Faced with the specter of drought which could impact government’s annual rice procurement that starts on October 1, 2009, the central government on Thursday increased the minimum support price of paddy by Rs 100 per quintal.
It also raised the MSP of pulses by whopping Rs 240 per quintal, to encourage more farmers to plant pulses to recoup some of the losses incurred due to drop in paddy area.
The area under cultivation for paddy and some pulses has fallen this year because of low rains in main growing states. However, some experts believe that the move is fraught with dangerous of further escalating food inflation, which are almost 10- 40% more as compared to last year.
The MSP for common variety of paddy has been hiked to Rs 950 from Rs 850 per quintal and for the A-grade to Rs 980 from Rs 880 per quintal for 2009-10 season.
The decision to increase the support prices for paddy, tur, moong and sesame was taken by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh.
The MSP for tur has been increased to Rs 2,300 from Rs 2,000 per quintal, moong to Rs 2,760 from Rs 2,520 per quintal and sesame to Rs 2,850 from Rs 2,750 per quintal.
“Last year there was record procurement. I am sure farmers will offer surplus paddy for procurement this year,” home minister P Chidambaram said after the CCEA meeting.
In 2008-09 season (October-September), the government has so far procured about 325 lakh tonne of rice, which is coming handy to overcome the shortfall in production of rice now. On Wednesday, agriculture minister Sharad Pawar exhorted states to tighten their machinery to procure as much as paddy possible from the farmers in view of the expected fall in production. He suggested steps like increasing the levy quota on rice millers and maintaining record of purchases made by private millers as measures to keep a tab on supplies.
With over one-third of the country’s districts having been declared drought affected, the rice production is likely to drop by 10 million tonne in the current kharif season.
?This shortfall in monsoon may result in shortfall in area coverage of paddy by about 5.7 million hectare compared to last year and production of rice may be reduced by 10 million tonne,” Pawar had said.
Meanwhile, Chidambaram said the government is offering an attractive MSP and will see how production and procurement of paddy takes place.
Asked about what the government was doing to contain the sharp rise in prices of essential food items, Chidambaram said the states should impose stock limits which should be followed dehoarding operations.