As the country prepares to harvest another bumper wheat crop in 2013-14 crop season that starts from April, experts fear that another record harvest might push up foodgrain stocks to 100 million tonnes (mt) by June 1 as rice purchases are also expected to be a record.
The situation can be salvaged to a certain extent if the government manages to clear 10-15 mt of inventories either by way of exports or through domestic sale in the coming financial year.
Grain stock as on December 2012 was estimated to be around 68.3 mt, more than the double the required the quantity.
“This would clearly show the huge imbalance in our production basket, as also in our policies that favour wheat and rice over other crops and would be like a crisis, and will have to be tackled sooner than later,” eminent agriculture economist and chairman of Commission for Agriculture Costs and Prices (CACP) Ashok Gulati told Business Standard.
| GRAIN BASKET Rabi sowing till January 4 (in million hectares) | |||
| Crops | 2011-12 | 2012-13 | % Change |
| Wheat | 28.18 | 28.63 | 1.59 |
| Coarse cereals | 5.63 | 5.91 | 4.97 |
| Pulses | 13.66 | 13.60 | -0.43 |
| Gram | 8.63 | 8.94 | 3.59 |
| Oilseeds | 7.94 | 8.09 | 1.88 |
| Total Rabi | 56.01 | 56.70 | 1.23 |
| Source: Department of Agriculture | |||
Officials said wheat production in 2013-14 season that starts from April 1, is expected to be between 85 and 90 mt as sowing till Friday is around 458,000 hectares more than last year. This year, the country harvested a record 94 mt of wheat compelling state agencies to procure an all-time high 38 mt, a staggering 10 mt more than 2011-12.
A situation similar to this year is also expected in 2013-14. Already, in rice state agencies have procured 1.2 mt more till yesterday as compared to the same period last year. By the close of the season, government plans to procure almost 40 mt of rice from farmers this year, 5 mt more than 2011-12.
Wheat and rice procurement seasons are different. Rice procurement starts from October every year, while wheat begins from April.
However, all this will not come at a low price. Infact, with government increasing the minimum support price (MSP) of wheat for 2013-14 season by Rs 65 per quintal, the food subsidy burden will straight away rise by Rs 2,275 crore.
In 2012-13 Union Budget, the food subsidy has been pegged at Rs 75,000 crore.
“With increase in MSP by Rs 65 a quintal, procurement cost of FCI will surely go up, and depending upon how much is procured and for how long it is stored and at price it is distributed under PDS, the subsidy Bill will get inflated. Presuming that FCI will procure at least 35 mt of wheat (last year it procured 38 mt), and if all other costs remain the same, the subsidy bill will go up by minimum Rs 2,275 crore,” Gulati said.
The burden will also be no less on consumers as wheat prices along with that of wheat flour will further move up. “Retail prices of wheat will go up further unless larger leakages from PDS flood the market at lower prices,” Gulati said.
The direct fallout of over-emphasis on grains, which the CACP sought to correct by recommending freezing the MSP of wheat for 2013-14 season is that import of edible oils and pulses is expected to cross Rs 65,000 crore in 2012-13 financial year, a steep jump of almost 16 per cent from the previous year.
But, a bumper harvest does not necessarily mean that the farmers are getting benefit from producing more. A recent field visit by senior officials from the department of agriculture found that rice prices in eastern India has plummeted to almost Rs 800-1,050 a quintal, as against the Centre determined MSP of Rs 1,250 a quintal in the absence of suitable state intervention mechanism.
Official data showed that this year (2012-13) rice procurement in the three major eastern states of Bihar, West Bengal and Odisha has been less than one-fourth of last year.
“This clearly shows that something is serious wrong with the policy as farmers are producing more, but in many area they are not getting adequate returns for their labour,” another expert said.
