Explanation:

Only statement 2 is correct.

For the first time, in 1966-67, the minimum support price (MSP) of wheat and paddy was fixed. To fix the price, the central government constituted the Agricultural Prices Commission, which was later renamed as the Commission for Agricultural Costs and Prices (CACP) in 1985.

This means that the minimum support price (MSP) system was introduced in the country to protect the interests of the farmers in general. Under this system, even if the price of a crop falls in the market, the central government procures it at the fixed MSP from the farmers so that they can be shielded against losses.

The MSP of a crop is the same throughout the country.

The Food Corporation of India (FCI) was constituted in 1965 on the recommendation of the LK Jha Committee. The government stores the grains procured from the farmers with the FCI and NAFED (National Agricultural Cooperative Marketing Federation of India) from where the grains are distributed to the poor under the Public Distribution System (PDS).

Since 2009, the Commission for Agricultural Costs and Prices fixes the minimum support price of a crop based on cost, demand, supply position, price changes, market price trend, different costs and international market prices.

The Ministry of Agriculture also claims that the cost of production of cultivation does not only include cash expenditure (as per market) but also the cost of labour (as per market rate). This means that agricultural wage rate is also considered while setting up of the MSP.