CACP fixes kharif MSPs, wants freer rice trade

Removal of the export bar on rice and allowing private retailers to procure grain for the Public Distribution System are among the recommendations made by the Commission on Agricultural Costs and Prices (CACP) while fixing minimum support prices (MSPs) for various kharif crops.

The report was given to the Union agriculture ministry last week. The report also asks for waiving the mandi tax for foodgrain, to lower the gap between wholesale and retail prices. And, to compensate farmers not covered by the MSP structure in another way.

It also wants more incentives for the eastern region to grow paddy and wheat, to diversify away from the traditional dependence on the north for these products.

The MSP it has recommended for paddy is Rs 1,080 a quintal, against the current MSP of Rs 1,000 a qtl. The Commission feels paddy farmers are “net-taxed”.

Official sources said the price a rice farmer gets in the current restricted environment was lower than what it would have been in a free market for trade. Rice is currently not exported, except for some varieites of basmati.

The CACP has fixed the MSP for cotton at Rs 2,800 per qtl (Rs 2,500 per qtl now), for sunflower at Rs 2,850 per qtl (Rs 2,350 now, tur/arhar at Rs 3,100 (Rs 2,800 now ), urad at Rs 3,300 (Rs 2,900), moong at Rs 3,450 (Rs 3,170 now), nigar seed at 2,900 (Rs 2,450) and sesame at Rs 3,900 (Rs 2,900). That for tobacco has been kept at Rs 5,000 per atl.

This review covers 15 kharif crops: the cereal ones of paddy, jowar, bajra, maize and ragi; tur, urad and moong among pulses; groundnut, soyabean, sunflower, sesame and nigar seed in oil seeds, and cotton and tobacco.

As for MSP coverage, it says half of all farmers aren’t getting the benefit. In which case, there must be other compensatory mechanisms. The report also makes a pitch for a focused agricultural budget on seed and technology development.

The CACP also feels the higher inflation overall is not due to the MSP system or grain prices, but due to the higher prices of meat, dairy products and fish.

Determination of MSP takes into account cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, on the general price level, the international price situation, parity between prices paid and received by farmers, and the effect on issue prices and implications for subsidy.