To encourage the production of oilseeds and pulses, rather than foodgrains, the Commission for Agriculture Costs and Prices (CACP) has recommended a steep increase in the minimum support price (MSP) of major oilseeds grown during the kharif season, like soybean and groundnuts, along with those for pulses like moong, urad and tur.

However, this is unlikely to hit the retail prices of most of these commodities, though it may raise their benchmark rates, as the average market price in many cases is below the MSP recommended by CACP. Tur, moong and sunflower seeds are exceptions.

Prices are also unlikely to be impacted much, as barring paddy and cotton, state agencies seldom carry out extensive purchases that tilt domestic prices towards MSPs.

The recommendations, finalised recently after extensive consultations, would now be placed before the Cabinet, which reserves the right to alter these.

Attempts to contact CACP chairman Ashok Gulati failed.

For paddy (de-husked rice), the commission has recommended a 15.7 per cent increase in the MSP to Rs 1,250 a quintal for the 2012-13 crop marketing year. Justifying its decision to recommend a nominal rise in the MSP of paddy for 2012-13, the commission said given the excess supply despite record exports in 2011-12, a margin of 5.5 per cent over the cost and 47 per cent over other expenditure, translating into a total rise of 15.7 per cent in the MSP over last year, would be acceptable.

India’s rice production is estimated to increase about 7.7 per cent in 2011-12 to a record 103.41 million tonnes, according to the third advanced estimates of the agriculture ministry. Such a bumper harvest and the subsequent increase in procurement have bloated grain stocks in state-run warehouses. As on April 1, India’s foodgrain stocks were estimated at about 53 million tonnes, a staggering 151 per cent rise over the stocks required under buffer and strategic reserve norms.

For oilseeds, the commission, while recommending a stiff rise of 37 per cent for groundnut, a 23.5 per cent rise for sesame, a 32 per cent rise for sunflower and a 33 per cent rise for soybean, said given the huge import bill of edible oils (about Rs 30,000 crore annually), oilseeds needed the most incentives.

The MSP recommendations cover the cost of production and some margin for growers, but are subject to domestic and international prices.

The CAPC said pulses, too, needed attention. While recommending a rise of 18-28.5 per cent rise in the MSP for cotton, it said despite the record production, exports were booming and the country had low stocks of cotton, something similar to an excess demand scenario. Hence, production could be further encouraged.

Source : business-standard.com