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The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (ifany) paid to the farmers plus
- a)procurement incidentals and distribution cost
- b)transportation cost only
- c)interest cost only
- d)procurement incidentals and charges for godowns
Correct answer is option 'A'. Can you explain this answer?
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The economic cost of food grains to the Food Corporation of India is M...
The Economic Cost of Food Grains to the Food Corporation of India
The economic cost of food grains to the Food Corporation of India (FCI) is the total cost incurred by FCI in procuring and distributing food grains to the consumers. This cost includes the Minimum Support Price (MSP) and bonus (if any) paid to the farmers, procurement incidentals and distribution cost, transportation cost, and interest cost. Let's break down these costs to understand them better.
Minimum Support Price and Bonus
The Minimum Support Price is the price at which the government buys food grains from farmers to ensure that they get a fair price for their produce. The bonus is an additional amount paid to the farmers over and above the MSP to incentivize them to produce more. The MSP and bonus (if any) paid to the farmers form a significant portion of the economic cost of food grains to FCI.
Procurement Incidentals and Distribution Cost
Procurement incidentals are the expenses incurred by the FCI in the process of procuring food grains from the farmers. These expenses include the cost of gunny bags, weighing, and other miscellaneous expenses. Distribution cost is the cost incurred by FCI in transporting the food grains from the procurement centers to the godowns and then to the distribution centers.
Transportation Cost
Transportation cost is the cost incurred by FCI in transporting the food grains from the godowns to the distribution centers. This cost includes the cost of hiring trucks, maintenance, and fuel expenses.
Interest Cost
Interest cost is the cost incurred by FCI in financing its working capital requirements. FCI has to borrow money to pay the farmers and meet other expenses. The interest cost is the cost of borrowing this money.
Conclusion
The economic cost of food grains to FCI is the sum total of all the above costs. It is important for the government to keep the economic cost of food grains low to ensure that food grains are available to the consumers at affordable prices.
The economic cost of food grains to the Food Corporation of India (FCI) is the total cost incurred by FCI in procuring and distributing food grains to the consumers. This cost includes the Minimum Support Price (MSP) and bonus (if any) paid to the farmers, procurement incidentals and distribution cost, transportation cost, and interest cost. Let's break down these costs to understand them better.
Minimum Support Price and Bonus
The Minimum Support Price is the price at which the government buys food grains from farmers to ensure that they get a fair price for their produce. The bonus is an additional amount paid to the farmers over and above the MSP to incentivize them to produce more. The MSP and bonus (if any) paid to the farmers form a significant portion of the economic cost of food grains to FCI.
Procurement Incidentals and Distribution Cost
Procurement incidentals are the expenses incurred by the FCI in the process of procuring food grains from the farmers. These expenses include the cost of gunny bags, weighing, and other miscellaneous expenses. Distribution cost is the cost incurred by FCI in transporting the food grains from the procurement centers to the godowns and then to the distribution centers.
Transportation Cost
Transportation cost is the cost incurred by FCI in transporting the food grains from the godowns to the distribution centers. This cost includes the cost of hiring trucks, maintenance, and fuel expenses.
Interest Cost
Interest cost is the cost incurred by FCI in financing its working capital requirements. FCI has to borrow money to pay the farmers and meet other expenses. The interest cost is the cost of borrowing this money.
Conclusion
The economic cost of food grains to FCI is the sum total of all the above costs. It is important for the government to keep the economic cost of food grains low to ensure that food grains are available to the consumers at affordable prices.
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The economic cost of food grains to the Food Corporation of India is M...
The economic cost of food grains procured by the FCI is a total of MSP and bonus (if any) paid to the farmers plus the procurement incidentals and distribution cost. The procurement incidentals are the initial costs incurred during procurement of food grains. The distribution costs include freight, handling charges, storage costs in godowns, losses during transit etc.
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The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (ifany) paid to the farmers plusa)procurement incidentals and distribution costb)transportation cost onlyc)interest cost onlyd)procurement incidentals and charges for godownsCorrect answer is option 'A'. Can you explain this answer?
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