Archive for February, 2008

Farm cost panel moots minimum remunerative price for crops

Suggests Rs 1,000 a quintal for paddy, Rs 2,100 for groundnut

New Delhi, Feb. 16 Forget minimum support price (MSP), it is minimum remunerative price (MRP) that seems to be the new official mantra for crops.

The Commission for Agricultural Costs and Prices (CACP) has recommended unprecedented increases in the MSPs of crops to be sown during the ensuing kharif season from May-June.

These range from 34-35 per cent for paddy and maize, 40-53 per cent for other coarse cereals (jowar, bajra, ragi), 25-40 per cent for pulses, 32-94 per cent for oilseeds, 39-48 per cent for cotton and 34-36 per cent for cigarette-grade Virginia flue cured (VFC) tobacco.

The CACP’s proposals — which are not binding on the Centre — are partly in response to the tight domestic supply situation in most agri-commodities and soaring international prices (especially for edible oils and rice) that render imports unfeasible. But more than that, they appear to have been heavily influenced by the report of the National Commission on Farmers, headed by Dr M.S. Swaminathan.

The Commission’s report had called for making the CACP an autonomous statutory organisation with its primary mandate being the recommendation of “remunerative prices” for all farm commodities.

Further, the MSP should be “at least 50 per cent more than the weighted average cost of production”, so that “the net take home income of farmers should be comparable to those of civil servants”.

An Agriculture Ministry official, when contacted, confirmed that “the CACP has basically adopted the Swaminathan formula of ensuring a minimum 50 per cent return over costs to farmers”.

new scenario

He said that in the new scenario, where rising non-farm incomes were creating disparities vis-À-vis the agriculture sector while simultaneously boosting demand for all foods, there was no point in just guaranteeing a basic “support” price to farmers.

“The latest official data for 2006-07 shows that while the country’s overall investment rate (gross capital formation as a proportion of gross domestic product) touched almost 36 per cent, it was barely 12 per cent within agriculture.

“Unless we change the focus to remunerative prices there will be no incentive for farmers to farm, leave alone invest in productive capacity”, he told Business Line.

The result: An across-the-board increase in MSPs recommended for all crops.

If accepted, it would practically reverse the situation prevailing till a couple of years ago, when official procurement prices were raised by a meagreRs 10 per quintal annually or not revised at all (soybean and VFC tobacco).

This time, even Virginia tobacco has not been spared, with the MSP of F2 (Black soil) grades being hiked from Rs 32 to Rs 43.5 a kg and that of L2 (Light soil) from Rs 34 to Rs 45.5 a kg.

Courtesy- Hindubusinessline