Q. 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

• transportation cost only
• interest cost only
• procurement incidentals and distribution cost
• procurement incidentals and charges for godowns

Answer: (c) procurement incidentals and distribution cost

Notes:

• The economic cost of food grains procured by the Food Corporation of India (FCI) is a total of Minimum Support Price and bonus (if any) paid to the farmers plus the procurement incidentals and distribution cost.
• FCI’s economic cost has three main components – procurement cost, procurement price, and distribution cost.
• The procurement incidentals are the initial costs incurred during the procurement of foodgrains.
• The distribution costs include freight, handling charges, storage charges, losses during transit and establishment cost.