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Harish Damodaran

NEW DELHI, Aug. 27

WITH the intense dry spell in June and July pushing up irrigation costs significantly, there is growing pressure on the Agriculture Ministry to reconsider its position not to effect any increase in the Minimum Support Price (MSP) of paddy for the ensuing 2002-03 marketing season (October-September).

As of now, the Agriculture Ministry's proposal— which is to be taken up by the Cabinet shortly— is in line with the Commission for Agricultural Costs and Prices' (CACP) recommendation to freeze the MSP for 2002-03 at the previous season's levels of Rs 530 per quintal for common paddy and Rs 560 per quintal for Grade `A' varieties. If the proposal goes through, it would be the first ever instance of no hike in the MSP of either paddy or wheat taking place— a political landmark of sorts.

However, according to Krishi Bhawan sources, there is "tremendous pressure" for a rethink on the MSP-freeze proposal, particularly in the context of the failure of the monsoon during June-July. "The CACP's kharif report was submitted in early-May, when there were hardly any indications of a dry spell,'' they observed.

Experts say that even in States like Punjab, where farmers have access to assured irrigation, the virtual absence of rains in July would have considerably raised cultivation costs. Paddy is usually transplanted in Punjab during early-June. Given the high temperatures, farmers give 7-8 irrigations during this month. With the arrival of the monsoon rains in July and the corresponding lowering of temperatures, the irrigation requirement is reduced by half in the subsequent months.

But this time round, the monsoon simply failed, with the State receiving just 29 per cent of last year's cumulative rainfall for June-July. Even as on August 21, the total seasonal precipitation was 45 per cent below the State's long period average value. As a result, farmers were forced to give 4-5 extra irrigations per month during July and August— something that would have not been required had the rains not failed.

"The number of irrigations would be even more if one considers the fact that temperatures in June were 5-8 degrees higher than normal, which is likely to have further enhanced the water requirement after accounting for evaporation losses. Moreover, the groundwater table has receded by roughly 10 feet this year, compared to the average annual depletion of 1.5 feet in Punjab. This again would have pushed up the cost of pumping up water,'' a senior Agriculture Ministry official said.

Assuming 10 extra irrigations, of which half may have done using electric pumpsets (electricity is supplied free to farmers in Punjab), at least five irrigations would have involved use of tubewells running on diesel. Given that a tractor typically consumes two litres of diesel per hour and it takes around 10 hours to irrigate one hectare, farmers would have incurred an additional cost of almost Rs 2,000 per hectare to compensate for inadequate rains.

In terms of paddy, taking the State's average per hectare paddy yield of five tonnes, the extra cost would work out to Rs 40 per quintal. "There is no way the MSP can be raised to this extent. The maximum that can perhaps be considered is a Rs 20 per quintal hike, which is the same as last year. Moreover, this can probably be given as a one-time bonus, so that it does not form the basis for deciding the MSP in the coming years,'' the officials said.

The former CACP Chairman, Prof Abhijit Sen, however, felt that there was no justification for a further MSP increase because the current price of Rs 530 per quintal was already way above the `C-2' cost of cultivation. The latter— which includes both `paid-out' costs as well imputed value of family labour and rental on land and owned capital assets— was estimated at Rs 471.71 per quintal during 2001-02.

"The existing MSP will more than cover the extra irrigation costs borne by the farmer this year. Even offering a higher price in the form of a bonus may not be prudent because past experience shows that the bonus invariably gets incorporated in the succeeding year's MSP,'' he noted.

For instance, the procurement price of wheat for the 1998-99 marketing season was fixed at Rs 510 per quintal, comprising an MSP of Rs 455 and a bonus of Rs 55 per quintal. But in the subsequent season, the MSP was straightaway hiked to Rs 550 per quintal, sans any bonus component.

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