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%.
 

Commodity	Percentage gap (%WSP-%MSP)
Moong	44.8%
Bengal gram	38.8%
Urad	25.4%
Arhar	21.4%
Wheat	11.52%
Paddy	(3.97)%

The MSP of moong remained unchanged in 2007-08 over 2006-07 whereas the wholesale prices had risen by 18%. The growth in the MSP is around 13.9% in 2007-08 over 2003-04. The wholesale prices had seen a phenomenal growth of 58.6% in 2007-08 over 2003-04. However the retail prices are above 60% compared to the wholesale prices.  The wholesale prices are 2 to 3 times the MSP.

The MSP of gram had increased by a mere 0.70% in 2007-08 over 2006-7 whereas wholesale prices moved by 42% for the same period. The MSP had shown a growth of 18% in 2007-08 over 2003-04 whereas the wholesale prices had a growth of 56.77% for the same period. The retail prices varied from 20 to 35% when compared to the wholesale prices. The wholesale prices across markets showed a variation of 10 to 40% of the MSP.

The MSP of Urad had remained unchanged in 2007-08 over 2006-07 whereas wholesale prices have come down by 6% for the same period. The MSP had shown a growth of 13.85% in 2007-08 over 2003-04 whereas the wholesale prices 39.33 % for the same period. The retail prices have been above 60% to the wholesale prices. The wholesale prices across the markets are almost double the MSP.

The MSP for paddy had shown a growth of 1.8% in 2007-08 over 2006-07 and whereas WSP had a growth of 7.56% in the same period. The fluctuations in wholesale prices are very much high. The prices in the nearby markets for the same variety also differs by around 30 to 50% .The prices are sometimes below the announced MSP. The retail prices of rice have been around 45% to the WSP.There is no lack of market integration and supply chain and logistics are the main constraints for these fluctuations.
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The MSP for Wheat had shown a growth of 15.38% in 2007-08 over 2006-07, which is the highest in the commodities under consideration. The gap between the MSP and WSP growth of wheat is 11.52% and has highest gap of 31% in the year 2007-08. 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% 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% 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 2007-08 slightly lower than 2006-07, that of 91.79 million tonnes. The FAO forecasts global Paddy production in 2007 at 633 million tonnes, which is 4 million tonnes above the estimate for 2006. India’s exports grew at mere 5% in 2006-07 over 2005-06.

The production estimate of pulses in 2007-08 is at 14.11 million tonnes and the previous year production was 13.39 million tonnes. The imports of pulses had gone up by 20% in 2006-07 compared to 2005-06 and in value for the same period by 32%. There is a gap of about 15 per cent between demand and supply of pulses in 2006.