The Commission for Agricultural Costs and Prices (CACP) is a statutory panel and an attached office under the Ministry of Agriculture and Farmers Welfare, Government of India. It was established in January 1965 as the Agricultural Prices Commission (APC) to advise the government on price policy for agricultural commodities. The problem it solved was the need for a stable and remunerative price environment for farmers, especially following the food shortages and the onset of the Green Revolution. The APC was renamed the CACP in March 1985 with a broader mandate that emphasized detailed cost-of-production analyses.
The CACP's primary mechanism is to recommend the Minimum Support Prices (MSPs) for 22 mandated agricultural commodities and the Fair and Remunerative Price (FRP) for sugarcane. The Commission submits its recommendations for Kharif and Rabi crops to the Cabinet Committee on Economic Affairs (CCEA). While the CACP is an expert body, its suggestions are not binding on the government. In formulating its recommendations, the CACP considers a comprehensive set of factors, including the cost of production (specifically the A2+FL and C2 costs), demand and supply conditions, inter-crop price parity, and the impact on the cost of living for consumers. The CACP connects directly to the Minimum Support Price (MSP) scheme, which is a key policy tool for agricultural price support in India. A significant recent change was the government's decision, announced in the 2018-19 Union Budget, to ensure that MSPs for all mandated crops provide a return of at least 50 percent over the cost of production. The CACP itself has also suggested bringing in legislation to confer on farmers the 'Right to Sell at MSP'.