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Resource centre on India's rural distress
 
 

How to stop the rot by Samar Halarnkar

Today, the Supreme Court of India will hear arguments in what is emerging as a national disgrace: One of the world’s largest stockpiles of foodgrain going to rot and rodent because the government lacks the vision, ability and commitment to either store it properly or distribute it to the poor.

Let me recap what I reported on the front-page of this paper last month: About a third of India’s grain reserves, 17.8 million metric tonnes of wheat and rice, are being stored outdoors under tarpaulin. Roughly valued at R17,000 crore, this mountain of grain is enough to feed 210 million Indians for a year. That’s as much grain as France consumes in a year. There are no precise figures but at least 150 million Indians go to bed hungry every night.

Foodgrain shouldn’t be out in the open, and if it is, it shouldn’t be there for more than six months. Indian norms are notoriously elastic, but even we say the grain shouldn’t be under tarpaulin for more than one monsoon, meaning, one year.

There are 5.17 million tonnes of wheat that has now seen two monsoons, or three, in Punjab and Haryana; 49,000 tonnes has now become “non-issuable”. In plain English, it’s not fit even for animal consumption. It will get worse. Within the next seven months, India will have more than double the grain that it needs for its food security.

Bereft of ideas and serious action, the government wants to do — well, nothing.

This is the short-term argument: We’ve already spent money buying the grain. If we were to spend more money to sell this grain at subsidised prices to the poor, the fiscal deficit will swell. In isolation, this sounds fair: The government is striving to keep the deficit below 5.5 per cent of Gross Domestic Product (GDP) for 2010-11; it was 6.7 per cent for 2009-10. It’s cheaper to let the grain rot than get it to the poor, that’s the argument.

Last month, an Empowered Group of Ministers decided to release some bit of the grain to the states. That doesn’t mean it’s reached the poor. Moreover, in the first six months of 2010, only 25 per cent of subsidised rice and wheat sent to the states was distributed.

The long-term problem is that India’s grain storage is a government-controlled mess. One example: some warehouse owners get as little as 40 paise per square foot of storage from the Food Corporation of India. Others who lease land to store grain in the open get as much as three times that amount. Contracts are arbitrary, and bedeviled by corruption. There are no more than 1,800 warehouses; more than a fourth of India’s grain stockpile is stored under tarpaulin. To build more storage would cost nearly R 8,000 crore.

So, if India cannot get grain to its poor and doesn’t have an immediate solution to what is going to become a bigger problem, why not earn some money and pare the mountain by exporting it?

There is no better time than now. As I write this, the world’s granaries are reeling from weird weather. Australia is facing what scientists are calling the perfect swarm, the biggest locust plague in 30 years, scheduled to hatch between August and October. A decade of warm weather, new farming techniques that leave soil — and locust eggs — undisturbed, and a summer of heavy rains have combined to threaten the vast fields of the world’s fourth-largest wheat exporter.

Far to the north, in Russia, the world’s third-largest exporter, wheat fields have been devastated by the worst drought in 50 years, the worst heat-wave on record and wildfires. The global price of wheat surged last Thursday to a two-year high when Russian Prime Minister Vladimir Putin last week announced a ban on exports. Floods have hit fields in Canada, the world’s second-largest exporter (the US is the largest).

Since June, a growing commodities panic has seen global wheat prices soar by nearly 80 per cent, triggering worries of food inflation and even unrest across the world. When this column went to press, some of panic had abated, with wheat prices dropping 9 per cent since last week’s surge, which analysts now say was an overestimation of the impact on global supply of Russia’s drought.

Still, speculation and slippery prices will continue. With growing consumption and climate malfunctions, foodgrain problems won’t end any time soon.

Wheat and rice are today the main global food crops. However, it is wheat — it comprises 60 per cent of India’s stocks; the rest is rice — that underpins urban civilisation. Wheat is the raw material for a variety of food and drink: from flour to cakes; pasta to couscous; beer to biscuits.

If more Indian wheat rots, it could drive global prices up further, the Associated Press reported last week, because though India’s wheat isn’t intended for export, it is counted in global wheat stocks.

India has banned exports of non-basmati rice and wheat since 2007, save for “humanitarian purposes”, for fear it could increase food prices. But prices have surged anyway because India can’t reach food to those who need it.

To the government, the export of wheat and rice is politically sensitive. “It’s impossible, it can’t be done,” a minister told me. Why not? On Wednesday, MPs in Parliament asked the same question.

India’s grain stockpile is now an international shame. Finding a creative way of getting it to the poor is the best solution. Exporting it is another. Letting it rot isn’t.