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LATEST NEWS UPDATES | Look beyond just stocking foodgrains by Yoginder K Alagh </title>
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Under ideal conditions, grain storage options in India are built up from the buffer stock strategies. These, in turn, are derived from fluctuations in grain output and the need to ride through, say, two bad years. To the needs of..."/>
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Under ideal conditions, grain storage options in India are built up from the buffer stock strategies. These, in turn, are derived from fluctuations in grain output and the need to ride through, say, two bad years. To the needs of..." />
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<h1 class="cat-box-title">Look beyond just stocking foodgrains by Yoginder K Alagh</h1>
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Published on</span><span class="text-date"> Sep 12, 2010</span>
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<p align="justify"><font ></font></p><p align="justify"><br /><font >Under ideal conditions, grain storage options in India are built up from the buffer stock strategies. These, in turn, are derived from fluctuations in grain output and the need to ride through, say, two bad years. To the needs of the required buffer are added the demands from operational requirements and those of grains in transit.</font></p><p align="justify"><font >Once upon a time, there used to be controversies concerning why should we separately account for buffers, operational needs and those in transit, since grain is grain and so there are moving targets within a year. But requirements are high before a crop comes in and low at the end of the season. There is no mention of all this in the mid-term appraisal of the Eleventh Plan, so obviously these are the issues that are not considered of much significance. Actual storage tends to be much lower than the ideal. The public distribution system is considered a temporary need, depending on the crop, therefore long-term requirements become difficult to be met in operative administrative terms—even though many committees, the latest being the Abhijit Sen Committee, have argued to the contrary. The Eleventh Plan mid-term appraisal has a passing reference to MSPs becoming incentive prices and so forcing resources to grains, but that is all.</font></p><p align="justify"><font >This would mean that if the ideal is to have a maximum storage of, say, 25 million tonnes, actual stocks may end up being higher. Anyway, a lot of storage is done in rented stores and some in what is called “cover and plinth (CAP)”, a euphemism for covered grain in the open. Whichever way it goes, more regular storage is needed and will be forthcoming if there exists some cost-benefit calculus for it; and that requires a medium-term perspective.</font></p><p align="justify"><font >Also, there is the question of spatial spread and the benefits of storage, which means riding the price cycle will become apparent. There would then be questions concerning who will do this—PPPs being a good bet.</font></p><p align="justify"><font >If storage is to be lean and mean or efficient, there will be questions about minimising it, as it is not an end in itself. Sometime in the mid-1970s, when Vijay Kelkar was working with me in the Planning Commission, he wrote a paper on marginal trade strategies to even out the weather cycle. We are a large country and there is the politics of grain and food trade, but there will be quantums of trade in the context of rapidly rising incomes. This will be an alternative to stocking the stuff at home, some say for rats. It’s a little difficult for an outsider to say how much, although there are some interesting exercises done by academia. What is quite clear is that there is no logic whatsoever for banning trade of wheat and rice, particularly of extra-superior long basmati or like varieties and of durum wheat. In fact, around a quarter of the buffer could be ensured by trade, if the studies are to be believed. The private sector should be encouraged to trade and operational rules can be built up.</font></p><p align="justify"><font >Economists like me, and at least two recent CACP chiefs, have argued for flexible tariffs to regulate trade. This is another way of letting the private sector take the risks but retaining the controls. I chaired a committee on integrating tariffs with MSPs. We worked out an efficiency price at which Indian farmers would be globally competitive and gave some calculations for meeting upfront costs until the farmer plays the global game. The idea was to integrate MSPs with tariffs and interest rate differentials. Not doing this means that the government does funny things like importing and then subsidising, which means subsidising foreign farmers. I walked away into the sunset but CACP chiefs and some of the best agricultural economists kept on pleading, arguing for variable tariffs, à la the Alagh Committee. The report was not heard of, but the agricultural ministry—obviously sympathetic—released a fairly detailed summary in reply to an unstarred parliamentary question. Five years later, I got to know that a PIB briefing said that the committee’s objective of globally competitive agriculture was accepted but integration of tariffs with government polices in agriculture was rejected. Apart from the use of variable tariffs, which could shave off around a quarter of the higher level demands for storage being projected, we could use global commodity futures creatively.</font></p><p align="justify"><font >Still, my experience in life is that governments come back to sense in time. Visiting abroad, I was told by an India-baiter that nothing ever succeeds in India. I agreed with him and said, you are so right and nothing ever fails in India either.</font></p><p align="justify"><font ></font></p>
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<br><a href="http://www.financialexpress.com/news/column-look-beyond-just-stocking-foodgrains/679150/0" class="re" target="_blank">The Financial Express, 9 September, 2010, http://www.financialexpress.com/news/column-look-beyond-just-stocking-foodgrains/679150/0</a><div class="clear"></div>
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<h1 class="cat-box-title">Look beyond just stocking foodgrains by Yoginder K Alagh</h1>
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Published on</span><span class="text-date"> Sep 12, 2010</span>
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<p align="justify"><font ></font></p><p align="justify"><br /><font >Under ideal conditions, grain storage options in India are built up from the buffer stock strategies. These, in turn, are derived from fluctuations in grain output and the need to ride through, say, two bad years. To the needs of the required buffer are added the demands from operational requirements and those of grains in transit.</font></p><p align="justify"><font >Once upon a time, there used to be controversies concerning why should we separately account for buffers, operational needs and those in transit, since grain is grain and so there are moving targets within a year. But requirements are high before a crop comes in and low at the end of the season. There is no mention of all this in the mid-term appraisal of the Eleventh Plan, so obviously these are the issues that are not considered of much significance. Actual storage tends to be much lower than the ideal. The public distribution system is considered a temporary need, depending on the crop, therefore long-term requirements become difficult to be met in operative administrative terms—even though many committees, the latest being the Abhijit Sen Committee, have argued to the contrary. The Eleventh Plan mid-term appraisal has a passing reference to MSPs becoming incentive prices and so forcing resources to grains, but that is all.</font></p><p align="justify"><font >This would mean that if the ideal is to have a maximum storage of, say, 25 million tonnes, actual stocks may end up being higher. Anyway, a lot of storage is done in rented stores and some in what is called “cover and plinth (CAP)”, a euphemism for covered grain in the open. Whichever way it goes, more regular storage is needed and will be forthcoming if there exists some cost-benefit calculus for it; and that requires a medium-term perspective.</font></p><p align="justify"><font >Also, there is the question of spatial spread and the benefits of storage, which means riding the price cycle will become apparent. There would then be questions concerning who will do this—PPPs being a good bet.</font></p><p align="justify"><font >If storage is to be lean and mean or efficient, there will be questions about minimising it, as it is not an end in itself. Sometime in the mid-1970s, when Vijay Kelkar was working with me in the Planning Commission, he wrote a paper on marginal trade strategies to even out the weather cycle. We are a large country and there is the politics of grain and food trade, but there will be quantums of trade in the context of rapidly rising incomes. This will be an alternative to stocking the stuff at home, some say for rats. It’s a little difficult for an outsider to say how much, although there are some interesting exercises done by academia. What is quite clear is that there is no logic whatsoever for banning trade of wheat and rice, particularly of extra-superior long basmati or like varieties and of durum wheat. In fact, around a quarter of the buffer could be ensured by trade, if the studies are to be believed. The private sector should be encouraged to trade and operational rules can be built up.</font></p><p align="justify"><font >Economists like me, and at least two recent CACP chiefs, have argued for flexible tariffs to regulate trade. This is another way of letting the private sector take the risks but retaining the controls. I chaired a committee on integrating tariffs with MSPs. We worked out an efficiency price at which Indian farmers would be globally competitive and gave some calculations for meeting upfront costs until the farmer plays the global game. The idea was to integrate MSPs with tariffs and interest rate differentials. Not doing this means that the government does funny things like importing and then subsidising, which means subsidising foreign farmers. I walked away into the sunset but CACP chiefs and some of the best agricultural economists kept on pleading, arguing for variable tariffs, à la the Alagh Committee. The report was not heard of, but the agricultural ministry—obviously sympathetic—released a fairly detailed summary in reply to an unstarred parliamentary question. Five years later, I got to know that a PIB briefing said that the committee’s objective of globally competitive agriculture was accepted but integration of tariffs with government polices in agriculture was rejected. Apart from the use of variable tariffs, which could shave off around a quarter of the higher level demands for storage being projected, we could use global commodity futures creatively.</font></p><p align="justify"><font >Still, my experience in life is that governments come back to sense in time. Visiting abroad, I was told by an India-baiter that nothing ever succeeds in India. I agreed with him and said, you are so right and nothing ever fails in India either.</font></p><p align="justify"><font ></font></p>
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<br><a href="http://www.financialexpress.com/news/column-look-beyond-just-stocking-foodgrains/679150/0" class="re" target="_blank">The Financial Express, 9 September, 2010, http://www.financialexpress.com/news/column-look-beyond-just-stocking-foodgrains/679150/0</a><div class="clear"></div>
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LATEST NEWS UPDATES | Look beyond just stocking foodgrains by Yoginder K Alagh </title>
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<h1 class="cat-box-title">Look beyond just stocking foodgrains by Yoginder K Alagh</h1>
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Published on</span><span class="text-date"> Sep 12, 2010</span>
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<p align="justify"><font ></font></p><p align="justify"><br /><font >Under ideal conditions, grain storage options in India are built up from the buffer stock strategies. These, in turn, are derived from fluctuations in grain output and the need to ride through, say, two bad years. To the needs of the required buffer are added the demands from operational requirements and those of grains in transit.</font></p><p align="justify"><font >Once upon a time, there used to be controversies concerning why should we separately account for buffers, operational needs and those in transit, since grain is grain and so there are moving targets within a year. But requirements are high before a crop comes in and low at the end of the season. There is no mention of all this in the mid-term appraisal of the Eleventh Plan, so obviously these are the issues that are not considered of much significance. Actual storage tends to be much lower than the ideal. The public distribution system is considered a temporary need, depending on the crop, therefore long-term requirements become difficult to be met in operative administrative terms—even though many committees, the latest being the Abhijit Sen Committee, have argued to the contrary. The Eleventh Plan mid-term appraisal has a passing reference to MSPs becoming incentive prices and so forcing resources to grains, but that is all.</font></p><p align="justify"><font >This would mean that if the ideal is to have a maximum storage of, say, 25 million tonnes, actual stocks may end up being higher. Anyway, a lot of storage is done in rented stores and some in what is called “cover and plinth (CAP)”, a euphemism for covered grain in the open. Whichever way it goes, more regular storage is needed and will be forthcoming if there exists some cost-benefit calculus for it; and that requires a medium-term perspective.</font></p><p align="justify"><font >Also, there is the question of spatial spread and the benefits of storage, which means riding the price cycle will become apparent. There would then be questions concerning who will do this—PPPs being a good bet.</font></p><p align="justify"><font >If storage is to be lean and mean or efficient, there will be questions about minimising it, as it is not an end in itself. Sometime in the mid-1970s, when Vijay Kelkar was working with me in the Planning Commission, he wrote a paper on marginal trade strategies to even out the weather cycle. We are a large country and there is the politics of grain and food trade, but there will be quantums of trade in the context of rapidly rising incomes. This will be an alternative to stocking the stuff at home, some say for rats. It’s a little difficult for an outsider to say how much, although there are some interesting exercises done by academia. What is quite clear is that there is no logic whatsoever for banning trade of wheat and rice, particularly of extra-superior long basmati or like varieties and of durum wheat. In fact, around a quarter of the buffer could be ensured by trade, if the studies are to be believed. The private sector should be encouraged to trade and operational rules can be built up.</font></p><p align="justify"><font >Economists like me, and at least two recent CACP chiefs, have argued for flexible tariffs to regulate trade. This is another way of letting the private sector take the risks but retaining the controls. I chaired a committee on integrating tariffs with MSPs. We worked out an efficiency price at which Indian farmers would be globally competitive and gave some calculations for meeting upfront costs until the farmer plays the global game. The idea was to integrate MSPs with tariffs and interest rate differentials. Not doing this means that the government does funny things like importing and then subsidising, which means subsidising foreign farmers. I walked away into the sunset but CACP chiefs and some of the best agricultural economists kept on pleading, arguing for variable tariffs, à la the Alagh Committee. The report was not heard of, but the agricultural ministry—obviously sympathetic—released a fairly detailed summary in reply to an unstarred parliamentary question. Five years later, I got to know that a PIB briefing said that the committee’s objective of globally competitive agriculture was accepted but integration of tariffs with government polices in agriculture was rejected. Apart from the use of variable tariffs, which could shave off around a quarter of the higher level demands for storage being projected, we could use global commodity futures creatively.</font></p><p align="justify"><font >Still, my experience in life is that governments come back to sense in time. Visiting abroad, I was told by an India-baiter that nothing ever succeeds in India. I agreed with him and said, you are so right and nothing ever fails in India either.</font></p><p align="justify"><font ></font></p>
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<br><a href="http://www.financialexpress.com/news/column-look-beyond-just-stocking-foodgrains/679150/0" class="re" target="_blank">The Financial Express, 9 September, 2010, http://www.financialexpress.com/news/column-look-beyond-just-stocking-foodgrains/679150/0</a><div class="clear"></div>
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LATEST NEWS UPDATES | Look beyond just stocking foodgrains by Yoginder K Alagh
Look beyond just stocking foodgrains by Yoginder K Alagh
Published on Sep 12, 2010
Modified on Sep 12, 2010
Under ideal conditions, grain storage options in India are built up from the buffer stock strategies. These, in turn, are derived from fluctuations in grain output and the need to ride through, say, two bad years. To the needs of the required buffer are added the demands from operational requirements and those of grains in transit.
Once upon a time, there used to be controversies concerning why should we separately account for buffers, operational needs and those in transit, since grain is grain and so there are moving targets within a year. But requirements are high before a crop comes in and low at the end of the season. There is no mention of all this in the mid-term appraisal of the Eleventh Plan, so obviously these are the issues that are not considered of much significance. Actual storage tends to be much lower than the ideal. The public distribution system is considered a temporary need, depending on the crop, therefore long-term requirements become difficult to be met in operative administrative terms—even though many committees, the latest being the Abhijit Sen Committee, have argued to the contrary. The Eleventh Plan mid-term appraisal has a passing reference to MSPs becoming incentive prices and so forcing resources to grains, but that is all.
This would mean that if the ideal is to have a maximum storage of, say, 25 million tonnes, actual stocks may end up being higher. Anyway, a lot of storage is done in rented stores and some in what is called “cover and plinth (CAP)”, a euphemism for covered grain in the open. Whichever way it goes, more regular storage is needed and will be forthcoming if there exists some cost-benefit calculus for it; and that requires a medium-term perspective.
Also, there is the question of spatial spread and the benefits of storage, which means riding the price cycle will become apparent. There would then be questions concerning who will do this—PPPs being a good bet.
If storage is to be lean and mean or efficient, there will be questions about minimising it, as it is not an end in itself. Sometime in the mid-1970s, when Vijay Kelkar was working with me in the Planning Commission, he wrote a paper on marginal trade strategies to even out the weather cycle. We are a large country and there is the politics of grain and food trade, but there will be quantums of trade in the context of rapidly rising incomes. This will be an alternative to stocking the stuff at home, some say for rats. It’s a little difficult for an outsider to say how much, although there are some interesting exercises done by academia. What is quite clear is that there is no logic whatsoever for banning trade of wheat and rice, particularly of extra-superior long basmati or like varieties and of durum wheat. In fact, around a quarter of the buffer could be ensured by trade, if the studies are to be believed. The private sector should be encouraged to trade and operational rules can be built up.
Economists like me, and at least two recent CACP chiefs, have argued for flexible tariffs to regulate trade. This is another way of letting the private sector take the risks but retaining the controls. I chaired a committee on integrating tariffs with MSPs. We worked out an efficiency price at which Indian farmers would be globally competitive and gave some calculations for meeting upfront costs until the farmer plays the global game. The idea was to integrate MSPs with tariffs and interest rate differentials. Not doing this means that the government does funny things like importing and then subsidising, which means subsidising foreign farmers. I walked away into the sunset but CACP chiefs and some of the best agricultural economists kept on pleading, arguing for variable tariffs, à la the Alagh Committee. The report was not heard of, but the agricultural ministry—obviously sympathetic—released a fairly detailed summary in reply to an unstarred parliamentary question. Five years later, I got to know that a PIB briefing said that the committee’s objective of globally competitive agriculture was accepted but integration of tariffs with government polices in agriculture was rejected. Apart from the use of variable tariffs, which could shave off around a quarter of the higher level demands for storage being projected, we could use global commodity futures creatively.
Still, my experience in life is that governments come back to sense in time. Visiting abroad, I was told by an India-baiter that nothing ever succeeds in India. I agreed with him and said, you are so right and nothing ever fails in India either.
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