source for cost-of-cultivation data by state and crop, and are cited in academic literature on agricultural pricing, terms of trade and the MSP-realization debate. For traders and procurement agencies (NAFED, FCI, CCI, JCI, state civil supplies corporations), CACP reports underpin procurement planning, buffer-stock forecasts and PM-AASHA state-level allocations.
Related deep-dives
Pair this CACP guide with the MSP deep-dive that explains the 22 notified crops and the CCEA notification route in detail; the umbrella PM-AASHA scheme that operationalises MSP for pulses, oilseeds and copra; the Food Corporation of India deep-dive on how paddy and wheat procurement actually reaches farmers; the income-support layer under PM-KISAN; and the yield-risk cover under PMFBY. For crop-choice planning aligned with the CACP announcement calendar, see the India crop calendar.
