The Hindu Business Line : Govt to freeze grains procurement price

For the first time since the institution of the minimum support price (MSP) regime in the early 1960s, farmers will receive no increase in the effective procurement price of either paddy or wheat grown by them this year.

For the ongoing 2003-04 kharif marketing season, beginning October 1, the Government had announced an MSP of Rs 550 per quintal for common paddy and Rs 580 per quintal for Grade `A' varieties.

Although these were Rs 20 per quintal higher than the MSPs declared for the 2002-03 season, farmers last year were also given a Special Drought Relief (SDR) rate of Rs 20 per quintal for their paddy, taking the final procurement prices to Rs 550 per quintal for common paddy and Rs 580 per quintal for Grade `A' paddy.

And since no SDR was announced in the current season, the effective price realisation for the farmer remained unchanged, despite an Rs 20 per quintal hike in the official MSPs.

The Cabinet Committee on Economic Affairs is expected to approve a similar procurement price freeze in the case of wheat, when it meets next week.

The Agriculture Ministry has already proposed an MSP of Rs 630 per quintal for 2003-04, to be marketed from April 1 onwards. Again, while the MSP per se would be higher than the Rs 610 per quintal figure for the 2002-03 season, the effective price to be paid by the Food Corporation of India to the farmers, after adjusting for the SDR component, would remain unchanged at Rs 630 per quintal.

If the Ministry's recommendation goes through — a likely prospect, barring some last minute accommodation to the ruling coalition's allies in Punjab and Haryana — history of sorts would be made.

A freeze in official procurement prices need not translate, however, into lower incomes for domestic grain producers. The reason for this is higher production, with the Krishi Bhawan estimating this year's kharif rice crop at 75.05 million tonnes (m.t), a 12.8 per cent jump over the previous year's drought-affected figure of 66.51 m.t.

Similarly, wheat area coverage reported, so far this year, has been 24 per cent higher, which means the overall crop size is certain to surpass the 2002-03 level of 69.32 m.t.

While the effective procurement prices for the two main cereal crops would stand frozen, the story is different, however, for oilseeds and pulses. For the ensuing rabi marketing season, the MSP for rapeseed-mustard is proposed to be fixed at Rs 1,600 per quintal (19.4 per cent higher than the final procurement price of Rs 1,340 per quintal), while it is to be raised by 14.9 per cent (from Rs 1,305 to Rs 1,500 per quintal) for safflower. Procurement prices of rabi pulses such as gram and masur (lentil) are also set to be hiked by 13-14 per cent, from Rs 1,225 to Rs 1,400 per quintal and from Rs 1,325 to Rs 1,500 per quintal, respectively.

These are steeper than even the increases of Rs 30-40 per quintal effected for kharif pulses, oilseeds and cotton.

True, MSP-fixation for pulses or oilseeds is largely an academic exercise, as the Government seldom procures these crops, unlike wheat and rice. The maximum quantities procured by NAFED amounted to 4.7 lakh tonnes (l.t.) for mustard (rabi 2002), 4.9 l.t. for soyabean (kharif 1999), 1.5 l.t. for groundnut (kharif 2001) and 17,678 tonnes for urad (kharif 2002). Compare these to the 20 m.t. each in the case of rice and wheat!

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