Russian wheat is now being exported at around $240 per tonne. Adding ocean freight and insurance charges will take the landed price in Indian ports to $280-285 or Rs 23,500-24,000 per tonne.
TThe Narendra Modi government has declared a minimum support price (MSP) of Rs 2,425 per quintal for the 2024-25 wheat crop. That’s a Rs 150 increase over last year’s Rs 2,275/quintal. The ostensible rationale for the move is wheat stocks in public godowns: These, at 23.78 million tonnes (mt) on October 1, were just a shade above the minimum required level of 20.52 mt and the lowest for this date in all years since 2008, except 2022. But then, rice stocks (inclusive of the derived grain from un-milled paddy), at 38.68 mt, were the highest ever for this time. As both rice and wheat are issued through the public distribution system, depleted stocks of the latter alone cannot be reason for effecting a not-small MSP hike. A second justification may be wholesale wheat prices in Delhi ruling at over Rs 2,800/quintal. But if open market prices are high, that should be incentive enough for farmers to sow more area. Why raise the MSP at all?
Russian wheat is now being exported at around $240 per tonne. Adding ocean freight and insurance charges will take the landed price in Indian ports to $280-285 or Rs 23,500-24,000 per tonne. That still works out lower than the latest MSP. MSP increases — these have amounted to Rs 150/quintal each in the last two years, as against an average of Rs 78 in the preceding five years — not only render Indian wheat globally uncompetitive, but also fuel domestic inflationary pressures. Government estimates, incidentally, show record wheat production of 110.55 mt in 2022-23 and 113.29 mt in 2023-24. If despite that — plus a ban on exports since May 2022 and stocking limits imposed on the trade — wheat is wholesaling about 10 per cent higher than a year ago, it’s obvious something isn’t adding up. If low stocks and overall availability are concerns, the government should simply allow duty-free imports. With Haryana elections over, there’s no political impediment to permitting it.
The more pertinent issue — and this extends to all crops — is a structural one. The focus on MSP takes attention away from improving per-acre yields and reducing cultivation costs, which are the only sustainable means to boost farm incomes. Hiking MSPs of chana, masur and rapeseed-mustard by Rs 210-300/quintal can be a useful signal for farmers to plant more area under pulses and oilseeds; but nothing more. Mustard yields in India are abysmally low, just as they are for wheat outside of Punjab, Haryana and western Uttar Pradesh. There’s much more to be done on that front through investment in breeding for higher yields, water and nutrient-use efficiency, heat tolerance, and pest and disease-resistance. Unfortunately, governments have gotten used to thinking short.
© The Indian Express Pvt Ltd
First uploaded on: 19-10-2024 at 01:30 IST
