GLOBAL WHEAT SCENARIO-WHERE DOES INDIA STAND?

It was not long ago that the Supreme Court in India admonished the Government for its "pussy footing" about problem of rotting wheat in its granaries. The court went to the extent of even suggesting distribution of the enormous quantity of wheat that could not be stored safely because of lack of storage capacity in its warehouses. Many observers even suggested that wheat should be exported to fetch valuable foreign exchange in stead allowing it to be spoiled because of exposure to weather elements under the CAP storage system. After almost an year GOI seems to have woken up to the reality and the hopelessness of the condition that exists in the country, it has recently allowed limited exports of wheat as well as sugar based on a "stop and go" policy.

According to recent reports GOI estimates that the country should be able to export about 5.5 million tons (mt) during the present financial year if the present trend is sustained till March. While a country like the US is expected to export more than 32 mt, Canada and Australia 18 mt each India's share in the world trade of 135 mt in wheat is less than 5%. Probably India can take consolation that its rank among the wheat exporting countries rose from being 16th last year to 7th this year!. Even the projection of 5.5 mt this year is based on the first half of the year performance which stood at 2.43 mt. Whether the simple arithmetic projection will materialize remains to be see under a regime which is not considered very stable politically. It may be recalled that only in September last year that GOI lifted the ban on wheat export, probably realizing that the available stock would be more than sufficient for ensuring food security.

A worrying factor that can still derail the progressive export policy now in place is the proposed Food Security Bill that will cover almost 70% of the country's population, offering rice and wheat practically free and whether the grains, available in its granaries presently and procured in future, would be adequate to meet this emerging demand. As per the records, GOI is holding a grain stock of about 43 mt presently which is much more than the 22 mt required as buffer stock according to global norms. If and when the Food Security Bill is passed and when the new policy is implemented, the situation may change dramatically and it should not come as a surprise if GOI again clamps on exports.

Any nation wishing to be a significant player in the global trade regime must have a stable and continuing export policy which only can generate the required confidence among the buyers. A fair weather exporter like India cannot be relied upon if the country does not strive to put in place a dynamic export policy which can instill confidence in the international market. If GOI can allow unrestricted exports, it is a question of time before the country can become a major player and such exports can be expected to create a positive backlash in the form of more production, better price realization to the farmer and creation of required infrastructure to maintain international quality for Indian products. What type of justification GOI can provide for exporting wheat at a price of $ 270 per ton, about Rs 14 per kg when the procurement price itself is about that and consumers pay almost double this price in the open market?

Export is inevitable whether one likes it or not because the country produces far in excess of the consumption need of the domestic market. As against an estimated production of 90 mt in the current year, Indian domestic consumption is only about 75 mt and the storage capacity in the country is far less than the surplus generated year after year. Indian agriculture is robust enough to maintain the present level of wheat production more or less and GOI should not have any apprehension in this regard. It is time the country invests on grain storage infrastructure and deploys most modern technologies for safe storage of grains for long time so that India becomes a quality and quantity player in grain exports in the coming years.

One of the excuses trotted out for not allowing export of wheat and sugar was that by doing that world prices would crash affecting global trade adversely. There were also fears that exports would affect domestic prices creating short supply in the market place. Did the export ban prevent price rise of sugar and wheat in the market in India? Absolutely not as Indian consumers have been buying these commodities in the open market at prices at least 10% more than that prevailed last year which is even higher than global prices. Now that limited exports under a controlled regime are allowed, countries like Bangladesh and other developing countries will be benefited to a great extent by getting Indian wheat, the price of which is almost 20-30% cheaper than that being realized by other exporting countries. It is a shame that India wheat cannot fetch good prices in the global market which may probably due to failure to adhere to quality norms set by other importing countries.  

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

   

FOOD VS MINERALS-ARE THE NEW POLICIES SKEWED?

The present government is very keen to push through the so called food security bill under which food grains like wheat, rice and coarse grains are distributed practically free to three fourth of the population in the country under the skewed perception that people would be happy if they could access staple foods easily. What is forgotten in this populist program is about the logistics of production of required food to meet the new needs arising out of the commitment by the government. The long forgotten Green Revolution had run its course, ruining the fertility and health of the soil and it is unlikely that the same soil can achieve quantum jump in production unless reclaimed or rehabilitated. Such a program of rejuvenation is far from the minds of the policy makers as of now and probably this commitment will eventually lead to massive imports of food in future. Present happy situation with the grain stocks cannot continue for ever and if the rains fail the country a couple of times the present stock can "evaporate" in no time. Is any one at Delhi, including the "exalted" Planning Commission bothered about this precarious situation?

The new Land Policy now being orchestrated is intended to facilitate land acquisition for industry and real estate conglomerates, the only redeeming feature being increased compensation receivable by the land losers. But disappearance of agricultural land, especially smaller holdings owned by millions of farmers in the coming years will make a dent in food production and such a land policy will also contribute to increased food imports. There appears to be a perception in the government that self reliance is a "sin" when the country has subscribed to free trade policies under the WTO regime. Is food import a wise policy? Of course not because grain prices in the international markets are influenced by many factors and India has no influence on the same. Is the country prepared to pay any price to import food grains when food shortages become acute one day? Recent events have seen how a small drought in one exporting country can cause spiraling of grain prices in the global market and imagine the potential risk in the form of civil disturbances that can occur under scarcity conditions! 

As one of the discerning critics has pointed out recently the present government seems to be more pre-occupied about mineral exports under the perceived impression that they can bring lot of money and this is the logic behind the enactment of the new Mining Bill. Though land acquisition for mining is not a pre-requisite as such lands rich in minerals are leased out for long time, fact still remains that land is lost for cultivation if minerals are found under the land, affecting again food production. Country seems to be forgetting the recent mining scams in states like Karnataka, Madhya Pradesh, Goa and others which have rocked the nation and all these scams are politician-mining mafia driven causing huge losses to the exchequer. Look at places like Bellary where the environment is thick with red dust generated by inefficient and crude way of mining and mining barons are ruthless in destroying every thing coming in their way. Illegal mining and exporting appear to be taking place under the very nose of the government in spite of judicial intervention! A number of NGOs who espouse the cause of environment are doing a yeomen service to the nation by their relentless fight against over mining and unscientific practices of mining industry. 

The current year bumper harvest may embolden the government to push ahead with its illogical policies because with large stocks of food grains in the government storage depots, covered as well open, a false sense of food security is likely to prevail at least for another year. When one talks about mining and export of minerals from the country, it is forgotten that precious non-renewable resources are lost once for all irretrievably and will the present rulers be around to answer to the future generations about such a heinous deed? What prevents the government from linking mining leases with production outfits which can extract the valuable mineral contained and return the bulk of the wastes back to the place preventing unnecessary land destruction. Export of minerals containing 99% sand and traces of targeted mineral is nothing but a folly when country is talking about value addition, industrialization and employment generation. 

India will be remembered in history as a country going down under with wrong policies and priorities, if agriculture is not given the importance it deserves. Almost 70% of the population living in the rural backyard of this country should be applauded and encouraged for providing food to the 30% of those living in urban regions generating economic wealth through manufacturing and other industrial and commercial services. If rural India falters the country will falter and it is the duty of the government to provide rightful environment through economic and policy support with more commitment. Farmers in this country should not be allowed to wither away by a deluge of suicides taking place in different agricultural belts and if such wake up calls do not ring alarm bells in the appropriate quarters, nothing else will!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com