In recognition of the importance of assuring reasonable produce prices to the farmers, motivating them to adopt improved technology and to promote investment by them in farm enterprises, the Agricultural Prices Commission (Currently known as the Commission for Agricultural Costs and Prices) was established in 1965 for advising the Government on agricultural prices policy on a continuing basis. The thrust of the policy in 1965 was to evolve a balanced and integrated structure to meet the overall needs of the economy and with due regard to the interests of the producers and the consumers.
The minimum support prices are announced by the Govt. of India with a view to ensuring remunerative prices to the farmers for their produce on the basis of the Commission for Agricultural Costs and Prices (CACP) recommendations. The minimum support prices are perceived by the farmers as a guarantee price for their produce from the Government. These prices are announced by the Government at the commencement of the season to enable them to pursue their efforts with the assurance that the prices would not be allowed to fall below the level fixed by the Govt. Such minimum support prices are fixed at incentive level, so as to induce the farmers to make capital investment for the improvement of their farm and to motivate them to adopt improved crop production technologies to step up their production and thereby their net income.
Recently GOI announced a marginal increase of Rs.20 a quintal in the minimum support price of wheat to Rs.1,120
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