Financial Daily from THE HINDU group of publications
Friday, Aug 30, 2002

Port Info

Group Sites

Agri-Biz & Commodities - Foodgrains

CACP asked to rework paddy MSP

Harish Damodaran

NEW DELHI, Aug. 29

THE Commission for Agricultural Costs and Prices (CACP) will rework its recommendations for the minimum support price (MSP) for paddy and other kharif crops to be harvested during the coming 2002-03 marketing season, beginning October.

The Agriculture Minister, Mr Ajit Singh, has asked the CACP to undertake the exercise following the failure of the South-West monsoon, particularly in the peak sowing months of June and July, "which may have resulted in an increase in cost of production."

The CACP had submitted its report on Price Policy for Kharif Crops of 2002-03 on May 16. The report had, among other things, called for a freeze in the MSP for paddy at last year's levels of Rs 530 and Rs 560 per quintal for common and Grade `A' varieties, respectively.

But according to Krishi Bhawan sources, the CACP's original recommendations needed `re-examination', since the report had projected the cost of production for various crops on the basis of a normal monsoon.

An official directive issued to the CACP has cited three reasons for assuming higher costs of cultivation. Firstly, the inadequate first half monsoon rains had forced farmers to resort to massive supplemental irrigation from canal water and sub-soil water sources. This, in turn, would have required greater use of water pumps, resulting in higher consumption of diesel/electricity consumption.

Secondly, farmers who had sown their crop in June expecting normal monsoon activity in July would have had to re-sow the same in August because 2002 witnessed the "driest July of the century." This again would have meant additional expenditure on seeds, fertilisers, labour, etc.

Finally, the weak monsoon precipitation is likely to adversely impact the overall productivity of kharif crops this year, which may lead to lower farm incomes at existing prices.

The sources said that the CACP would undertake the review in the next 10-15 days and this could form a supplementary to the earlier Cabinet note prepared by the Agriculture Ministry. The Ministry had, in fact, originally accepted the CACP's recommendations, including an MSP freeze on paddy.

"But things have changed since then. It would be very awkward to announce an MSP freeze (that too, for the first-ever time) precisely in a year when drought has struck. We have, therefore, asked CACP to suggest what measures could be taken by the Government to help the farmers so as to enable them not only to recover their additional costs but also to provide them an incentive to go whole heartedly for the coming rabi sowings," the sources added.

Interestingly, the CACP is currently headless, with a Member, Dr T. Haque, officiating as Chairman. Besides Dr Haque, there are two non-official Members representing the farming community (Mr M. Raghupathy and Mr Ramdhar) and a Member-Secretary, Mr S.K. Roy. The posts of Chairman, two official Members and one non-official Member are lying vacant.

Given such a situation, it is unlikely that the CACP's conclusions would deviate substantially from what the Ministry (especially Mr Ajit Singh) perceives, observers pointed out.

Send this article to Friends by E-Mail

Stories in this Section
Expert panel moots insurance for aqua farms

Fears over import of exotic fish, shrimp — Potential harm to domestic species
Rubber prices rule steady
A prescription to stir tea industry
Compound tax eating into rice trade in Tamil Nadu
CACP asked to rework paddy MSP
Parakh Foods mulls new refineries
Vegoil seen up on tight global supplies
Coffee: Needs a potent brew
Govt nod for 4 agri-export zones — China keen on MoU to import mangoes
India's farm economy — Protect domestic producers wholeheartedly

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line