Govt may finalise MSP of rabi crops in Oct

Written by Commodities Bureau | New Delhi, Sep 30 | Updated: Oct 2 2008, 05:22am hrs
To facilitate farmers to take an informed decision and to encourage them to plant more foodgrain, the central government might finalise the minimum support price (MSP) of agricultural commodities for the coming rabi season in October.

The MSP of wheat, one of the largest-grown foodgrain in the country sown during the period, is also likely to be announced at the same time. Sowing for wheat starts around October and ends in the December-January period.

The commission for agriculture costs and prices (CACP), the nodal agency that determines the minimum support price of agriculture produce, has submitted its final proposal to the government for consideration.

According to sources, the CACP has recommended the biggest hike in MSP for chana (chikpeas), while the lowest has been for wheat. The commission had recommended a MSP of around Rs 1,100 per quintal for wheat in the coming year, which is less than what it had been doing since the last two years, as the current MSP is already 60% more than the cost of the wheat crop, sources said.

FE hadreported in June that the commission was not keen on recommending a significant hike in the MSP for wheat in 2008, because the current MSP is more than the average cost of wheat. The government raised the MSP of wheat by Rs 150 per quintal, to Rs 1,000 per quintal for the 2008-09 marketing season (April-June).

In a span of just two years, the MSP has been raised by a whopping Rs 300 per quintal, which also includes bonuses announced virtually every year. Sources said that as the cost of harvesting wheat was around Rs 620 per quintal, the MSP is already Rs 1,000, which is almost 60% more than MS Swaminathans recommendation of being 40% over cost of production, so another significant hike in MSP seems unwarranted.

A major reason for the sharp increase in the area under wheat and an all-time high crop of over 78 million tonne was the early announcement of MSP and a substantial increase which followed.

Sources said that this time around the MSP for other rabi-grown crops was not expected to be much higher than that of last year.

The MSP for mustard and other crops will be calculated at cost of production plus a 10% margin, another official said. During the ongoing kharif sowing season, the government had hiked the MSP of paddy, the main foodgrain grown in the season, to around Rs 850 per quintal, lower than the CACPs recommendation of Rs 1,000 per quintal.