Punjab’s hold on wheat weakening

Wednesday, 05/09/2012

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CHANDIGARH: Punjab’s contribution of wheat to the national pool has come down from a whopping three-fourths of the total national production to one-third in just six years.

According to agriculture experts, with the country’s dependence on P unjab fo r wheat on the decline, farmers of the state need to diversify into more profitable crops such as barley, oilseeds and pulses.

The experts say that if this trend continues, Punjab would not be in position to charge taxes to the tune of 14.5%, which it levies on the Centre for procurement.

Punjab contributed 75% (69.51 lakh tonnes) of the total production of wheat in the rabi season of 2006-07. During the current season, in which the procurement ended in June, the state’s contribution was 34% (129 lakh tonnes).

Though Punjab is witnessing a gradual increase in wheat production, states such as Uttar Pradesh, Madhya Pradesh and Rajasthan, which were once regarded as consumer states, are contributing considerably to the national pool.

In the current rabi season (2012-13), Madhya Pradesh has contributed 85 lakh tonnes (22%), UP 50 lakh tonnes (13%) and Rajasthan 20 lakh tonnes (5.25%). Haryana’s share was 89 lakh tonnes (23.3%). The total stocks in the national pool touched 381 lakh tonnes.

“The message is clear: go for alternative crops in the rabi season, which are more beneficial than wheat. Finally, all stakeholders in the field of farming — farmers, central and state governments, and scientists — have understood that diversification has to be introduced,” said PS Rangi, a consultant with the Punjab State Farmers’ Commission.

Moreover, the Commission for Agriculture Cost and Prices (CACP) has announced not increasing the minimum support price (MSP) of wheat in the 2013-14 rabi season. The wheat MSP in the current season was Rs 1,285 per quintal.

MS Sidhu , head of the department of economics and sociology, Punjab Agricultural University, Ludhiana, opined that serious efforts needed to be made to reduce farmers’ dependence on wheat. “But there is no need to worry at the moment. Ours is a large country with a huge population. The foodgrain requirement would rise continuously,” he added.

Punjab earns about Rs 2,400 crore by levying taxes on the Centre for procuring wheat from the state. Punjab charges market fee of 2%, rural development cess of 2%, infrastructure cess of 3%, commission agents’ charges of 2.5% and VAT (value-added tax) of 5%, whereas the corresponding figures for other wheat-producing states are lower. Haryana is charging total taxes of 12.5%, lower than Punjab’s 14.5%.

The National Democratic Alliance (NDA) government (1999-2004) had proposed to freeze taxes on foodgrain procurement at 4%, but to no avail. The central government has been pressing states to reduce the taxes.

Agri - e co n o mis t Sarda ra Singh Johl agrees that Punjab is under pressure to reduce taxes as other states are witnessing increased wheat production and charging lower taxes.

“There is a need to look for crop alternatives as other states have started growing wheat in a big way. But there is no immediate danger. Wheat would continue to be in demand in the country as well as abroad,” he said.