Overflowing granaries

Shanta Kumar panel's recommendations have been ignored

With the government’s foodgrain coffers brimming over and more stocks pouring in regularly, thanks to an open-ended grain procurement policy, the country’s food surplus has become unmanageable. By official reckoning, the total inventories in the Central grain pool are close to twice the desired stockpiling of 41.1 million tonnes in the beginning of June. Though the fiscal load of the excess stocks is hard to assess precisely as it keeps varying with size of inventories, duration of storage and procurement incidentals, rough estimates put it at over Rs 1 trillion. The carrying cost and the interest on the funds spent on its acquisition and upkeep by the Central and state level food handling agencies are in addition to this. All this ultimately inflates the food subsidy. 

A sizeable part of the food stocks is held in the states where these have been purchased on behalf of the Centre. The governments of these states, notably Punjab, Haryana and Madhya Pradesh, are pressing the Food Corporation of India (FCI) to expedite evacuation of these grains as their godowns are over-flowing and monsoon is approaching. The FCI’s own warehouses, too, are bursting at the seams. A part of the procured grains is, therefore, lying in the open under the improvised Cover-and-Plinth (CAP) system of storage where these face a high risk of rain damage and pilferage. 

Overstocking of foodgrains could be justified in the past on grounds of food security, but not in today’s stable food surplus economy. This year, too, the FCI and the state agencies have mopped up 76.1 million tonnes of staples (33.8 million tonnes wheat and 42.3 million tonnes rice) though the anticipated requirement of the public distribution system and welfare schemes is only around 61 million tonnes. Such imprudence in handling the food economy is untenable. The Shanta Kumar Committee on the FCI and food sector reforms had specifically cautioned against overstocking in its report presented in 2015 and pointed out that it entailed heavy costs without serving any purpose. It suggested offloading inventories in the domestic or export markets as soon as these tended to exceed the buffer stocking norms. But this wise counsel has gone unheeded along with many other sound recommendations of this panel. Only last week, an indication came from food minister Ram Vilas Paswan that the functioning of the FCI would be streamlined as per the recommendations of this committee. 

The oversupply of foodgrains is attributable also to steady uptick in the output of cereals in the absence of a reliable export outlet. The need, therefore, is to reorient crop production in favour of high-value and export-worthy products. Paddy can easily be substituted in the north-western non-rice consuming region with crops like basmati, cotton, maize, soyabean and others which are in demand at home and abroad. Haryana has already begun doing so by offering cash incentives and free seeds of alternative crops. Similarly, procurement as a means of lending price support to a crop can be replaced with systems like price deficiency payment and direct income support to farmers. Unless policies are modified on such innovative lines, especially in the regions where the food stocks are facing the risk of rotting for want of safe storage, the country’s granaries might turn into graveyards of grains.