• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Harish Damodaran

New Delhi, Dec. 28 The Centre is in a bind over the issue of raising the minimum support price (MSP) of the 2008-09 wheat crop to be marketed from April next.

The Cabinet Committee on Economic Affairs (CCEA), which met here on Friday, deliberated on the subject without arriving at a consensus on the MSPs to be fixed for wheat and rapeseed-mustard – the two most important crops planted in the rabi (winter) season.

The Commission for Agricultural Costs and Prices (CACP) had suggested an MSP of Rs 1,080 a quintal for this year’s wheat crop, as against the Rs 1,000 level of 2007-08.

For rapeseed-mustard, it had proposed an increase from Rs 1,800 to Rs 1,900 a quintal.

“There were differences expressed (in the CCEA meeting) over the extent of MSP hikes to be granted.

This was on account of conflicting views by the Agriculture Ministry, on the one hand, and the Finance Ministry (technically under the Prime Minister) and the Planning Commission, on the other. The former has favoured the CACP’s recommendation, while the latter two see no justification for any MSP increases at this point,” said highly placed sources.

Besides, there were some Ministers who apparently even questioned the need for announcing the MSPs now, given that harvesting of the standing rabi crop is more than a couple of months away. “In all likelihood, they will eventually settle for an MSP of Rs 1,050 for wheat and Rs 1,850 in the case of rapeseed-mustard,” the sources added.

Last year – and also the preceding two years – the Centre had declared the rabi MSPs by early-October, well before the start of sowing operations. The idea was to send the ‘right’ signal to farmers in order to induce them to plant more, especially in the context of domestic shortages and spiralling international prices.

But now, with inflationary pressures easing along with a crash in global commodity prices, the Centre is in no desperate hurry to appease farmers. Even without the MSPs being announced, progressive sowing reported so far of wheat, at 250.43 lakh hectares (lh), is more than the 244.34 lh covered during this period last year. Likewise, cumulative rapeseed-mustard acreage has expanded from 58.11 lh to 65.18 lh.

In fact, the Centre’s main worry now is over dealing with a prospective glut situation in most agri-commodities – a far cry from how things were only 5-6 months ago. Wheat stocks with the Food Corporation of India and State agencies are currently at a six-year-high, with the same being true for rice as well.

With all indications of a bumper wheat crop and rice procurement in the ongoing kharif marketing season on course to surpass the record 284.93 lakh tonnes (lt) of 2007-08, the worst fears are of a repeat of 2000-04 taking place. The period from 2000-01 to 2004-05 saw almost 300 lt of foodgrains – 178.29 lt of wheat and 120.81 lt of rice – getting exported from the Central pool at highly subsidised rates.

In rapeseed-mustard, too, there have been years such as 2006-07, when the National Agricultural Cooperative Marketing Federation (Nafed) ended up buying over 22 lt, representing more than a quarter of the domestic output. “The Centre is also concerned whether a higher MSP would push up edible oil prices during election time,” the sources noted.

More Stories on : Wheat | Agricultural Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2008, 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