Sell excess wheat, share profit with farmers, says CACP

NEW DELHI: The government should liquidate wheat stocks through exports and sales in the open market and share the proceeds with farmers to raise their income levels, a government panel suggested. In its latest report to the agriculture ministry, the Commission for Agricultural Costs and Prices (CACP), which recommends a minimum support price (MSP) for agriculture crops, is said to have maintained that there is no reason to lift the suggested freeze on wheat MSP, a source said. 

The Union Cabinet had asked the CACP to review its earlier recommendation of not raising the MSP after the agriculture ministry suggested an upward revision to Rs 1,400 per quintal from the existing floor price of Rs 1,285 per quintal. The review was sought in the wake of an increase in input cost such as diesel prices. 

"The commission has a view that the wheat's cost of production is very well covered within the earlier recommended unchanged MSP of Rs 1,285 per quintal. Even the rise in diesel prices makes no difference. The market price of wheat is above the MSP and the need is to sell the swelling wheat stock and share the profit with farmers to benefit them," the source said. 

According to CACP, the all-India weighted average cost of production is Rs 1,085 per quintal. The MSP returns for wheat over the cost of production would be about 17% at all-India level and it would cover the cost of almost 95% of wheat production. CACP chairman Ashok Gulati refused to comment on the fresh recommendation. 

"The domestic and international prices of wheat are ruling much above the minimum support price. If the government wants to benefit farmers, it should focus on liquidating the stocks and share the benefits with farmers. The government should offload at least 15-20 million tonne of grains from the godowns in the open market and export freely in the global market where prices are hovering around $314-320 per tonne," he said. 

There is good demand for Indian wheat in Bangladesh followed by South Korea, Thailand, Vietnam, Indonesia, Yemen and Oman. Seven lakh tonne of government stock has been shipped out of the 11.5 lakh tonne contracted after the government allowed export of 2 million tonne from its stocks in July this year. The commission had earlier suggested a 10% bonus above the MSP for farmers if the export had been banned. 

The commission has asked the Centre to review its policy of open-ended procurement and limit its purchases especially from states which levy high taxes. 

Haryana and Punjab, the wheat basket of the country, levy taxes ranging from 11.5% to 14.5% while emerging wheat producing states like Madhya Pradesh and Bihar and Gujarat levy taxes between 4.5% and 6.5%. The commission has also suggested that the government review hiving off of food grains as a separate group from the purview of taxation to keep market prices lower. 

Meanwhile, wheat sowing has taken off to a slow start due to late monsoon withdrawal and delayed harvesting of summer crops in most parts of the country.

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