Agricultural prices cover prices of agricultural products (output prices) and prices of requisites for agricultural production (input prices) at various stages of marketing. The structure of Indian agricultural marketing system consists of: Agricultural Co-operative Marketing Societies; Regulated Markets; Public Trading and Futures Trading.
Commission for Agricultural Costs and Prices (CACP) while recommending the minimum support prices takes into account all-important factors, which are as follows:-
i) Cost of Production
ii) Changes in Input Prices
iii) Input/Output Price Parity
iv) Trends in Market Prices
v) Inter-crop Price Parity
vi) Demand and Supply Situation
vii) Effect on Industrial Cost Structure
viii) Effect on General Price Level
ix) Effect on Cost of Living
x) International Market Price Situation
xi) Parity between Prices Paid and Prices Received by farmers (Terms of Trade).
Agricultural price policy is basically aimed at intervention in the agricultural produce markets with a view to influencing the level of fluctuations in prices and price-spread from farm-gate to the retail level. The instruments of agricultural price policy comprised mainly the controls/restrictions of various forms, imports of food grains and distribution of imported grains at below the market prices.