Freeze paddy support

Increasing paddy MSPs will only benefit farmers in Punjab and Haryana, who ought to be discouraged from growing water-guzzling, non-basmati paddy.

 There is no case at all for raising the minimum support price (MSP) of paddy by around 16 per cent for the new 2012-13 crop year, as demanded by the Agriculture Ministry. Krishi Bhawan has apparently mooted an MSP of Rs 1,250 and Rs 1,280 a quintal for the ‘common’ and ‘grade A’ paddy varieties that are due for transplanting with the arrival of the south-west monsoon. This is as against their corresponding rates of Rs 1,080 and Rs 1,110 fixed last year. The proposed hikes have little justification when rice stocks in public godowns, at over 32 million tonnes (mt) as on June 1, are more than two-and-a-half times the normative buffer and strategic reserve requirements. If to this, another 50 mt of wheat is added, we have a situation where government godowns are overflowing with these two fine cereals. The appropriate policy response for that would be to freeze their MSPs, rather than even debate over how much to increase them this time.

The Agriculture Ministry can, of course, defend a sharp MSP increase by citing higher cultivation costs, especially on account of labour and non-urea fertilisers, experienced by paddy growers. Moreover, there is also a need to incentivise farmers in Eastern India, where yields are currently low, but can go up substantially because of the higher rainfall and groundwater aquifer levels in this region. Neither of these arguments, however, really makes a case for hiking MSPs. The right answer to higher cultivation costs would be to raise paddy yields and shift production to States having the maximum potential for that. Higher MSPs mean little to farmers in Bihar, West Bengal or Assam; their interests are far better served if the Government actually procures even at the existing rates, besides ensuring timely availability of fertilisers, credit, seed and extension support. Increasing MSPs instead will mainly benefit farmers in Punjab and Haryana, who ought to be discouraged from growing water-guzzling non-basmati paddy in the first place.

So what should the Government do? Well, it must freeze the MSP for paddy at the current level and raise the same substantially for pigeon-pea, green/black gram, groundnut, soyabean and maize. And it should do so straight away, so that farmers get the right signals ahead of the ensuing kharif plantings. Their incentives need to be aligned with the country’s requirements of cutting down on its imports of edible oils and pulses, amid burgeoning public inventories of rice and wheat. The case for resetting MSPs accordingly gets strengthened even more in the current scenario of an extended dry spell since October and a monsoon outlook that seems far from promising. The public money going into paying higher MSP on paddy can well be spent in promoting water-saving SRI (System of Rice Intensification) or direct-seeding technologies. Even better is if it is used to induce farmers to boost pulses and oilseeds yields.

(This article was published on June 7, 2012)


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