Recently the term A2, A2+FL and C2 for defining the production cost was in news. It is related to:
Production cost of shale gas.
Production cost of agricultural crops.
Production cost of solar power.
Production cost of coal.
• The Commission for Agricultural Costs and Prices (CACP) gives three definitions of production costs of agricultural crops: A2, A2+FL and C2.
• A2 costs basically cover all paid-out expenses, both in cash and in kind, incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel, irrigation, etc.
• A2+FL cover actual paid-out costs plus an imputed value of unpaid family labour.
• C2 costs are more comprehensive, accounting for the rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL.