The Commission for Agricultural Costs and Prices (CACP) has recommended a generous increase in the Minimum Support Price (MSP) of rabi lentils (masur), gram (chana) and safflower (Kusumbh), as compared to cereal crops like wheat and barley, indicating a new-found focus on pulses and oilseeds.

The Ministry of Agriculture’s note on “Price Policy for Rabi Crops of 2010-11 season” says that the fixation of MSP for the season, to be marketed in 2011-12, has been done with the projected benefit of “higher production through assured remunerative prices to the farmers”. The prices fixed by the CACP will be put before the Cabinet Committee on Economic Affairs for final approval.

The MSP for wheat has been fixed at Rs 1,120 per quintal, an increase of Rs 20 per quintal. It had been increased by the same amount last year from Rs 1080 per quintal to Rs 1100 per quintal. This is likely to annoy Punjab chief minister Prakash Singh Badal, who had demanded a sharp increase in the MSP for wheat last year due to rising input costs. Thereafter, price of urea has gone up by 10 per cent.

The price of gram has been fixed at Rs 2,100 per quintal as compared to Rs 1,760 last year. For masur, it is Rs 2250 per quintal against Rs 1870 last year. Safflower has been hiked from Rs 1680 to Rs 1800 per quintal. In the case of barley, MSP will go up by Rs 30 (as compared to Rs 70 last year), taking it up to Rs 780 per quintal. Mustard/rapeseed will go up by Rs 20 to Rs 1850 per quintal.

The ever-widening demand-supply gap in some categories of pulses and oilseeds has prompted the government to offer incentives to farmers. The anticipated gap in pulses next year will be around 4.5 mllion tonnes and in oilseeds, around 27 million tonnes. The shortfall is currently being met through imports. Even so, the prices of some dals – like green gram – have reached dizzying heights.

While the Food Corporation of India (FCI) is the nodal agency for procurement of cereals, the National Agricultural Cooperative Marketing Federation (NAFED) is the nodal agency for procurement of oilseeds and pulses.

In the last two years, there was a sharp increase in the procurement of cereal crops, particularly wheat and rice, due to “strategic reserve norms” instituted after the worldwide food scare and dip in wheat stocks. This resulted in heavy procurement of wheat, which has put tremendous pressure on storage facilities. The government is now seeking to offload some of it by amending the OGSS or Open General Sale Scheme.

One reason for the low increase in MSP of wheat this year may be the fact that there has been a sharp increase overall from Rs 750 per quintal in 2006-07 to Rs 1100 in 2009-10. The Swaminathan Committee had recommended that MSP should be announced before the sowing season and should be cost plus 50 per cent (that is, 50 per cent more than the total cost of production).