Cabinet set to increase support price for wheat

The Cabinet is likely to announce next week an increase in the minimum support price (MSP) for wheat. With general elections scheduled for next year, this crucial exercise in national food management could be electorally significant, reports Zia Haq.

The Cabinet is likely to announce next week an increase in the minimum support price (MSP) for wheat.

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With general elections scheduled for next year, this crucial exercise in national food management could be electorally significant.

The MSP — the price the government assures farmers to avoid distress sales — is critical because it determines productivity, procurement and governs the farmer’s choice of crops.

A senior official said the hike would be eight per cent over the current rate of Rs 1,000 per quintal. The government is open to announce a higher price — highly possible in an election year — but not a price lower than the recommended MSP.

The Commission for Agricultural Costs and Prices, the panel that fixes the MSP, has worked out a “50 per cent hike” over what is called the “C2 price” for wheat, defined as actual expenses incurred in cash and kind by the farmer, plus interest on value of owned capital assets, a senior official said, requesting anonymity as he is not authorised to speak to the media.

Commission chairman S Mahendra Dev told HT: “We have recommended a good remunerative price for wheat, which should boost productivity and procurement.” Wheat is a rabi (winter) crop, sown in October-November.

The MSP is the country’s method in maintaining food security by which the government buys wheat and paddy at a fixed price and sells it for a lower price through the public distribution system (PDS). The MSP also influences domestic food prices.

Official figures said wheat procurement during 2008-09 was 22.54 metric tonnes, twice of that in 2007-08. “We are in a good food security position. Wheat prices have come down internationally from $450 in March to $170 now,” Shiraj Hussain, joint secretary in the ministry of food, said.

However, P Chengal Reddy, secretary general of the Consortium of Indian Farmers’ Association, said the Centre had “totally neglected” farmers by not implementing the MSP recommendations made by the MS Swaminathan Committee for Support Prices.