Tackling the problem of embarrassing plenty

THE prospects for raising bumper food and cash crops in the 2001- 02 agricultural season have brightened considerably with the onset of the monsoon in Kerala, parts of Karnataka, Maharashtra, Gujarat, Goa and even other regions in North India earlier than expected. The Meteorological Department has predicted that rainfall in the new agricultural season will be normal for the 13th season in succession. The Union Ministry of Agriculture has, therefore, estimated that the output of foodgrains may well constitute an all time record at 212 million tonnes as compared to 196 million tonnes and 208.90 million tonnes respectively in the two previous seasons. The yields of cash crops, too, may well be at new peaks.

The shortfall in the yield of fine cereals in the current (2000- 01) season, which is coming to a close shortly, by 4 million tonnes in respect of rice and 7.10 million tonnes relating to wheat is ascribed to the prevalence of drought in Gujarat, Rajasthan, parts of Madhya Pradesh, Andhra Pradesh and Orissa. The yield of pulses, too, was lower by 1.70 million tonnes and that of coarse cereals by a marginal one-lakh tonnes.

The unfavourable conditions in many regions, however, should not have resulted in any significant decline in output as compared to 1999-2000. This is because the Food Corporation of India (FCI) and other agencies have been compelled to procure huge quantities in spite of its disinclination to intensify purchases because of the unmanageable stocks with it.

The procurement operations in both fine cereals may well touch new peaks in the respective marketing seasons, as purchases of rice even upto April 16, 2001 were higher at 15.79 million tonnes against 14.19 million tonnes comparably. As there is a glut in Andhra Pradesh and elsewhere and the rabi crops of this cereal have not been fully absorbed, the total quantity procured may well be as high as 20 million tonnes in October-September 2000-01 against 17.27 million tonnes formerly.

As regards wheat, the farmers in Punjab and Haryana have been anxious to unload their stocks at the procurement prices fixed by the Centre, as open market prices are below these levels. Even upto May 31, the quantity secured was as much as 19.65 million tonnes against 16.36 million tonnes for the whole of the previous marketing season in spite of the yield of the crop being stated to be distinctly lower at 68.50 million tonnes against the record of 75.57 million tonnes in 1999-2000. Notwithstanding reports about damage to the standing crop due to unseasonal rains, the actual yield may prove to be even 72 million tonnes, as purchases upto March 2002 can be even 22 million tonnes.

With a comfortable position in rice as well, it will not be incorrect to state that the output of all food crops in 2000-01 can be easily 202 million tonnes. There has also been a softening trend in prices for certain types of pulses and surprisingly a glut in coarse cereals, particularly maize, has emerged. It has been necessary to effect exports of maize in sizable quantities. The availability of cheaper and better quality foodgrains in the open market has, thus been responsible for a reduced offtake through fair price shops.

What is, therefore, distressing is the absence of a net visible improvement in aggregate consumption. With the acquisition of a sizable portion of marketable surpluses by official agencies, stocks are now at the embarrassingly high level of 60 million tonnes. It may even be rising to 62-63 million tonnes by July 1, against 42.20 million tonnes, 33.10 million tonnes and 28.50 million tonnes on the same date in the three previous years. The net rise in production in 1998-2001 was, thus, only 3.70 million tonnes. But the yield of fine cereals was higher at 5.10 million tonnes. How then could buffer stocks have risen by as much as 31.50 million tonnes in three years!

The NDA Government has been endeavouring to bring about a reduction in stocks with the supply of highly subsidised foodgrains to consumers below the poverty line. Quotas of 3 million tonnes and 5 million tonnes have been earmarked for boosting exports of rice and wheat respectively. But it has not been possible to effect sizable shipments of rice even at prices below the procurement rates, as there is no shortage in world markets. Also, with complaints about the quality of wheat shipped, it has not been possible to reduce buffer stocks significantly.

With large quantities stored in the open and difficulties in maintaining stocks in proper condition, it is feared that severe damage to stocks may be sustained during the rainy season, if arrangements cannot be speeded up to create additional space and maintain stocks on a dispersed basis. The exercises in respect of exports have been rendered highly difficult, as imports of wheat and rice could be easily arranged on a cheaper basis and it has been necessary for the NDA Government to jack up the duty on rice to 80 per cent and that on wheat to 60 per cent.

Since the monsoon is likely to be vigorous in the main kharif growing areas in the next three or four weeks, the Centre will be inviting the wrath of farmers, if reasonable prices for their produce cannot be ensured, when the kharif crops get harvested from October. The prospect is, indeed, frightening, as the Centre's plan for limiting procurement purchases by FCI with decentralisation of operations at the State level has not been acceptable to many State governments.

It is, therefore, being suggested that there should be proper crop planning and greater emphasis on the cultivation of oilseeds and pulses, which are in deficit and even cotton. It will not be possible, however, to raise the output of oilseeds and pulses tangibly from rainfed areas, unless there is diversion of acreage from fine cereals to these crops. If there has been no rise in prices for edible oils even with a shortfall in the yield of oilseeds and certain categories of pulses, it is due to large lower priced imports. It has been actually complained by farmers that huge imports of edible oils have had a depressing effect on internal prices and the Union Ministry of Commerce has been obliged to jack up import duties on various types of edible oils. Paradoxically, the Malaysian Government has been asking for a reduction in the import duty on unrefined palm oil.

While it will be interesting to watch how the pattern of agricultural production gets changed, a record yield of fine cereals may be highly embarrassing to the Centre and the States, which have large surpluses. If 40 or 45 million tonnes of rice and wheat have again to be procured out of the crops for the 2001-02 agricultural season and offtake through fair price shops does not turn out to be higher than 20 million tonnes, buffer stocks may be unmanageable at 80 million tonnes! Since complaints about starvation deaths from Orissa and elsewhere have been reported, even with plentiful availability, vigorous efforts have to be made to implement food for work programmes.

Worried Ministry

The NDA Government has got jittery over the heavy loss that may have to be sustained, if there was a further embarrassing accumulation of stocks with heavy procurement out of the record crops that may be raised in the 2001-02 agricultural season. The Union Ministry of Food and Civil Supplies has, therefore, decided in a dramatic move to stimulate offtake through fair price shops by slashing the prices for fine cereals for sale through the public distribution system (PDS). Even those above the poverty line can now get their requirements of wheat and rice at 75 per cent of the economic cost against 100 per cent hitherto while those below the poverty line will have to pay only 45 per cent of the economic cost as compared to 50 per cent so far.

The developments in the current agricultural season in later months will, thus, be posing serious challenges to the Central and State governments. A new breakthrough cannot be achieved on the agricultural front without a rising level of consumption by all sections of the community and a meaningful policy for exporting at least 8-10 million tonnes of fine cereals annually.

P. A. Seshan

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