The Hindu Business Line : <I>No announcement on minimum support price yet </I>

Today is June 2. The southwest monsoon broke over the country a week ahead of the normal date. Monsoon is progressing well and has already touched Saurashtra in Gujarat.

Conditions are propitious for planting the kharif season crops.

Yet, the Centre has not done what it ought have done much before the onset of monsoon and in any case by early May. Minimum support price (MSP) for kharif crops has not yet been announced.

What is holding up the decision is not known. But this is the Government that claims to be doing everything to promote agriculture and farmers' interest! The recent bitter experience in wheat is fresh in everyone's memory. The Government announced a bonus of Rs 50 a quintal over and above the procurement price of Rs 650 a quintal. But the bonus announcement came three weeks too late. Wheat procurement has been hit badly.

Farmers on their own

Of course, in recent years, farmers have stopped bothering about MSP. They go about planting according to their judgment based on past practice or price outlook.

Policymakers have failed to use MSP as an instrument to encourage specific crop production or crop diversification. It has become more of a ritual than instrument to facilitate crop planning.

Assuming normal rainfall over the next four months, there is nothing to suggest a substantial growth in farm output in kharif 2006. Whether paddy, coarse cereals or oilseeds there are no indicators to infer either acreage expansion or yield improvement and overall output increase.

Sugar & cotton

Sugarcane crop that was planted late 2005 is looking good. It is possible the harvest could rebound to about 300 million tonnes. Experience of last three years and prices last season suggest that cotton crop could do well - perhaps 240-250 lakh bales. (This, notwithstanding the ongoing controversy over pricing of Bt cottonseed).

Otherwise, on current reckoning, 2006 kharif season is likely to be just about as normal as the last three years with no dramatic improvement in crop size. Should such a development materialise, we could witness further tightness in supplies of critical food commodities like rice, maize, groundnut and pulses. This will lead to price spurt and inflation.

However, distribution of rains is critical. Although India Meteorological Department has forecast a slightly below-normal southwest monsoon, if well distributed - temporally and spatially - kharif farm output could still show modest levels of growth.

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