NEW DELHI: Bowing to pressure from wheat-growing States, the Centre on Friday announced an incentive bonus of Rs. 50 per quintal on the minimum support price of wheat procured by the Food Corporation of India for the Central pool with immediate effect. At the same time, because of low procurement, it decided to import 30 lakh tonnes of wheat to build up a buffer as stocks fell to 19 lakh tonnes on April 1 against a norm of 40 lakh tonnes. This was decided here on Friday at a late evening meeting between Prime Minister Manmohan Singh and Union Food and Agriculture Minister Sharad Pawar.

The decision to give the bonus of Rs. 50 per quintal on the support price of Rs. 650 per quintal set for this season would put an additional burden of Rs. 731 crores on the FCI. The Government expects to procure about 150 lakh tonnes of wheat this season against earlier estimates of 162 lakh tonnes. During the last season it procured 147 lakh tonnes. Procurement has been below par in Punjab, Haryana and almost nil in Uttar Pradesh so far.

Announcing the decision, Mr. Pawar said though he was "personally not happy", the decision to import wheat had to be taken to build up buffer stocks and protect the interest of consumers. He had reviewed the situation with the Chief Ministers of Punjab, Haryana and Uttar Pradesh over the past two days. "The assessment after this review showed that the pace of wheat procurement has been slow and some private traders have been purchasing wheat at rates above the support price offered by the Government."

Mr. Pawar said private trade (like Cargill, ITC and others) were buying off wheat from farmers at Rs. 20, Rs. 16 and even Re. 1 per quintal more than the Rs 650 per quintal offered by the FCI. Consequently, the Government has decided to lure farmers with a bonus of Rs. 50 per quintal. Farmers who have sold their wheat to the FCI from March 20, when procurement began, would be able to avail themselves of the bonus with retrospective effect.

Wheat production this season has been estimated at 74 million tonnes against earlier expectations of 72 to 73 million tonnes.

The Government has not placed any restrictions on export of wheat (by private trade). At the same time, it has sold under the Open Market Sale Scheme 7 lakh tonnes of wheat from the Central pool during the first quarter of this year to keep wheat prices under check. During the entire financial year the FCI had released 11 lakh tonnes in the open market to control prices. According to Mr. Pawar, the imported price of wheat was about Rs. 9,978 per tonne, whereas the economic cost to the FCI including storage, taxes, labour and transportation costs was Rs. 1308.10 per tonne.

He expressed happiness that sugarcane production is expected to be 190 lakh tonnes compared to 120 lakh tonnes last year. The rice procurement position is also "quite comfortable" with a record procurement of 231.67 lakh tonnes against 206.98 lakh tonnes. Rice procurement had improved in Chhattisgarh, Orissa and West Bengal this year.

Mr. Pawar denied that the decisions taken by the Government were a violation of the model code of conduct for elections as "there were no elections in the wheat-growing States".

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