The MSP of kharif crops for the 2010-11 crop marketing season has been announced. The big surprise is pulses. The MSP of arhar has been hiked by a whopping 30% to Rs 3,000 per quintal, that of moong by 15% to Rs 3,170 per quintal and that of urad by 15% to Rs 2,900 per quintal. Such a sharp hike in the MSP of pulses has not been seen in the last several years. The reasoning appears to be to promote the cultivation of pulses in a big way to bring them into the same league as main crops like foodgrains and oilseeds. This, in turn, would help bridge the demand-supply gap?estimated to be around 3-4 million tonnes annually.
The gap has widened in the last decade, even as pulses production has stagnated at around 14-15 million tonnes annually, while demand has steadily increased to over 18 million tonnes. Pulses are the primary source of protein for the poor. It is in this context that the recent MSP increase poses a big challenge for the government. After the hike, the MSP of pulses, considered to be a wholesale market benchmark, will be around 30-50% of the retail prices of moong, urad and arhar that are being sold for up to Rs 100 a kg in the retail market. In other words, the base price of arhar (tur) would now be Rs 30 per kg, for moong it would be Rs 31.70 per kg and for urad it would Rs 20 per kg. There is an added incentive of Rs 5 per kg to farmers if they opt to sell to state procurement agencies during the two months of harvest or arrival season is meant to keep adequate stocks with the government to meet its social obligations.
A farmer who opts to sell arhar to government agencies will get a price of almost Rs 35 per kg. Thus, private traders definitely have to pay more than this to purchase his produce. Added to processing costs and other incidentals, this could increase retail prices. Given the experience in foodgrains, the MSP usually forms the base market rate. Raising the MSP is just one part of the solution. It should be adequately supplemented by research on new varieties and investment in irrigation (as the crop is mostly grown in arid regions), so that the objective of bridging the demand-supply gap is met in its entirety.
?sanjeeb.mukherjee@expressindia.com