Editorial: Time to act

The indication by the finance minister, P Chidambaram, that the ban on the export of non-basmati rice may soon be lifted, is welcome — but needs to be put into effect quickly. The embargo on exports was part of a series of restraints imposed on the free trade and stocking of several key agricultural products, in a bid to tame their prices. At the same time, the import duties on these items were slashed or wholly waived. Besides, futures trading was prohibited in eight commodities. Some — and certainly not all — of these measures may have been desirable when the prices seemed to be getting out of control.

But that situation has since undergone a vast change, making a review of all the restrictive measures imperative as well as urgent. The prices of most agricultural commodities, barring pulses, sugar and perishables, have remained stable or slid in the domestic as well as global markets on the strength of an improved harvest outlook. And it is exigent because the kharif harvest is round the corner and continuing with the curbs will hurt the interests of growers.

Farmers have planted larger areas under paddy and oilseeds, especially soyabean, in the current kharif in anticipation of good returns that now appear uncertain because of the unfavourable trade policies. It is, therefore, no wonder that even an edible oil industry body, the Solvent Extractors’ Association of India, has demanded a hike in import duties on edible oils in order to prevent domestic prices from crashing. The prices of most kharif oilseeds, including soyabean, are projected to be 30 to 40 per cent lower in October, when the harvest comes to the market, than in June-July, when these crops were sown. Should that be allowed to happen, it would severely affect the income of oilseed producers and would also come in the way of raising production in the future. The consequence would be enhanced import dependence in edible oils, which even today is high at 45 to 50 per cent. The even bigger worry is about paddy farmers who are already indignant over the government’s decision to pitch the minimum support price (MSP) at Rs 850 a quintal, rather than Rs 1,000 as recommended by the Commission for Agricultural Costs and Prices (CACP).

The other problematic factor (and this is not new) is the fact that many paddy growers will not get the government-fixed minimum support price, since the official procurement programme is confined usually to a handful of states. Under the circumstances, distress sales of paddy cannot be ruled out, especially because the area under the crop has expanded by around 2 million hectares and production is set to top the previous record by a handsome margin. The official foodgrain kitty, too, is overflowing, thanks to the all-time high procurement of both wheat (over 22 million tonnes) and rice (over 27 million tonnes) this year. Thus, there is hardly any need, or justification, for persisting with the restrictive policies announced at a time of shortage and rising prices. On the contrary, well-conceived moves are called for to ward off a downturn in prices at the time of the peak kharif marketing season, which begins next month. Such a step will be far more useful to farmers than the writing off of loans, which the government has done.