Rs 35 hike in wheat price recommended

CHANDIGARH, (IPA) — The Commission for Agricultural Costs and Prices (CACP) is understood to have recommended an increase of Rs 35 per quintal in the minimum support price (MSP) of wheat for the 1998-99 crop over last year’s recommended price of Rs 455 per quintal.

The Commission has also reportedly suggested that MSPs for barley, gram, rape seed/mustard and safflower be fixed at Rs 385, Rs 895, Rs 1,000 and Rs 990 per quintal respectively against last year’s recommended prices of Rs 350, Rs 815, Rs 940 and Rs 910 per quintal.

In its report on the price policy for rabi crop of 1998-99 submitted to the Centre, the Commission has broadened its ambit and dealt with important issues relating to food security, procurement, wheat bonus, foodgrain distribution and movement and wheat imports which have far-reaching implications.

It has recommended that as the supply situation of foodgrain was currently quite comfortable, no further contracts be entered for the import of wheat during the current year.

The issue of wheat bonus which lately has acquired unusual importance figures prominently in the CACP report. As the new recommended price of Rs 490 falls short by Rs 20 a quintal than the current year’s effective MSP of Rs 410 for wheat, the government is expected either to fix more than Rs 510 per quintal as MSP for the next season or announce a wheat bonus as it had done in the past two years.

The situation has prompted the CACP to make certain suggestions concerning the practice of announcing wheat bonus, often due to political compulsions, which, in turn, create anomalous situations not only adversely affecting the consumer and increasing food subsidies but also distorting open market price structure and fuelling inflation.

The Commission has suggested that if the government had any reason to revise upwards the MSP recommended by the Commission, other than those which are already contingent on market circumstances after the harvest, it should do so at the stage of MSP fixation itself.

The government should make a clear announcement that any bonus in the future will be contingent on it being transparently evident that adequate procurement will not occur at the MSP fixed earlier, and that it should take certain concrete decisions to make this credible. For example, announcement of any bonus for wheat can be delayed till after the end of April to provide a period of price discovery; and, if any bonus is announced, this could be linked to a procurement target which when reached would automatically lead to the withdrawal of the bonus.

The Commission’s views assume importance in view of the past two years experience. As the market price of wheat in 1996-97 had exorbitantly shot up raising fears of inadequate procurement, the Government announced a wheat bonus of Rs 60 per quintal over the previously announced MSP of Rs 415. But in 1997-98 when the open market price of wheat was lower than the MSP, the government, under political compulsions, announced a wheat bonus of Rs 55 per quintal after announcing an MSP of Rs 455 per quintal.

In its latest report, the CACP has suggested that as and when the price policy is being announced for different agricultural commodities, the government should also seriously look into the financial implications this has for agencies implementing the support price policy. Besides, the central government should consider fixing uniform procurement prices inclusive of statutory levies, allowing states the option of imposing the full levies or earmarking the difference for a fund which can be used only for market development.

The Commission has recommended that a system of variable tariffs on both imports and exports of agricultural goods should be considered for early adoption and well before dismantling existing quota restrictions. On the issue of import duty on edible oils, particularly on palmolein and palm oil, in the medium term, it needs to be increased and not reduced.

The report suggests that the allocation of foodgrain under the Targeted Public Distribution System, including the food for works provision within it, be increased substantially, particularly for those below the poverty line and that arrangements should be made to meet any residual need for counter-inflationary release of government stocks through a modified version of open market sales, along the lines earlier suggested by the Commission.

Apparently concerned over falling wheat productivity, the Commission has recommended that the Integrated Cereal Development (Wheat) Programme be evaluated as soon as possible, preferably by an agricultural university or institution. A totally new programme delinked from ICD (Wheat) should be launched to tackle the special problems of high yield areas like Punjab, Haryana and Uttar Pradesh.

It has also suggested that planned and budgeted expenditures on agriculture be protected from subsequent cuts because of fiscal and other reasons.

Dealing with the problems of plenty created by accumulation of procured foodgrain in the major surplus states, the Commission has opined that the Department of Food, the FCI and the Railways should set up a High-Level Standing Committee to discuss the problems of foodgrain movement on a regular basis so that the grains were not spoiled at major procurement centres for want of proper storage facilities, or due to lack of timely movement to the consuming regions. This Committee may also consider urgently the matter of disposal of relaxed quality rice, keeping in view the standards of acceptability of the consuming states.