| Government measures to protect consumer interests hit the country's farmers hard.
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| Farmers are at the receiving end of the government's drive to protect the interests of the consumers.
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Prices of several commodities are lower than the international prices, but farmers are often unable to take advantage of this through exports as the government has imposed either export quotas or export duties and denied them an opportunity to profit from the situation.
| STATE OF THINGS | | Commodity | International price | Local spot price
Rs/tonne | Price change*
In per cent | | Dollar/tonne | Rs/tonne | | Wheat Canadian milling | 425 | 16750 | 11500 | -31.34 | | White sugar | 326.5 | 13000 | 14000 | 7.69 | | Corn | 215 | 8500 | 7700 | -9.41 | | Cotton |
68 cent/IB | 22000 | 20800 | -5.45 | | Castor oil | 1400 | 55160 | 48500 | -12.07 | | Soyabean oil digam | 1100 | 43340 | 53500 | 23.44 | | Barley | 315 | 12400 | 10300 | -16.94 | | Palm oil RBD | 1025 | 40385 | 51000 | 26.28 | | Chana Kabuli-Australia | 570 | 22500 | 23000 | 2.22 | | Sorghum-jowar | 222 | 8750 | 9250 | 5.71 | | * Between international and local prices |
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| When domestic prices became more than the international prices, imports have been allowed to depress local prices. Both ways, the farmers get hit. This is happening mostly in the case of food items and not in the case of cash crops such as cotton and castor.
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Experts believe that such a strategy helps in controlling the prices in the short term but affects farmers in a big way.
| WAY AHEAD | In mn tonnes
Crop |
Forecast | |
FY07 |
FY08 | | Foodgrain | 216.13 | 217.20 | | Cereals | 201.90 | 202.60 | | Rice | 92.76 | 93.00 | | Wheat | 74.89 | 75.00 | | Pulses | 14.23 | 14.60 | | Oilseeds | 23.88 | 27.00 | | Source: CMIE |
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| Take wheat, for example. While international prices have doubled, the government raised the procurement price by 18 per cent. To keep prices in check, exports have been banned and millers have been allowed duty-free imports. The result: farmers are being denied the price they deserve even though the government is importing wheat at a high cost.
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| The story is the same in rice also. The government declared higher minimum export price in the beginning of the season to ensure that exports don't remain attractive enough.
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| Prices of maize and barley are also lower compared to international prices and hence exports are attractive. But the government is facing continuous pressure from poultries for banning exports of maize.
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| Edible oil prices are higher in India and hence half of the requirement is met through imports. Since Malaysian palm oil is at an all time high, there are reports that the government is considering a further cut in the import duty.
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| But B V Mehta, executive director of the Solvent Extractors Association, said the government should not act in panic as domestic edible oil prices have gone up by just 15-20 per cent (70 per cent in international markets) in the last 12 months due to several rounds of duty cuts, tariff freeze and the strong rupee.
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| Mehta said the import duty may have to be brought down to zero if the government wants to keep the price stable. This is taking into account the future projections on international prices.
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| Experts also said the government either imports commodities at high cost to keep the domestic prices depressed or place various restrictions on exports to control prices. These measures only benefit traders.
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| Shard Joshi, chairman of Shetkari Sangathana, gives the example of the ban on futures trading. "Commodity futures help farmers to know the trend in prices and allow them to pre sell their crop in the futures market to encash the benefits of high prices. If futures is banned, the traders benefit," he said. |
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