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Centre in a spot over wheat MSP

September 18, 2007 13:17 IST

Wheat market is again hotting up with the Commission for Agricultural Costs & Prices recommending a Rs 1,000 a quintal minimum support price for the procurement of the cereal during the coming rabi season.

This is bound to create more trouble for the Centre on the wheat front.

If the Centre go according to the recommendation, it has to shell out Rs 150 more per quintal for the procurement of the commodity, which was being bought by the government during the last season at Rs 850 per quintal, inclusive of an MSP of Rs 750 and a bonus component of Rs 100.

Last year, too, the procurement price was raised by Rs 150, but the MSP per se went up by only Rs 100 (from Rs 650 to Rs 750). But this time, the panel has straightaway mooted an MSP of Rs 1,000, which works out to be Rs 250 more than the MSP for 2006-07 and Rs 150 over the final procurement price.

The CACP is currently before the concerned ministries (Agriculture, Food, Finance, and Commerce) and the Planning Commission. Based on the inputs and comments received, a final note would

be drafted by the agriculture ministry, which may be taken up by the Union Cabinet by the end of October, before the beginning of the sowing operations.

The Centre is in a spot over the CACP's recommendation. This is more so after its decision earlier this month to contract 7.95 lakh tonnes of wheat imports at $ 389.45 a tonne, which comes to a landed price of almost Rs 16 a kg at Mundra or Kandla port.

When imported wheat on the government account can be bought at Rs 16, it would be politically difficult to deny the farmer a price of Rs 10. Moreover, the old argument that it is cheaper to import wheat in the south than to transport grain from Punjab does not hold true any longer, officials said.

The CACP note is said to have also cited the report of the National Commission on Farmers under Dr M S Swaminathan, calling for fixing the MSP at 50 per cent more than the average cost of production. Besides, it has referred to the recently launched National Food Security Mission, targeting an additional eight million tonnes wheat production between 2007-08 and 2011-12.

Commodity Online