The Hindu Business Line : Wheat growers unlikely to get bonus

Last year, we hiked the MSP by Rs 100 and gave a bonus of Rs 100, but this time, we have included both and announced the Rs 1,000 MSP, say officials.

M.R. Subramani

New Delhi, April 14

The Centre is unlikely to offer bonus payment to wheat growers over and above the Rs 1,000 a quintal minimum support price (MSP) announced for this year’s procurement.

When contacted, Government officials said there were no plans for bonus since it had been factored in the MSP. “The Rs 150-hike in the MSP this year takes into account the bonus. Last year, we hiked the MSP by Rs 100 and gave a bonus of Rs 100, but this time, we have included both and announced the Rs 1,000 MSP,” say officials.

Initially until the middle of March, indications were that a bonus payment was on cards for the growers. But developments since then have changed the scenario in the market and the Government’s thinking.

Private buyers are out of Punjab and Haryana markets as they will have to foot a higher price than what they will have to in Madhya Pradesh, Maharashtra or Gujarat. This is because of higher market fees, value-added tax and payment for ‘arthiyas’ (commission agents).

Also, the flour mills seem to be well-stocked and things are not turning out in the farmers’ favour what with last year’s stocks finding their way into the market. A south Indian flour mill has got last year’s crop from Gujarat at Rs 12,600 a tonne at its gate.

In Madhya Pradesh, the private trade has bought wheat at Rs 1,080 a quintal. In fact, Madhya Pradesh wheat is superior to the Punjab and Haryana varieties due to higher gluten content of 13-14 per cent.

This leaves the field clear for the Central procurement agencies, which will have to foot Rs 1,190 a quintal for buying wheat at the current MSP besides footing commissions, levies, packaging, labour and transport charges in Punjab and Haryana.

Trade sources say FCI has recommended bonus payment for growers to ensure the procurement target is met but market developments have left the Centre to review its stand. The Union Food and Agriculture Minister, Mr Sharad Pawar, during his visit to Chandigarh last week, said the Centre will look into the issue of bonus taking all developments into consideration. He also pointed out the higher market cess and VAT imposed by the Haryana and Punjab Governments as hurdles in announcing the bonus.

“Moreover, with inflation over 7.5 per cent, any bonus announcement will only lead to the consumer price index soaring. The Centre does not want inflation to get out of hands and, therefore, bonus is unlikely,” government officials said.

Political issue

On the other hand, the issue of bonus payment is turning out to be a political with the Akali Dal seeking a bonus of Rs 400 and the Congress leaders in Haryana seeking Rs 200 a quintal.

A section of the trade also feels that with global prices above Rs 16,000 a tonne, the Centre will be under pressure to pay bonus.