Q. The “C2” cost of production in the context of Minimum Support Price (MSP) refers to:

[A] All paid-out costs directly incurred by the farmer, either in cash and kind, on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation.

[B] The average cost of production for all farmers cultivating the crop in a particular region.

[C] The actual cost of production, including account rent and interest foregone on land and machinery owned by farmers.

[D] The projected cost of production based on future market trends.

Answer: C
Notes:

Explanation – Different Production Costs Considered While Fixing MSP are:

  • A2: All paid-out costs directly incurred by the farmer, either in cash and kind, on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation.
  • A2+FL: Imputed value of unpaid family labour is added to the A2 cost to derive A2+FL.
  • C2: Estimated land rent and the cost of interest on the money taken for farming is added to A2+FL to get the C2 production cost. It is a more comprehensive production cost.

Source: Forum IAS

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