BackGrow more pulses, oilseeds and not cereals: CACP report
The nominal Rs50 hike in MSP of wheat is because of excess stocks in the central pool, the report said
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New Delhi: The Rabi price policy report made public on Thursday advocates moving away from production of cereals and growing more pulses and oilseeds.
The nominal ₹ 50 hike in minimum support prices (MSP) of wheat is because of excess stocks in the central pool and the fact that support prices are comfortably higher than projected costs, the report said.
The price policy report for Rabi crops (marketing season 2015-16) prepared by Commission for Agricultural Costs and Prices (CACP) was submitted to the government in July and was made public a day after the Union cabinet on Wednesday approved increases in MSP recommended by the CACP.
The CACP report recommended a nominal hike of 3.6% in the MSP of wheat—from ₹ 1,400 a quintal in 2013-14 to ₹ 1,450 a quintal in 2014-15. The increase in the MSP of wheat has been steadily declining—from 9.8% in 2011-12 to 5.1% in 2012-13 and 3.7% in 2013-14.
Wheat is the major cereal grown alongside pulses and oilseeds in the winter or Rabi season, extending from November to April. Foodgrain output in the country during Rabi season currently outstrips the monsoon-dependent Kharif, with paddy as the primary crop. In 2013-14, the Kharif output is estimated at 129 million tonnes, lower than the 135 million tonnes produced during Rabi season.
The CACP report notes that against the buffer stock norm of 31.9 million tonnes of rice and wheat (as on 1 July every year), total central pool stocks were more than double at 65.3 million tonnes (25.5 million tonnes of rice and 39.8 million tonnes of wheat) on 1 July 2014.
“This amounts to locking of resources, estimated at ₹ 45,640 crore, which entails its own opportunity costs. It needs to be noted here that the economic cost of Food Corporation of India (FCI) is about 32-43% more than the MSP of wheat," it said, adding, this has resulted in rising expenditure on food subsidy bill which is budgeted to be ₹ 1.15 trillion in 2014-15.
Noting that the crop production pattern in the country is not in sync with changing demand, the report lauded the central government policy restricting the state government from declaring bonuses over MSPs.
“The domestic supply of edible oils and pulses falls short of the demand and the shortfall is made good by imports. In contrast, since the granaries are overflowing with wheat and rice, there is an urgent need to move away from cereals to pulses and oilseeds. In such a situation, giving state-specific bonuses on wheat (and also on paddy) encourages more production of this commodity and dampens the prospects of diversification towards oilseeds and pulses," the report said. Growing more pulses and oilseeds also requires less water, it added.
But farmer organizations are unhappy with the nominal hike in MSP. “Inputs like fertilizer, diesel and labour are substantially costlier compared to last year and the ₹ 50 hike will not cover the costs. Even if the government wants the farmer to grow pulses and oilseeds, there are no incentives in place—MSPs are low and there is very little procurement by government agencies," said Yogesh Kumar Dwivedi, program director (agri-business promotion) at Action for Social Advancement, a Bhopal-based non-profit working with small and marginal farmers in five states.
Price policy for Rabi pulses and oilseeds shows a marginal rise of 1.6% rise in MSP for oilseeds and between 2.4% and 4.2% for pulses (gram and lentil).
The CACP report reveals that several states made demands for higher MSPs compared to the ₹ 1,450 per quintal for wheat approved by the Union government. While Madhya Pradesh demanded an MSP of ₹ 2,600 a quintal, Punjab and Andhra Pradesh demanded ₹ 1,900 a quintal and ₹ 3,612 a quintal, respectively.
According to CACP’s calculations, the MSP for wheat accounts for a 21.7% return to farmers; an MSP of ₹ 1,450 per quintal against projected cost of ₹ 1,191/quintal. In its election manifesto, National Democratic Alliance (NDA), elected in May this year, promised a minimum of 50% return to farmers over costs, in line with the recommendations of National Commission on Farmers chaired by agriculture scientist M.S. Swaminathan.
In its non-price policy recommendations, CACP suggested the need to strengthen wheat procurement beyond Haryana, Punjab and Madhya Pradesh which produces 43% of the grain but contributes 87% to the central pool.
Among its other recommendations were encouraging adoption of warehouse receipts which will allow farmers to avail loans and not resort to distress sales, limiting procurement in states which levy taxes in excess of 5% on procurement and rationalization of import tariffs on oilseeds and edible oil.
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