MSP hike may still elude govt goals
Can the hike in support price for wheat to be marketed in 2008 ensure sufficient grain in the mandis to meet all of welfare and PDS needs?
By TNN |
NEW DELHI: Can the hike in support price for wheat to be marketed in 2008 ensure sufficient grain in the mandis to meet all of welfare and PDS needs? Commodity analysts appear cautious. One section thinks the higher MSP will lure farmers sufficiently to the mandis for the government to meet purchase targets mid next year.
“No trading in wheat was happening at the current level of Rs 750 per quintal and it had to be hiked for wheat trade to resume. This will ensure that. Prices for the consumer will not be affected since it relies mainly on demand and supply in the market only after trading begins,” said a commodity analyst.
However, another section is wary with the possibility that the increase in support prices and a later reopening of wheat futures could lead to traders holding back to realise a better price in forward trading. Worse, some think the cascading effect of wheat price hike could impact on a whole range of food, including maida, bread, rava and dhalia.
Meanwhile, wheat prices in Delhi, a major trading centre, shot up to Rs 1,025 per quintal from Rs 1,000 per quintal on indications that the Centre could announce a bonus on wheat to be bought by it in April 2008. Signals are that the bonus announcement, aimed at boosting government buys from mandis, could come just before the beginning of the marketing period for rabi crops.
This would be in addition to the hike in MSP announced on Tuesday, ahead of the sowing season next month. MSP shot up from Rs 750 per quintal in 2006-07 to Rs 1,000 per quintal in 2007-08, a 33% hike. The actual hike, though, works out at present to only Rs 150 per quintal since a bonus of Rs 100 was announced by the Centre above MSP in 06-07. Despite this, it fell woefully short of procurement targets and had to resort to high priced wheat imports.
The government’s Tuesday’s decision to extend the ban on wheat exports for an indefinite period and also ban exports of wheat flour could also be pushing up wheat retail prices, though to a lesser extent.
Meanwhile, hinting that the wheat bonus could come in March, FCI chairman Alok Sinha said prices of the commodity in the domestic market were stable due to higher production leading to adequate availability.
Countering him, NCDEX Institute of Commodity Research (NICR) director and CEO Sanjay Kaul said wheat prices were stable until September but have been rising this month.
Agri business consultancy agency Achievers’ Resources’ Vijay Sardana said the decision to hike MSP and throw in a bonus year after year was directly impacting consumer prices. “The government cannot take politically motivated decisions such as this at the expense of staple food prices.
It has inflationary impact across the board. A comprehensive long-term policy to ensure fair price for both farmer and consumer is imperative in the emerging commodity context,” he said.
“No trading in wheat was happening at the current level of Rs 750 per quintal and it had to be hiked for wheat trade to resume. This will ensure that. Prices for the consumer will not be affected since it relies mainly on demand and supply in the market only after trading begins,” said a commodity analyst.
However, another section is wary with the possibility that the increase in support prices and a later reopening of wheat futures could lead to traders holding back to realise a better price in forward trading. Worse, some think the cascading effect of wheat price hike could impact on a whole range of food, including maida, bread, rava and dhalia.
Meanwhile, wheat prices in Delhi, a major trading centre, shot up to Rs 1,025 per quintal from Rs 1,000 per quintal on indications that the Centre could announce a bonus on wheat to be bought by it in April 2008. Signals are that the bonus announcement, aimed at boosting government buys from mandis, could come just before the beginning of the marketing period for rabi crops.
This would be in addition to the hike in MSP announced on Tuesday, ahead of the sowing season next month. MSP shot up from Rs 750 per quintal in 2006-07 to Rs 1,000 per quintal in 2007-08, a 33% hike. The actual hike, though, works out at present to only Rs 150 per quintal since a bonus of Rs 100 was announced by the Centre above MSP in 06-07. Despite this, it fell woefully short of procurement targets and had to resort to high priced wheat imports.
The government’s Tuesday’s decision to extend the ban on wheat exports for an indefinite period and also ban exports of wheat flour could also be pushing up wheat retail prices, though to a lesser extent.
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Meanwhile, hinting that the wheat bonus could come in March, FCI chairman Alok Sinha said prices of the commodity in the domestic market were stable due to higher production leading to adequate availability.
Countering him, NCDEX Institute of Commodity Research (NICR) director and CEO Sanjay Kaul said wheat prices were stable until September but have been rising this month.
Agri business consultancy agency Achievers’ Resources’ Vijay Sardana said the decision to hike MSP and throw in a bonus year after year was directly impacting consumer prices. “The government cannot take politically motivated decisions such as this at the expense of staple food prices.
It has inflationary impact across the board. A comprehensive long-term policy to ensure fair price for both farmer and consumer is imperative in the emerging commodity context,” he said.
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