Wheat MSP must be linked to market price, says expert

The government's minimum support price for wheat in the ensuing rabi season should be linked with the market price, noted farm scientist M S Swaminathan said.

"Farmers should be given a minimum price, calculated on the basis of input cost and 50 per cent over and above this cost," Swaminathan said in an interview.

Last year, the support price for wheat was Rs 850 per 100 kg as against the average market price of Rs 1,000-1,100.

The Commission for Agricultural Costs and Prices has recommended Rs 1,000 per 100 kg as the wheat support price for this year's rabi season.

Wheat, India's main rabi, or winter-sown, crop is sown during October-November, and harvested from February onwards.

India is targeting a wheat output of 75.5 million tonnes in 2008, unchanged from this year's production of 74.89 million tonnes produced this year.

Swaminathan, called the father of India's Green Revolution, said adopting a market-linked support price mechanism would ensure a good response to state-run agencies' wheat procurement programme.

He favoured a procurement price linked to international rates. "The procurement price should be benchmarked against global prices." Contrary to the current practice, there should also be a distinction in the minimum support price and procurement rates, he said.

"The minimum support price should be the base procurement price," he said. Currently, the minimum support price is considered the procurement price for the commodity by state-run agencies, and not the floor price.

Swaminathan said the government's procurement of the food grain was falling short of target due to the twin factors of low growth in production and aggressive buying by private companies such as Reliance, ITC and Cargill. During the last two years, the Food Corporation of India, the country's nodal food grain procurement agency, has been failing to meet its wheat procurement target, making India a net importer of the food grain.

Last year, the government had procured 9.4 million tonnes of wheat as against the targeted 16.4 million tonnes. This year wheat procurement fell 4 million tonnes short of the target at 11 million tonnes.

India imported 5.5 million tonnes of wheat last year, while 1.3 million tonnes in imports have so far been contracted since the beginning of the current financial year in April.

The government's wheat import decision, at a time when the global prices of the food grain have been on the boil due to squeezed supplies, has been flayed by not just the opposition parties, but also the Left front, allies of the ruling United Progressive Alliance.

Swaminathan, however, declined to comment on the controversy. "A blame-game does not help anyone," he said.

He said wheat imports were not new to India. Even during the mid-60s, just before the Green Revolution, the import route had been adopted to shore up strategic reserves.

The government maintains that wheat is being imported to build reserves and to run various welfare schemes, including the public distribution system, meant for the poor people.

"We need to have adequate food grain stocks to fight widespread chronic malnutrition," he said.

Swaminathan said this wheat import episode should be viewed as a "wake-up call" to raise the country's overall farm productivity.

He prescribed focus on soil fertility, water-harvesting, credit and insurance facilities in rural areas to raise grain output.

Bihar, eastern Uttar Pradesh, West Bengal and Assam need special attention in this respect, he said.

Emulating China

Elaborating on effective food management, Swaminathan said the system in China, the other booming economy of Asia, had met with great success.

"China has a very efficient food management system," he said.

The dragon economy exports rice and imports wheat, double the quantity of the exported rice. The country adopts flexibility in this policy""taking up the exercise at a time when the global price of rice is higher than wheat, Swaminathan said.

The National Commission of Farmers, headed by the farm scientist, has recommended India should follow a pragmatic pricing policy, on the lines of China.

"We need to have a sustainable food security strategy," he said.