Price difference on commodities hits farmers

New Delhi, July 15: Farmers and consumers will be hit hard as the difference between the minimum support price (MSP) and Wholesale Price (WSP) for essential items on an average stood at 33 per cent during 2002-07 against their striking variance of 60 per cent in WSP and Retail during five years, industry chamber Assocham said in a study.

The study on, MSP Vs WSP and Their Impact on Retail Prices, said this gap has provided all the benefits to the middle men.

''WSP benefited multiple times middlemen and traders, particularly for sale of essential commodities and worst hit in the process remained farmer and consumer as farmers margins squeezed badly with consumers paying unreasonably higher prices,'' said Assocham President Venugopal N Dhoot.

However, Mr Dhoot added, hoped that with retail players like Reliance, Subhiksha etc opening up their chains of retail outlets, consumers would benefit and farmers get reasonable price for their produce as organised retailers source their supplies directly from farm land for end users without involving middle men in the process.

The study said price difference between MSP and WSP for moong was highest by 45 per cent in 2002-07 and trend is unlikely to be reversed.

It further points out that for gram, the difference was 38.8 per cent, Urad 25.4 per cent and Arhar 21.4 per cent, the average of which works out to be about 33 per cent against their average price differential of 60 per cent with retail prices at which consumers bought them in the period.

As regards wheat and paddy, the difference between MSP and WSP, and WSP and retail was 11.52 per cent and 3.97 per cent respectively which is well within the acceptable limits.

The study pointed that normally, the difference between WSP and retail prices on an average stays around 20 per cent but for supplies of essential goods, it has been much more.

It also revealed that MSP of Arhar increased by a mere 0.70 per cent in 2006-07 over 2005-06 whereas wholesale prices moved by 32 per cent for the same period.

The MSP had shown a growth of 6.41 per cent in 2006-07 over 2002-03 whereas the wholesale prices 27.77 per cent for the same period.

The wholesale prices varied from 10 to 15 per cent to MSP across the markets while the retail prices are over and above 85 per cent to the wholesale prices. The variation in the wholesale prices across markets is 10 to 20 per cent. MSP of moong remained unchanged in 2006-07 over 2005-06 whereas the wholesale prices had risen by 18 per cent. The growth in the MSP is around 13.9 per cent in 2006-07 over 2002-03.

There has been a phenomenal growth in wholesale prices at 58.6 per cent in 2006-07 over 2002-03. However, the retail prices are above 60 per cent compared to the wholesale prices. The wholesale prices are two to three times the MSP.

The MSP of gram had increased by a mere .70 per cent in 2006-07 over 2005-06 whereas wholesale prices moved by 42 per cent for the same period.

The MSP of Urad had remained unchanged in 2006-07 over 2005-06 whereas wholesale prices have come down by 6% for the same period.

The MSP had shown a growth of 13.85 per cent in 2006-07 over 2002-03 whereas the wholesale prices 39.33 per cent for the same period.

The retail prices have been above 60 per cent to the wholesale prices. The wholesale prices across the markets are almost double the MSP.

MSP for Wheat had shown a growth of 15.38 per cent in2006-07 over 2005-2006, which is the highest in the commodities under consideration, while gap between the MSP and WSP growth of wheat is 11.52 per cent and has highest gap of 31 per cent in the year 2006-07.

There are fluctuations in wholesale prices. The inconsistency in wheat prices also adds to the problems of the farmers.

The wholesale prices show a variation of 10 to 15 per cent for the same variety across the markets. The wholesale prices are always on the higher side of MSP across all the markets unlike paddy. The retail prices varied from 50 to 70 per cent when compared to WSP.

The cultivation and production of paddy is almost stagnant in the country and production is estimated at 91.05 million tonnes in 2006-07 slightly lower than 2005-06, that of 91.79 million tonnes.

The FAO forecasts global Paddy production in 2007 at 633 million tonnes, which is four million tonnes above the estimate for 2006.

India's exports grew at mere 5 per cent in 2005-06 over 2004-2005.

The production estimate of pulses in 2006-07 is at 14.11 million tonnes and the previous year production was 13.39 million tonnes while the imports of pulses had gone up by 20 per cent in 2005-06 compared to 2004-05 and in value for the same period by 32 per cent.

UNI