Higher MSP alone cannot boost farm growth: CACP

A higher support price for farmers' produce cannot ensure agriculture growth unless non-price factors like irrigation and storage facilities are put in place, the Commission for Agriculture Costs and Prices (CACP) said today.

The CACP, which was founded in 1965, is a statutory body and advises the government on the pricing policy for major farm items.

"Price is an important and critical instrument to improve production, but price alone is not sufficient to change the situation of agriculture where it is today," newly-appointed CACP Chairman Ashok Gulati told PTI.

He stressed that non-price factors such as good seeds, water management and good storage facilities need to be put in place to achieve the desired growth of 4% in the agriculture sector.

The government has kept a target of 4% per annum farm growth for the Eleventh Plan (2007-12). This fiscal, the agriculture sector is expected to grow at the rate of 5.4%, as against 0.4% last year.

Asked how he would strike a balance between a high support price for farmers and inflation, Gulati said, "Currently, inflation is not in rice and wheat, but it is in fruits, vegetables, fish and poultry products -- which are not under the purview of the CACP."

He also mentioned that prices of some food items are rising due to an increase in the cost of production.

"Poor people would like to have wheat at Rs 2 per kg. Who will produce wheat at such low price? So, the question is if you have to protect the poor, then give conditional cash transfer," he suggested.

Noting that the CACP's mandate is to recommend an assured price for farmers, Gulati said that "it cannot simply recommend a higher MSP for agricultural commodities without keeping in view the foodgrains stock situation, cost of production, inflation and other factors".

Through the MSP mechanism alone, farmers cannot be asked to produce more foodgrains in the absence of proper storage infrastructure. "Both things have to be kept in mind while recommending any good incentive price for farmers," he noted.

For the 2010-11 crop year, the MSP of wheat has been fixed at Rs 1,120/quintal, paddy at Rs 1,000-1,030/quintal, gram at Rs 2,100/quintal, masur at Rs 2,250/quintal, arhar at Rs 3,000/quintal and moong at Rs 2,170/quintal.