The Hindu Business Line : Finetune grains management

WHAT IS HOLDING back the Centre from fine-tuning the foodgrains management policy? Three weeks into November, the Centre has perhaps already missed the opportunity to send a clear signal to growers. Planting of rabi crops has commenced; but the Government is yet to take a decision on the minimum support price (MSP) for the 2003 harvest season. There is no reason why the Centre should drag its feet on this issue, especially in a year when acute moisture-stress in many parts of North India is sure to reduce farm output. Recent widespread rains in the South can only partially offset the impact. The Government is not only duty bound to allay the fears of farmers on the price front, but it also owes an explanation to the people on why matters relating to agriculture are treated so causally.

As for wheat, there is clearly no case for a hike in the procurement price, which was Rs 610 per quintal for the 2002 harvest. Indeed, a case can be made out for a slight reduction; but to New Delhi even the very thought would be anathema given the political repercussions of such a move. By holding back the announcement, the Centre seems to be buying time; but that has always cost the economy dear because of the Government's inability to withstand lobby pressure when the crop is ready. It is possible that, at the time of harvest, the procurement price for wheat may be unchanged from the previous year. But that would be unfair to the growers who should have had the option (however, theoretical) to decide whether or not to grow wheat. Even if it was too late when the MSP for rice was announced, in September, that the Government deemed it fit to freeze the price at last year's level was in itself an encouraging sign and generally perceived as the nature of things to come. (It is, of course, another matter that drought relief of Rs 20 per quintal was announced in addition to the procurement price.) When will the MSP cease to be a political instrument and revert to its economic role of influencing cropping patterns?

The recent hike in the sale prices of wheat and rice is sure to slow exports. Rice exports have been rendered uncompetitive; but, thankfully, stocks have fallen to about 17 million tonnes. At over 30 million tonnes, the wheat inventory is still significantly large, and the Food Ministry is anxious to reduce the volume by allowing export of lustre-lost wheat at heavily subsidised rates. The world market is turning exporter-friendly with tightening supplies and firming prices. But the export efforts are frustrated by the sudden diversion of rail rakes for internal movement of foodgrains. These developments show the policy-makers in poor light. There apparently is no strategic plan, but only crisis handling. The muddled foodgrains management in terms of the MSP, procurement, open-market sale and exports should give way to a more robust and transparent policy that is also forward-looking.

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