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Come June, bountiful Rabi harvest poses problem of plenty by Rajeev Deshpande & Surojit Gupta

A problem of plenty is looming as by June 1, an estimated 12 million tonnes of foodgrain will have to be stored in the open in "kutcha plinths" with a bountiful Rabi harvest and procurement of 65 million tonnes of grain boosting food stocks to record levels.

With states like Madhya Pradesh - apart from the wheat baskets of Punjab and Haryana - delivering bonus yields, food stocks are expected to hit the 75 million tonne mark, placing the government in a Catch-22 situation as the total storage capacity with the Centre and states adds up to 63 million tonnes.

"Management of wheat procurement in 2012-13 will be more problematic than last year and if MP procures 65 lakh tonnes of wheat, evacuation of wheat from Punjab will remain adversely affected...in these states (Punjab, Haryana and MP) substantial quantity of wheat will have to be stored in kutcha plinths," an official note states.

While on one hand, there is relief that a bumper crop will help meet commitments under the proposed food security Act, the current off take of 53-55 million tonnes under the public distribution system (PDS) will not clear stocks fast enough to accommodate fresh arrivals. The recently added 30 lakh tonne storage is not adequate, and procurement, officials said, is expected to touch 74 million tonnes by July.

Keeping food stocks in plinths make them vulnerable to "damage due to excessive rains" as had happened in the past few years when bulging stocks led to lakhs of tonnes of damaged wheat being sold off at reduced rates.

Pushing stocks into the market is a plausible option, but the government's room for manoeuvre is limited as finance minister Pranab Mukherjee is keen to keep the food subsidy bill in check. Moving grain comes at a cost as the government pays Rs 22-24 for every kg procured, while the sale price, even for above poverty line (APL) families, is Rs 8 a kg.

There have been suggestions that the government restrict itself to maintaining stocks for calamities, PDS supplies and a strategic buffer to ensure the Centre can intervene to maintain moderate prices. But the ambitious food security Act that seeks to provide entitlements to 67% of the population will mean that the government will dominate the market even more than it does. Some experts feel allowing exports and imports while maintaining a strategic reserve is more likely to ensure food security.

Sources said with exports not permitted, government procurement played a vital role in ensuring farmers got their due with the winter crop exceeding expectations. Lack of strong intervention would have almost certainly led to acute farm distress and prices in mandis would have crashed due to higher supplies.

Officials estimate that wheat procurement to go up to about 74 million tonnes by July, while available storage space is for about 45 million tonnes. "Let July come and there will be a huge problem," said a farm ministry official. Punjab CM Parkash Singh Badal has already flagged the problem of storage and has urged the Union government to help solve the problem.

Estimates show that total food grain production in 2011-12 is estimated to be 251.42 million tonnes of which rice is about 102 million tonnes and wheat 88 million tonnes. The economic survey notes that "public private partnerships models can be of help in ensuring faster development of these requirements which are of vital importance for the growth of the agriculture sector."

Times View

Lamenting the lack of grain storage facilities has become an annual, entirely avoidable ritual. It does not take rocket science to figure out that if a growing population is to be fed properly, India's foodgrains production must rise sharply over time. That means more grain will need to be stored. The debate on who should build the required storage capacity is a largely meaningless one. Given the scarcity of such storage right now, clearly both public and private capacity needs to be urgently created. The government must step up investment in building warehouses while creating an environment in which the private sector also steps in. Nothing can be worse than letting grain rot in the open or be eaten by rats when humans are starving.