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G. Chandrashekhar

MUMBAI, Sept. 27

WHAT was thought to be unthinkable has happened at last. The Government mustered enough courage to announce there will be no increase in the minimum support price (MSP) for paddy for 2002-03.

The Centre should be complimented for not succumbing to lobby pressure — for once at least — although the present tough stand should have been taken three years ago.

Be that as it may, the MSP for paddy will not go up from last year's level of Rs 530 per quintal for Common variety and Rs 560 per quintal for grade-A. It is perhaps the first time in recent memory that the Government has turned down persistent pleas for a hike in paddy MSP.

Currently, the country's rice stocks are slightly below 20 million tonnes, still three times more than the minimum stock norm of 6.50 mt for September 30.

The absence of upward revision in paddy MSP is unlikely to hurt growers. Indeed, the admitted position of the Government is that rice production this kharif season will be down by a massive 13.3 mt to a recent low of 66 mt.

Such a sharp fall in production is bound to keep prices high enough for farmers to realise remunerative prices. Indeed, in the ensuing season, there is possibility that procurement — slated to begin by October 1 — may fall well below last year's level. It is also time for the policy makers to decide on procurement of only one variety, the common variety rice.

It would be a pity if the pragmatic decision on paddy MSP is sought to be politicised by interested parties and pressure brought on the Government. This time, New Delhi successfully faced pressure not only from interested States, but also from within — from the Minister for Agriculture, for instance. It must stay firm.

The State Governments have no cause to complain really. They are free to pay a higher price to farmers in their State. There is no reason why the Centre should be burdened with the extra expenditure when the States are unwilling show any initiative for crop diversification or reduction in local taxes and levies.

No change in MSP for paddy should send out clear signals to farmers in States as Punjab and Haryana, where the unbroken rice-wheat-rice cycle for years has led to soil degradation and loss of fertility. Agriculturally crucial frontline States as Punjab and Haryana are national property; and no political party or vested interest should be allowed to vandalise the property.

Now, having mustered political courage to say ``no'' to MSP hike on paddy, the Government must show the same resolve in case of wheat too. Wheat planting will commence around four weeks from now. It would be in fitness of things that farmers are informed of the decision well in advance of sowing, so that there is no cause for complaint.

So far, the policy makers have failed to utilise MSP as a potent instrument to influence cropping pattern and acreage shift. Instead of announcing the MSP for various crops well in advance so that farmers can exercise their option of crop choice, in last few years, the Government invariably made the decision — often more for political reasons than economic — at the time of harvest. This is best avoided and MSP decided well advance of planting season.

Equally welcome is the decision to keep unchanged the MSP for soyabean at last year's level of Rs 885 per quintal for yellow and Rs 795 per quintal for black variety. For last several years, soyabean prices have ruled anything between 15-30 per above the MSP announced for the year. Soyabean farmers have invariably received remunerative prices, except perhaps last year when prices dipped to the level of MSP and the Government had to undertake support operation.

Because large crushing capacity continues to chase whatever quantity of soyabean is produced, growers have become complacent. Despite higher prices, soyabean yields have not improved at all and continue to stand at less than one ton per hectare. All production increases have come through area expansion and not through yield increase.

It must be recognised that under Indian conditions, agricultural supply response to prices is at best tenuous or inadequate. Price is no doubt a great incentive; but high price alone will not translate to higher production. We need non-price and non-trade policy initiatives that will help farmer take an informed decision about what to grow and how to market.The present bold decision on paddy and soyabean MSP will set farmers thinking. It will, over a period of time, encourage area shift from surplus grains to deficit oilseeds. But the Government should not rely on price alone. Pro-active initiatives to strengthen the agricultural base are necessary.

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