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LATEST NEWS UPDATES | The Peel-An-Onion Plan by Lola Nayar

The Peel-An-Onion Plan by Lola Nayar

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published Published on Feb 7, 2010   modified Modified on Feb 7, 2010

Another food crisis? This time it’s not shortages but prices—a plain failure of responsive policy and execution.

Zooming food prices are raising political temperatures yet again. The rumblings, for once, are not merely restricted to the opposition parties, but evident within the ruling coalition as well. Though attacks from across the political spectrum have become a bit subdued of late, the target remains Union agriculture and food minister Sharad Pawar. And by putting the onus of all price control measures on collective cabinet decisions, Pawar—who has been holding his portfolios for the past six years—has once again proved he is no Abhimanyu of Mahabharata.

None less than Prime Minister Manmohan Singh has tried to deflect the onslaught by claiming that last year’s drought and better rural incomes due to NREGA are to blame for the pressure on food demand and prices. There are, however, not many takers for this premise. “NREGA is helping people survive, not creating demand,” stresses Dr M.S. Swaminathan, who headed the National Commission on Farmers.

Very few of his panel’s recommendations to help improve farm incomes, boost production and productivity and ensure better food security have been implemented so far. The noted agriculture scientist points out that the Rs 10,000 additional annual income for an average five-member rural family through NREGA would work out to less than Rs 30 per day, hardly enough to create a major difference to the large malnourished rural population.

Concurs Dr Mihir Shah, member, Planning Commission, “Given the context of the double-digit food inflation, it is eating into the additional resources being created for NREGA beneficiaries.” Currently, a majority of NREGA workers, particularly in tribal areas, consist of small and marginal farmers hit by low productivity. For NREGA to achieve its objective, Shah stresses, it has to create enduring assets that would help improve agriculture productivity.

Admittedly, the 2009 drought, the worst in three decades, has hit agriculture—and the effects cover rice, sugarcane, onions and even milk (thanks to flagging fodder supply). But is that the whole story? Alas, there are many layers to this complex problem, starting with the near-stagnant agriculture productivity over last two decades. Despite increasing pressures on land and food supplies, the government’s efforts to improve agriculture infrastructure have been inadequate, say experts.

But more specifically, it isn’t lack of food stocks that is at the heart of the current problem. Rather, it’s a shocking lack of policy initiatives and coordination between different arms of government that has escalated prices to levels double that of last year in the case of most farm produce—be it wheat, rice, eggs, or milk. “We had ample wheat and rice stocks but did not release it in the open market,” says agronomist Ashok Gulati. Despite experts recommending that 5-10 million tonnes wheat be released from government stocks in October 2009 to help cool prices, it is still to be implemented, he points out.

“It is a policy failure that we have food grains and yet prices are rising,” says N.C. Saxena, former advisor to the prime minister. Ironically, it is only now when the harvest is barely two months away that the food ministry has woken up to the need for silo space to stock fresh buys from farmers. Pawar, however, defends the delay, saying that till a clearer picture of the rabi crop was available, no such step could be contemplated. Now that the government is fairly optimistic of a bumper wheat crop and good paddy production, it is speeding up the market intervention.

Dropping its earlier stance, the government has cut its wheat price by Rs 200 per quintal to find buyers, both private millers and state governments. So far, a total of 2 million tonnes of wheat and 1 million tonnes of rice have been allocated to states/UT governments for sale to retail consumers and small millers. Hopefully, it will help bring down atta prices not just in the north but also in states like Kerala where it is being sold for over Rs 30/kg.

Instances of policy failure abound, whether due to poor monitoring and information gathering or lack of timely action by the central government. Gulati points out that a year ago, the government had ample indications of the sugar shortfall in 2009-10, but took no action. Instead, sugar exports were encouraged till February 2009 and duty-free imports allowed only when the global prices had risen sharply. Even action to hasten processing of raw sugar stuck at the ports (after UP banned entry and processing of any imported sugar) was taken when the sweetener’s price crossed Rs 45/kg.

Agriculture experts are in complete tandem with Pawar when he complains that his “statements are given disproportionate publicity and it affects price”. Their advice to the minister is to “act more and speak less in public as when he creates a scare, it creates expectations”—leading to a jump in prices (both domestic and global). Not that it has ever checked Pawar from forecasting shortfalls. He has already forecast that India will remain import-dependent for pulses and edible oil for the next decade. This year, of the 50 million tonnes of pulses available globally, India has bought 35 million tonnes.

Take the case of milk, the price of which has been hiked yet again by Rs 1-2/lt in most states within days of the minister warning of a shortage. Pawar’s defence is that again the media is to blame as his forecast was for 2020! Agriculture experts, however, point out that the widespread drought last year has pushed up prices of coarse grains and fodder, impacting all animal farm products. The impending hike in milk prices has been preceded by farmer agitations in some states, including Maharashtra, to protest the steep price of fodder and animal feed.

Clarifies R.K. Sodhi, chief general manager, GCMMF, which is better known by its Amul brand, “There will be no shortage if prices are right as it will help farmers improve production through better cattle feed.” He warns against milk powder imports to tide over the shortfall as the dairy industry will get “finished like the edible oil industry and it will increase import dependence”.

On the vegetable and fruit front, Prof Sudhir K. Panwar of Kisan Jagriti Manch states, “There is no mechanism to control vegetable prices which see a 400 per cent difference between farm gate and consumer price.” The only gainers are the middlemen. The price scenario for vegetables is not likely to improve as summer approaches and the variety and quantity becomes limited.

Not just consumers, even policymakers will soon have limited options if farm productivity does not improve fast. For this year, once again, everyone is hoping the monsoons will deliver the much needed relief. Be it individual or collective responsibility, somebody has to shoulder the blame for this shocking state of affairs.

Outlook India, February, 2010, http://www.outlookindia.com/article.aspx?264135
 

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