Tuesday, April 15, 2008

Price difference over 60% in five years

by Jo Black

Though the difference between Minimum Support Price (MSP) and Wholesale Price (WSP) for essential commodities such as Moong, Urad, Gram, Arhar on an average was around 33% between December 2003 to January 2008, it has gone up beyond 60% in wholesale prices and retail prices in the same period, which shows that farmers and consumers remained hard hit due to huge difference in WSP and retail price, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Above conclusions were drawn by ASSOCHAM Paper on `MSP Vs. WSP& Their Impact on Retail Prices’ that studied essential commodities price trends for a period of 5 years, it also concluded that price difference between MSP and WSP for moong was highest by 45% in 2003-08 and trend is unlikely to be reversed. Normally, the difference between WSP and retail prices on an average stays around 20% but for supplies of essential goods, it has been much more as seen in the findings of paper.

It further points out that for gram, the difference was 38.8%, Urad 25.4% and Arhar 21.4%, the average of which works out to be about 33% against their average price differential of 60% with retail prices at which consumers bought them in the period. As regards wheat and paddy, the difference between MSP and WSP was 11.52% and (3.97)% respectively which is well within the acceptable limits.

Commenting on ASSOCHAM findings, its President, Mr. Venugopal N. Dhoot said, “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. The ASSOCHAM Chief, however, 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.

These also reveal that MSP of Arhar increased by a mere 0.70% in 2007-08 over 2006-07 whereas wholesale prices moved by 32% for the same period. The MSP had shown a growth of 6.41% in 2007-08 over 2003-08 whereas the wholesale prices 27.77% for the same period. The wholesale prices varied from 10 to 15% to MSP across the markets. The retail prices are over and above 85% to the wholesale prices. The variation in the wholesale prices across markets is 10 to 20%.

 

 

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