The Hindu Business Line : Centre likely to pay bonus to wheat growers

Mounting pressure
Centre to take decision on bonus payment by March.
It will have to incur an additional cost of Rs 750-1,500 crore.
FCI hopeful of meeting rice, wheat procurement target.

M.R. Subramani

Bangalore, Feb. 8 The Centre is set to announce a bonus payment of Rs 50-100 a quintal for wheat growers, following pressure from farmers as well as some State Governments. The payment will be over the Rs 1,000 a quintal minimum support price (MSP) announced by the Union Government before wheat sowing began.

“An announcement regarding bonus payment will be made by March,” said informed sources, who did not wish to be identified.

Soaring global prices

There has been growing unrest among farmers in wheat-growing States in view of galloping global prices, while political pressure has also been piling on the Centre in the form of demand from Punjab and Haryana Governments.

“Given the fact that global prices are ruling around Rs 16 a kg, there should be no surprise if the Centre announces a bonus payment for wheat farmers,” a roller-flour miller said.

On Thursday, wheat on Chicago Board of Trade, seen as a benchmark by traders, hit a five-month high of $10.93 a bushel or Rs 15,500 a tonne.

In the event of the bonus payment, the Centre will have to incur an additional cost of between Rs 750 crore and Rs 1,500 crore, depending on the amount that it offers to make to the growers.

Buffer stocks

Industry sources said the Centre would have to pay a higher price for procuring wheat for buffer stocks in view of higher global prices. “The Government has to pay more or otherwise the Union Government’s procurement scheme may face problems,” they said.

The Centre has set a target of procuring 150 lakh tonnes of wheat this year.

Meanwhile, speaking on the sidelines after inaugurating the two-day International Seminar on Wheat and Wheat Products, the Union Minister of State for Consumer Affairs, Dr Akhilesh Prasad Singh, told reporters that the country would not have to import wheat during 2008-09.

“Buffer stocks are expected to be 53 lakh tonnes as on April 1 and it is more than the norms set by the Government. Production, on the other hand, is expected to be 74.81 million tonnes (mt) and we think it would meet our demand,” he said.

Though production would be lower than last year’s 75.81 mt, the carryover stocks would take care of the situation.

As per buffer stock norms, the country should have 40 lakh tonnes of wheat as on April 1.

Asked about bonus payment, the Minister said: “We will consider it before procurement begins. We may take a decision in March.”

Procurement

On the rice situation, Mr Singh said buffer stocks procurement for the marketing season ending September was higher by nearly four lakh tonnes at 180 lakh tonnes as on Thursday compared with the same period a year ago.

“We are hopeful of achieving the procurement target of 276 lakh tonnes against last year’s purchase of 250.75 lakh tonnes,” he said.

Mr Alok Sinha, Chairman and Managing Director of the Food Corporation of India, said as per the agency’s assessment, it could procure 150 lakh tonnes of wheat. “We will be in the market to ensure that there is no distress sale by the farmers. If the farmers get a price better than the MSP, we will only be happy,” he said.

All arrangements were in place and the tie-up with the National Agricultural Marketing Federation would continue this year too for procurement of wheat.

On the rice situation, he said stocks as on April 1 would meet or be near the buffer norm of 122 lakh tonnes.

To a question on rice procurement for buffer stocks, he said despite a two lakh tonnes setback in Tamil Nadu, it could be around 265 lakh tonnes to 275 lakh tonnes. In Tamil Nadu, standing paddy crop was affected due to untimely rains during kharif but it was expected to be made good during the current rabi season, he said.

“Even the initial slack seen in procurement was due to delay in the arrivals,” he said.

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