Agricultural Prices Commission

The Agricultural Prices Commission (APC) was established in January 1965 by a resolution of the Government of India, on the recommendation of the L.K. Jha Committee, as an advisory institution under the Ministry of Agriculture (later the Ministry of Food and Agriculture). Its creation was part of the institutional architecture of the Green Revolution era, alongside the Food Corporation of India (FCI), also set up in 1965 under the Food Corporations Act. The APC's mandate was to advise the government on price policy for major agricultural commodities so as to ensure remunerative returns to producers, maintain a balance between the interests of farmers and consumers, and stabilise agricultural production. Its first chairman was the economist M.L. Dantwala, who shaped the early methodology of price recommendation.

The Commission worked by recommending two principal price instruments: the Minimum Support Price (MSP), a floor price at which government agencies guarantee to purchase produce to protect farmers against distress sales, and the procurement price, at which grain was bought for the public distribution system and buffer stock. In framing its recommendations, the APC examined the cost of cultivation, input-output price parity, demand and supply conditions, the terms of trade between agriculture and non-agriculture, and the effect on the general price level and the cost of living. It submitted commodity-wise reports for crops such as paddy, wheat, coarse cereals, pulses, oilseeds, sugarcane, cotton and jute. The government, however, retained the final discretion to accept, modify or reject the recommendations, since the body was purely advisory and never a statutory price-fixing authority.

In March 1985, the Agricultural Prices Commission was reconstituted and renamed the Commission for Agricultural Costs and Prices (CACP), broadening its remit to give explicit weight to the cost of production and to the wider farm economy. The CACP, which functions to this day (2026) as an attached office of the Ministry of Agriculture and Farmers' Welfare, recommends MSPs for 23 crops each season. Following the M.S. Swaminathan National Commission on Farmers (2004–06), the demand that MSP be fixed at 50 per cent above the comprehensive cost of production (the C2+50% formula) became a central political issue, prominent in the 2020–21 farmers' protests against the since-repealed farm laws. The continuity from APC to CACP makes the 1965 origin essential context for understanding India's contemporary price-support debates.

For the UPSC examination, the APC is tested chiefly in the Post-Independence India segment of the General Studies Paper I (history) and in the agricultural economy portions of GS Paper III (food security, MSP, buffer stocks, PDS). Prelims questions typically probe the year of establishment (1965), its advisory nature, its renaming to CACP in 1985, and its distinction from the FCI, which is the operational procurement agency. Mains answers should connect the APC's founding to the Green Revolution package and trace the evolution of price policy up to the C2+50% debate, demonstrating command over both the institutional history and the live policy controversy.