Soon after the announcement of procurement prices of wheat for the next crop, the fertiliser firms have increased the price of DAP by Rs2,400- Rs2,500 to Rs5,570 per 50 kg.

The support price has been fixed at Rs950 for 40 kilogrammes for the next wheat crop-- an increase of over 50 per cent over last season’s Rs625. How much of this increase will benefit the growers and how much of it will be shared with other stakeholders like suppliers of inputs such as fertiliser, pesticides etc, the middlemen who finance and market much of the agriculture produce and the banks in a scenario of rising interest rates? The State Bank has recently increased the indicative loan limit per acre while the volume of agriculture credit is rising rapidly. Then the diesel and electricity prices are also on the increase.

The key issue in support pricing is to reverse the transfer money from the rural to the urban centres to encourage farmers to save and invest in modernisation of agriculture. If much of the increase in support price is mopped by stakeholders other than the growers, farming would deprived of the incentive to develop on modern commercial lines.

Last year, prior to the announcement of procurement prices, farmers demanded a price of Rs1100 for 40 kilogrammes keeping in view the international prices. What they have got now is close to that, which is expected to help increase the area under cultivation and achieve a record target of 25 million tones. If production does not rise to that level, there will be serious problems.

The best option for the policy makers to pull the economy out of the current crisis is to place agriculture at the centre of national development strategy by encouraging huge investments in modernisation of agriculture. In 2-3 years time, many of the fundamental weaknesses in the economy can be significantly overcome by just increasing yield per acre of major crops, both for food security and for feeding industries with raw materials. Rural prosperity would also provide a bigger market for manufacturing to grow in the present difficult global economic scenario.

Focus has to be on home-grown policies and utilisation of indigenous resources and technology.

The current year’s crop was grossly over-estimated at 22.5 million tones, while the production is far less, resulting in serious shortage. The government should be careful about the evaluation of the next crop and its distribution. No doubt, attempts will be made to corner the market by unscrupulous traders and push up the prices but steps should be taken to prevent such tactics. There is a need to develop a smooth supply chain for essentials like wheat which is the staple diet of the common man.

When the new crop arrives, distributive arrangements should not fail. One of the reasons for the prices shooting up recently was the ban imposed on the inter-provincial movement of wheat. Such ad hoc steps should be avoided and the promised amount of wheat should be supplied to flour mills. If more wheat has to be imported, the government should be ready for it.

Meanwhile, smuggling of wheat should be vigorously checked particularly to Afghanistan. Similarly, malpractices by flour mills should also be tackled.

The official distributive machinery is so faulty that it creates artificial shortages. That is the outcome of the poor administration which ought to be improved. Sometimes, truckloads of wheat disappear.

On its part, the government has assured full support to the farming sector including bank credits, a continuous supply of fertilisers as well as water and power. What matters now is the efficacy of the distributive and the administrative machinery.