The Hindu : Andhra Pradesh News : Expert suggests solution to paddy support price issue

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Saturday, Dec 08, 2007
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Andhra Pradesh

Andhra Pradesh

Expert suggests solution to paddy support price issue

Staff Reporter

Workshop held on agricultural pricing policy

Kakinada: The State government has no alternative but for giving subsidy amounting to not less than 20 per cent of the cost of production of paddy in addition to the Minimum Support Price (MSP) fixed by the Commission for Agricultural Costs and Prices (CACP) as a temporary relief to farmers who have been demanding hike in MSP to Rs. 1,000 per quintal from Rs.745, according to C. Ratnam of School of Economics, Andhra University.

“As the Central government has rejected the State government’s plea to hike the MSP upon the advice of CACP, the feasibility of compensating the losses being incurred by farmers, by giving additional subsidy, should be seriously examined.

Agriculture being a State subject under the Constitution, the State government cannot shirk its responsibility of rescuing farmers whose return on investments fell below the cost of production.”

Burden on exchequor

Delivering the keynote address at a workshop on Agricultural Pricing Policy and Food Security at Ideal College of Arts and Sciences here on Friday, Prof. Ratnam said the additional subsidy on paddy entails a burden of Rs.1,000 crores on the State exchequer but the government has no other option to alleviate the plight of farmers whose profits are declining year after year.

He cited the instance of the government of Kerala paying Rs. 150 per quintal over and above the MSP and, observed that the CACP has to take the international prices into account while taking a decision on fixing the MSP.

The CACP cannot peg it (MSP) at a level where it will have a cascading effect on the general price line of all agricultural products, which ultimately pushes up the inflation rate.

Moreover, the multi-national companies which are dominating the Indian market, will not buy paddy at the rate higher than the prevailing MSP.

There are several other aspects of the pricing policy that have to be considered while fixing the MSP.

Prof. Ratnam pointed out that the cost of production of paddy in Andhra Pradesh is higher when compared to many other paddy-producing States due to various reasons.

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