Wheat farmers to reap at least Rs 275/q profit

NEW DELHI: Here’s what the whopping subsidy bill of over Rs 1,500 crore that the government is set to fork out on the wheat bonus price of Rs 100 per quintal will actually mean to the farmer: It will allow him a clean profit of Rs 275 per quintal for grain sold to bolster the Central pool. The Centre has already announced that its overall target in terms of procurement would be around 150 lakh tonnes and the subsidy outgo on wheat support has been calculated on the basis of this.

According to calculations carried out by the Commission on Agricultural Costs and Prices (CACP), the average cost of production for wheat crop for the year 2006-07 was Rs 574 per quintal compared to the actual gross return on wheat (production per hectare) of Rs 16,909 per ha. The bonus of Rs 100 per quintal on wheat, the staple crop for the rabi season, was declared last Saturday by the Centre for the crop season 2006-07 —this is marketed during 2007-08—over and above the minimum support prices (MSP) of Rs 750 thus bringing up total support of wheat to Rs 850 per quintal. The current support price in itself was Rs 100 higher than the previous crop season 2005-06.

They may still not look, too, rosy compared to the current prevailing spot prices of Rs 1,050-1,350 per quintal for atta, but it is the first time that the Centre has declared a support price that is virtually neck and neck with the estimated open market price in the mid-April to mid-May peak procurement season. That’s not the case for this year.

The total economic cost for wheat per quintal has been worked out at Rs 1,232.58 per quintal by the Food Corporation of India (FCI) compared to the Rs 850 support price declared. For 2006-07, the pooled cost of wheat (MSP plus bonus) has been calculated at Rs 761.87 per quintal. To this CACP added the various procurement incidentals (Rs 170.46 per qtl) and distribution costs pegged at Rs 300.25 per qtl, inclusive of an average freight of RS 104.49.