CACP may stick to its stand on wheat MSP

The Commission for Agricultural Costs and Prices (CACP) is likely to stick to its recommendation of not raising the minimum support price (MSP) for wheat, despite the government directing the matter be reconsidered.

Recently, the Cabinet had deferred a decision on wheat MSP. The government had asked CACP to reconsider its recommendations, owing to a rise of Rs 5 a litre in diesel price in mid-September. But officials said CACP, the government’s nodal agency for recommending MSP for farm commodities, might continue to recommend an MSP of Rs 1,285 a quintal for the 2013-14 season (April-March). This is because the cost of cultivating wheat, after factoring in the diesel price rise, would still be lower than the current MSP.

The modified weighted cost of cultivating wheat for the 2013-14 season estimated by CACP is Rs 1,098.47 a quintal. This includes transportation, insurance and marketing costs. “If we add diesel prices of Rs 30 a quintal, the cost of cultivation is Rs 1,128 a quintal, leaving farmers with a healthy margin of Rs 157 a quintal, as the prevailing MSP of wheat is Rs 1,285 a quintal,” an official said.

It is expected CACP would send its revised recommendations to the government in a few days. In a meeting earlier this month, the Cabinet had deferred a decision on changing wheat MSP for the 2013-2014 crop marketing season, owing to differences between ministries over CACP’s recommendation to freeze the price.

Officials said while the food department didn’t favour a significant increase in the wheat procurement price, owing to burgeoning stocks and the adverse impact it would have on the food subsidy Bill, the agriculture ministry felt a bonus of 10 per cent should be paid upfront to compensate farmers for rising diesel costs. The officials added even if the Cabinet overruled CACP’s recommendations and raise the MSP, the price might not be changed much.