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Our Bureau

New Delhi, Aug. 20 The Centre has hiked the minimum support price (MSP) for the current year’s paddy crop (to be marketed from October to September) by Rs 100 a quintal.

The new MSP has been fixed at Rs 950 a quintal for ‘common’ paddy and Rs 980 a quintal for ‘Grade A’ finer varieties, which is higher than their corresponding 2008-09 levels of Rs 850 and Rs 880 a quintal, respectively.

However, since the Centre also paid a ‘bonus’ of Rs 50 a quintal over and above the MSP for the 2008-09 crop, the effective price increase paddy farmers would receive in the coming marketing season would be only Rs 50 a quintal.

Taking a normative outturn ratio of 67 per cent, the Rs 50 a quintal hike in paddy prices would push up rice prices by around Rs 75 a quintal. Thus, if the Centre ends up procuring 32-33 million tonnes (mt) of rice in the 2009-10 marketing year — unlikely because of a shortfall in production this year — its additional food subsidy outgo would be around Rs 2,400-2,500 crore.

For a typical mill, the ex-factory cost for par-boiled rice is roughly 1.8 times the price of paddy, while being 2 to 2.2 times in the case of raw rice. Thus, if a mill were to purchase paddy at Rs 980 a quintal, its cost of par-boiled rice would be around Rs 1,765 a quintal, while amounting to Rs 1,950-Rs 2,150 a quintal for raw rice.

In the event of mills supply ‘levy’ rice to the Government, the price of this, at Rs 980 a quintal for paddy, will be Rs 1,465 (at 67 per cent outturn ratio) plus another Rs 200-300 a quintal towards processing and other overheads.

The Rs 50 a quintal higher procurement price for 2009-10 — approved at the meeting of the Cabinet Committee on Economic Affairs (CCEA) here on Wednesday — is below the hefty Rs 125-155 increases granted in the previous two years (see table).

The CCEA also approved the MSPs for other crops planted during the current kharif season. While the MSPs have been raised for tur/arhar (from Rs 2,000 to Rs 2,300 a quintal), moong (from Rs 2,520 to Rs 2,760 a quintal) and sesamum (from Rs 2,750 to Rs 2,850 a quintal), these have been frozen at existing levels for all other crops.

Thus, cotton’s MSP has been retained at Rs 2,500 a quintal for medium staple kapas and Rs 3,000 a quintal for long staples, while remaining at Rs 1,350/1,390 a quintal for black/yellow soyabean, Rs 840 a quintal for maize, bajra and hybrid jowar, Rs 860 a quintal for ‘maldandi’ jowar, Rs 915 a quintal for ragi, Rs 2,520 a quintal for urad, Rs 2,100 a quintal for groundnut-in-shell, Rs 2,215 a quintal for sunflower-seed and Rs 2,405 a quintal for niger-seed.

The MSPs for all the crops have been fixed as per the recommendations made by the Commission for Agricultural Costs and Prices, an official release said.

The Centre’s move to virtually freeze MSPs for most crops this year comes in the wake of soaring prices of agricultural commodities despite negative overall wholesale inflation numbers. This marks a departure from trends in the recent past. Besides paddy, MSPs were been hiked steeply between 2003-04 and 2008-09 for cotton (from Rs 1,725-1,925 to Rs 2,500-3,000 a quintal) and soyabean (from Rs 840/930 to Rs 1,350/1,390 a quintal).

More Stories on : Rice | Agricultural Policy

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