The Hindu Business Line : Diversion of ration rice stocks for exports is not ruled out

Recent reports suggesting large-scale diversion of rice meant for food-for-work schemes to exports may not be wholly unfounded. To understand why this cannot be ruled out, one needs to only look at data on rice production, Governmental procurement and exports. The accompanying table shows that between 1999-2000 and 2005-06, the country's rice output has gone up only marginally from 89.68 million tonnes (mt) to 91.04 mt.

During this period, procurement for the Central pool has soared by almost 10 mt. The Food Corporation of India (FCI) and State agencies last year bought 28.01 mt or nearly 31 per cent of the total output, whereas it was only around 20 per cent in 1999-2000.

Non-Basmati Exports

As regards exports, basmati rice shipments have risen steadily from 0.64 mt to 1.16 mt, with a corresponding increase in value of exports from Rs 1,780.34 crore to Rs 3,030.32 crore. Since the Union Government does not procure basmati rice, the issue of diversion does not arise.

Matters are more complex vis-à-vis non-basmati exports. The three years from 2001-02 to 2003-04 witnessed a boom, entirely on account of the Centre allowing exports from the Central pool in order to pare the FCI's bloated inventories. Thus, from a mere 1.26 mt in 1999-2000 and 0.68 mt in 2000-01, non-basmati exports touched a peak of 4.26 mt in 2003-04. But from 2004-05, the Government stopped allocating rice from FCI stocks. Despite that exports have shown no let up, with 3.91 mt of non-basmati rice valued at Rs 4,144.03 crore getting shipped out in 2005-06.

Diversion Theory

That raises a question: In a scenario, where rice production has risen by hardly one mt and the purchases by the Government have soared by 10 mt, how have exporters managed to source an additional three mt without impacting prices? Indeed, unlike in wheat, there has been no flare-up in open market prices of rice. The diversion theory then cannot be dismissed, more so given the huge gap between welfare scheme prices and realisations from exports.

The possibility is all the more when one considers the sheer logistics involved in procuring, moving and storing four mt — the equivalent of some four-lakh trucks. If there is an agency (FCI) to take care of all this (at the tax-payer's expense) and no dearth of pliable officials, exports of grains meant for the public distribution system become an eminently viable proposition.

More Stories on : Rice | Social Welfare | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Improve credit delivery to farmers: PM

Diversion of ration rice stocks for exports is not ruled out

Kakinada gets aqua farming society

Plea to take up dredging in 15 fisheries harbours

Is a dualistic MSP the answer?

Rubber crashes on sales

Ethanol: TN sugar mills submit bids

H1 cashew exports down

FAO funds pepper unit in Lanka

Pepper continues to slip

Arecanut co-ops oppose move to ban gutkha