Ans: D

Exp:

The MSP for a crop is the price at which the government is supposed to procure that crop from farmers if the market price falls below it. As such, MSPs provide a floor for market prices, and ensure that farmers receive a certain “minimum” remuneration so that their costs of cultivation (and some profit) can be recovered.

On the recommendations of the Commission for Agricultural Costs and Prices (CACP) the Centre currently fixes MSPs for 23 farm commodities —

• 7 cereals (paddy, wheat, maize, bajra, jowar, ragi and barley),
• 5 pulses (chana, arhar/tur, urad, moong and masur),
• 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower and nigerseed) and
•  4 commercial crops (cotton, sugarcane, copra and raw jute).

 The CACP calculates three types of costs — A2, A2+FL and C2:

• A2: It is lowest cost, which is the actual paid-out cost incurred by a farmer.
• A2+FL: It is the actual paid-out cost plus imputed value of family labour.

C2: It is the highest of the three costs, defined as ‘Comprehensive Cost including Rental Value of Own Land (net of land revenue and interest on value of own fixed capital assets (excluding land))’.

Ans: A

Exp:

Pair 1 is incorrectly matched: Amber box: Nearly all domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box, which is defined in Article 6 of the Agriculture Agreement as all domestic supports except those in the blue and green boxes. These include measures to support prices, or subsidies directly related to production quantities.

 Pair 2 is incorrectly matched: Blue box: This is the “amber box with conditions” — conditions designed to reduce distortion. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production . At present there are no limits on spending on blue box subsidies.

Pair 3 is correctly matched: The green box is defined in Annex 2 of the Agriculture Agreement. In order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion (paragraph 1). They have to be government-funded (not by charging consumers higher prices) and must not involve price support. 

Ans: A

Exp:

Dairy is the single largest agricultural commodity that contributes 5% to India’s national economy and employ more than 8 crore farmers directly. In 2023, the average retail price of milk in the country has shot up by 10% in June year-on-year to ₹57.61 per litre.

Statement 1 is correct: With a contribution of 23% to global milk production, India holds the first production in the world.

Statement 2 is incorrect: The per capita availability of milk in 2021-22 was 444 grams per day as against the world average of 394 grams. India is one of the leading exporters of meat, dairy and poultry products. In 2022-23 financial year, the country exported meat, dairy and poultry products worth $4.03 billion, 2% lower than FY22.

Ans: C

Exp:  

The CACP projects three kinds of production cost for every crop, both at state and all-India average levels: 

• A2 covers all paid-out costs directly incurred by the farmers in cash and kind on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc. Hence , pair 1 is correctly matched
• A2+FL includes A2 plus an imputed value of unpaid family labour. Hence , pair 2 is correctly matched
• C2 is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL. Hence , pair 3 is correctly matched

CACP considers both A2+FL and C2 costs while recommending MSP while it reckons only A2+FL cost for return. C2 costs are used by CACP as benchmark opportunity costs to check if the MSPs recommended by them at least cover these costs in some of the major producing states. The CACP’s Price Policy report stated that its MSP recommendation was based on 1.5 times the A2+FL costs. The 1.5-times MSP formula was originally recommended by the National Commission for Farmers headed by agricultural scientist M S Swaminathan. Some farmers and farmers’ organizations have been agitating and making certain demands like increase in MSP for agricultural crops on the basis of C2 system.

Ans: A

Exp:

Buffer  stock  refers  to  a  ‘reserve’  of  commodity  to  offset  price  fluctuations  and  unforeseen emergencies. Introduced in 1969 (4th Plan, 1969-74), under it, Government of India maintains a buffer stock of selected foodgrains (wheat and rice) in the Central Pool for: 

• Meeting the prescribed minimum buffer stock norms for food security.

• Monthly release of foodgrains for supply through Targeted Public Distribution System(TPDS) and Other Welfare Schemes (OWS).

• Meeting emergency situations arising out of unexpected crop failure, natural disasters, etc.

• Price stabilisation or market intervention to augment supply so as to help moderate the open market prices.

Central Pool consists of stocks held by FCI, stocks of the Decentralised Procurement Scheme of the participating states and the state government agencies(SGAs).