Oilseed floor price raised, wheat to get less support

In a clear message to farmers on the margins to switch from grains to oilseeds, the Cabinet on Tuesday approved one of the biggest increases in minimum support price of rabi oilseeds, but limited it in the case of wheat.

The minimum support price (MSP) of wheat was raised from Rs 1,170 per quintal (which includes a bonus of Rs 50 per quintal), to Rs 1,285 per quintal, an increase of around 10 per cent.

But, the support price for mustard was raised by 35 per cent to Rs 2,500 per quintal, while that of chana and masoor was raised by Rs 33 per cent and 24 per cent, respectively to Rs 2,800 per quintal for each.

“We want farmers in the margins to switch from grains to oilseeds as on the one hand our grain stocks are overflowing, and on the other hand, in 2010-2011 India imported edible oils worth Rs 29,000 crore. This needs to be corrected,” Ashok Gulati, chairman of Commission for Agricultural Costs and Prices (CACP) told Business Standard.

CACP, the government’s nodal agency for setting price of farm commodities that government pays, had recommended increasing the MSP of wheat for 2012-2013 crop marketing season that starts from April to Rs 1,350 per quintal, a jump of almost Rs 180 per quintal over and above the current price.

However, the MSP rise to Rs 1,350 per quintal depends on the states reducing their mandi tax to four-five per cent from 14 per cent in big grain producing states like Punjab.

The finance ministry was believed to have been not in favour of such a proposal. It also feared rise in retail prices if the proposal was accepted.

Officials said the food ministry, too, was not in favour of the increase as suggested by the CACP on the grounds that it will inflate the subsidy bill, which is already poised to cross Rs 100,000 after the Food Security Bill is passed.

“Heavy taxes distort the markets and ward off private traders. This is unjust to states like Madhya Pradesh, which are emerging as big contributors of grains to the central pool, but levy much less tax on primary products,” the official said.