The other components are pooled cost of grains and distribution cost that includes freight, handling, and storage, etc. Data of past five years shows while the economic cost of wheat increased at an annual growth rate of 4.9%, the distribution cost recorded the highest growth of 7.2%, followed by pooled cost of grains (5.7%), and the lowest (1.2%) was procurement incidentals.
Increase in pooled cost of grains is due to a rise in MSP of wheat and lower growth rate in procurement incidentals is due to reduction in statutory charges after introduction of the goods and services tax.
However, these charges are still high in some states, a CACP report said, and there is a need to reduce procurement incidentals by reducing mandi fee and other charges in states such as Punjab and Haryana, the report said.
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