New Delhi, December 26
After keeping the contentious issue pending for almost two months, the Centre on Wednesday announced an increase of Rs 65 per quintal in the support price of wheat, taking it up to Rs 1,350 per quintal for Crop Year 2012-13. Finance Minister P Chidambaram also announced additional wheat export of 2.5 MT to clear surplus stock and ease the storage crunch.

Predictably, the decision left farmers clamouring for a better support price. However, Commission for Agricultural Costs and Prices (CACP) chairman Ashok Gulati, who for this year had recommended freezing wheat MSP at last year’s rate, said the signal to Punjab and Haryana farmers was clear -- they need to look beyond paddy and wheat and diversify towards maize and poultry for the betterment of the soil and depleting water table.

“Punjab and Haryana’s future lies in value addition and crop diversification. There are no soft options anymore. Just asking for higher MSP will not take them (the farmers) any further,” he told The Tribune in response to the growers’ demand of Rs 2,250 a quintal for wheat.

While farmers are basing their demand on the Swaminathan Committee’s recommendations of C2+50% (cost of production + 50% more) formula for MSP calculation, Gulati says even if increased diesel prices is added and all other factors included, the cost of wheat cultivation would still work out around Rs 1,130, leaving farmers with a “good enough” profit margin.

As per experts, the modified weighted cost of wheat cultivation for Crop Year 2013-14 is around Rs 1,098.47 per quintal, including transportation, insurance and marketing costs. Also, the government, which is currently sitting on foodgrain stocks three times the size of normal buffer requirements, wants farmers to diversify into oil seeds and other foodgrains for which it is exploring options such as special packages for diversification.

In any case, Chidambaram said the Rs 65 increase in MSP was without conditions attached to it. In other words, the government has left a scope for a bonus, which will depend upon how the situations pans from here, sources said.

The CCEA also approved the Food Ministry’s proposal to allow export of an additional 2.5 MT of wheat from Food Corporation of India godowns.

In June, it had allowed export of 2 MT wheat to clear surplus stocks. The entire quantity has been contracted for shipment and 1 MT of it has already been exported. This takes the total approval for wheat exports to 4.5 MT.

The decision to export wheat is in consonance with the Commission for Agricultural Costs and Prices’ recommendation asking the government to offload at least 15 MT in the domestic and export markets to ease the storage situation. Experts say due to a drought in the US, international wheat prices are currently reigning between $330 and $340 per tonne, up from $240 to $250 per tonne some weeks back.