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            Working Group suggests MSP for crops at 50% over actual production cost

            The Working Group on Agriculture Production has suggested that the Centre should fix the minimum support price (MSP) for crops at 50% more than the actual cost of cultivation. If implemented, this recommendation by the group, headed by Haryana Chief Minister Bhupinder Singh Hooda, would have far-reaching impact on farm incomes. The Group also includes the chief ministers of Bihar, Punjab and West Bengal. The report submitted to Prime Minister Manmohan Singh and Agriculture Minister Sharad Pawar on Wednesday, in fact, sought a review of the CACP's (Commission for Agricultural Costs & Prices) methodology for calculating cultivation costs, which it feels, does not adequately reflect 'actual' costs.

            The MSP for paddy, for instance, is currently fixed at Rs 1,000 per quintal for common varieties and Rs 1,030 for grade A (fine and superfine) crop. As against this, the CACP has estimated he all-India average 'C-2' cost for paddy at Rs 742.43 a quintal. The C-2 costs cover all paid out expenses on fertilizers, pesticides, diesel, hired labour, etc., plus imputed (opportunity cost) values on family labour, land (rental income foregone) and capital (interest foregone of owned assets such as tractors and implements). If farmers are to be paid 50% over the C-2 cost, as recommended by the CACP, they would be entitled to an MSP of around Rs 1,115 for a quintal of paddy. It would be even more if "actual" costs are to be taken into consideration.

            The Working Group has also called for farm loans to be extended at an interest not more than 4% per annum, besides providing subsidy on diesel used for irrigation on the lines of the scheme drawn by the Bihar Government. It has favoured a comprehensive policy for extending the insurance cover to all crops and livestock, for which funds must come from the Centre.

            Another recommendation relates to higher investment in the power sector to ensure easy availability of energy to farmers. The report has also called for more investment in agricultural research to develop high-yielding varieties,. In all, the Group has made more than 150 specific recommendations, which will be discussed at a meeting of the central ministers and chief ministers, chaired by the Prime Minister.

            Significant recommendations of the Working Group are summarised below (some recommendations have already been implemented during the course of the current year):

            # Bridge the horizontal and vertical gaps in yield by ascertaining these through specific studies and address them through appropriate interventions like timely sowing, balanced use of fertilizers and soil ameliorants, and improving water use efficiency.
            # Expansion of area under boro (winter) rice by increasing cropping intensity especially in the states of Assam, Bihar, Jharkhand, Orissa, and West Bengal.
            # Assam should also be included in the extending green revolution to Eastern India programme.
            # Additional investments are required to maintain canals and to fund research on conjunctive use of brackish water with canal water.
            # Develop and upscale integrated farming systems including crops, horticulture, and livestock to generate both on-farm and off-farm employment for small and marginal farmers.
            # Promote production of hybrid seed aggressively and provide incentives to private sector.
            # State Seed Corporations should either be reformed/re-organised to make them vibrant organisations or should be closed to allow development of alternative mechanisms.
            # There is need to create appropriate pesticide/ bio-pesticide quality control set up and to provide deterrent punishment for the sale of spurious pesticides.
            # Institutional development across states is a priority area for equitable flow of credit.
            # Encourage establishment of agri-business centres by self-help groups to purchase, maintain and provide farm machinery to farmers under custom hiring and others.