With state-owned agencies such as Food Corporation of India (FCI) having sufficient wheat stocks, the Commission for Agricultural Costs and Prices (CACP) has recommended a marginal increase of R50 per quintal on minimum support price (MSP) for the next rabi marketing season (2015-16).
The agriculture ministry will now consult the state governments of the key wheat growing states such as Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan and the food ministry before seeking a Cabinet nod on MSP. Usually, the government agrees to the CACP recommendations.
The government had fixed an MSP of R1,400 per quintal for the current year’s marketing season and agencies such as FCI and state government owned agencies had purchased 28 million tonne (mt) of wheat from farmers during the 2014-15 marketing season.
Sources told FE that the government agencies like FCI at present have 38 mt of wheat stocks at the start of this month which is far excess of the buffer stocks norm; therefore, the CACP has recommended a moderate increase.
The FCI has been conducting weekly auctions to sell 10 mt of excess wheat stocks under Open Market Sale Scheme (OMSS) to bulk buyers by March, 2015. The FCI would commence procurement of wheat for the next season from April 2015 and it continues up to June 2015.
In the 2013-14 marketing season, due to huge wheat stocks held with FCI, the CACP had recommended freezing of MSP at the previous year's level of R1,285 per quintal which the UPA government did not accept and revised MSP to R1,350 per quintal.
For the 2014-15 rabi marketing season, the UPA government had raised the support price of wheat marginally to R1,400 per quintal notwithstanding the then agriculture Minister Sharad Pawar had suggested R100 per