Home › PYQs › Agriculture › All questions › 2019 · FCI economic cost
UPSC Prelims 2019 · Agriculture · Farm Money
The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
- (a) transportation cost only
- (b) interest cost only
- (c) procurement incidentals and distribution cost
- (d) procurement incidentals and charges for godowns
Show the answer and explanation
Answer: (c) procurement incidentals and distribution cost
Economic cost = MSP (and bonus) + procurement incidentals (mandi charges, bags, handling) + distribution cost (transport, storage, losses).
Why the others are wrong
(a) Transport is only part of it.
(b) Interest is only part of it.
(d) Leaves out distribution costs.
The trap
(d) sounds complete, but distribution cost is broader than godown charges.
🔒 FCI economic cost = acquisition cost (MSP + incidentals) + distribution cost.