Panel moots 5% cap on hike in paddy support price

CACP believed to have ranked states on marketing of farm produce

As with wheat, the Commission for Agricultural Costs and Prices (CACP) has recommended no more than a five per cent increase in the Minimum Support Price (MSP) for paddy for the 2013-14 kharif crop marketing year, starting October.

Officials said its latest price report on kharif crops has recommended the MSP of common grade paddy at Rs 1,310 a quintal, just Rs 60 more than the current one. For Grade ‘A’ paddy, it has proposed Rs 1,340 a quintal; it is now Rs 1,280 a quintal.

If approved by the Cabinet, this will be one of the lowest increases in the MSP of paddy in the past five-odd years. Officials in the know said this was to correct the market, which had moved up sharply in recent years because of a steep rise in MSP. The marginal increase is also meant to check the government’s rising food subsidy bill, expected to exceed Rs 100,000 crore in 2013-14. (Click for chart & table)

Between 2010-11 and 2012-13, the MSP of common grade paddy was raised 25 per cent and of grade ‘A’ by 28 per cent. Some officials said the nominal increase was also in line with the government policy to encourage cultivation of alternative crops such as oilseeds and pulses,  in place of foodgrain such as wheat and rice.  

No rise has been suggested for the MSPs of tur, urad and sunflower. For maize, moong, groundnut, yellow soybean and medium staple cotton, the recommended percentage rises are 11.5, 2.27, 8.1, 14.3 and 2.7, respectively, officials added.

In its earlier price recommendations, the CACP had recommended freezing the MSP of wheat for the 2013-14 crop marketing season that will start from April.

The government disagreed because of the sharp increase in diesel prices. The MSP of wheat for 2013-14 was finally settled at Rs 1,350 a qtl, about Rs 65 more than the earlier MSP of Rs 1,285 a qtl.

The Commission is also believed to have, for the first time, ranked states on the basic ease of marketing farm produce. The rank indicates how efficient is the agricultural marketing system in a state and how suitable it is for farmers to sell produce.  

“We have also tried to highlight the massive paddy marketing problem in the eastern states of Bihar, West Bengal, Odisha and so on, where farmers are forced to sell produce at 15-20 per cent below the MSP because the official procurement system is weak,” said another senior official from the department of agriculture.

The report on kharif price policy for 2013-14 is also expected to highlight the plight of farmers of eastern India, who have been left out of MSP regime because of inefficient procurement mechanism. “In many places of east India farmers had to sell their produce at 15-20% below the government determined MSP, which makes the whole exercise somewhat irrelevant,” another official said.