Dry Spell: Govt may junk wheat bonus this year
The government appears to have junked plans for a Rs 100-150 per quintal bonus for wheat this season.
By TNN |
NEW DELHI: The government appears to have junked plans for a Rs 100-150 per quintal bonus for wheat this season. In years of difficult procurement of grain, a bonus is paid, in addition to the minimum support price recommended by the Commission on Agricultural Costs and Prices, when Food Corporation of India procures grain.
���Wheat support price, at Rs 1,000 per quintal this year, has already gone up by over 10% compared to last year,��� sources pointed out despite stagnant yields and soaring demand since 1999, adding, ���We have ensured that it is at unprecedented levels and remunerative enough for the farmer who got both bonus (Rs 100/quintal) and support hike last year.���
The government���s rising comfort level, though, could mean higher farmer discomfort. It set a wheat procurement target of 15 million tonnes this year and put in place a number of measures to ensure that private trade buys did not render askew its plans and farmers were forced to bring their produce to mandis for state buys.
Farmers��� and other stakeholders had mounted pressure in the run-up to the official wheat buying season on the government to announce a bonus this year as well to incentivise wheat farmers because of high input prices and high domestic consumer prices. An announcement was expected by end March. An additional outgo of Rs 750-Rs 1,500 crore was estimated. First indications that a bonus was not in the offing despite political pressure and high global prices came from food minister Sharad Pawar by end March itself.
Several things may have worked in favour of the government���s decision not to announce a bonus this year for wheat. One, the projection that it would be comfortable on stocks. Both farmers and traders were sitting on wheat stocks since last year and higher availability, in the event of good harvest, would force down prices. Farmers would, therefore, want to dispose of older stocks and prices offered by the private sector would be moderate compared to last time, ensuring increased arrivals at the mandis and adequate government buys at the floor price and not at global parity prices.
Two, output was estimated at one million tonne lower than last year���s production of 75.81 million tonnes but carryover stocks (including imports, at 5.3m tonnes) were expected to be adequate to meet the government���s PDS and welfare needs, crossing the 40-lakh tonne buffer norm for April 1.
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Of the total output, some 60 million tonnes of wheat makes it to the open market and private sector buys. Most of this is bought by smaller traders, millers and food product manufacturers. Big private sector purchases stood at 20 lakh tonnes in 2007, higher than in 2006. But actual 2007 buys by the private trade are estimated to be far higher than the official figure.This year, a higher mandi cess in key states such as Punjab were expected by the government to further disincentivise the private sector, which had indicated in February that high prices could restrict its buys to lower than last year���s levels.
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