Surinder Sud: The wheat crisis

FARM VIEW

The timing of the wheat imports created a feeling of shortage, ensuring farmers stopped selling to FCI.

Unlike in the past, wheat growers this year are not exactly queuing up to sell their stocks to government agencies. Even the offer of a generous bonus of Rs 50 a quintal on top of the procurement price of Rs 650 has not lured the sellers.

There are several reasons for this. The most significant among them are the flawed wheat distribution policies and mistimed announcement of wheat imports that created a scarcity psychosis even prior to the harvesting of the fresh crop. As a result, not only has the wheat-based industry entered the market as a big buyer, but speculators, too, have been mopping up grain to make profits through futures trading. Besides, it prompted the large farmers to hold on to part of their produce in anticipation of higher prices subsequently.

Yet another reason "" and this merits special consideration "" is the lower-than-expected crop yield in Punjab and numerous pockets in Haryana, which together account for over 80 per cent of total wheat procurement. In fact, what is even more disconcerting is the near stagnation in overall wheat output for the past eight years.

Let us take the government policies first. In June 2002, the government had mountainous wheat inventory of 41.5 million tonnes. The annual wheat procurement has been averaging around 15 million tonnes since then. Yet, by April 2006, the wheat reserves were down to the bottom, merely 1.9 million tonnes. All this because the government continued to dole out wheat liberally on various pretexts even after it had achieved the objective of downsizing the unsustainable grain inventories. The open market sales, for instance, continued till March this year though the official stocks had already fallen below the buffer stocking norms.

Surprisingly, when in January the Cabinet Committee on Economic Affairs gave its nod to the food ministry's proposal to slash the monthly grain entitlement of ration card holders, especially that of the households above the poverty line, the government did not implement it for political reasons. Had this been done, and followed up with measures such as stoppage of wheat allocations to non-wheat consuming areas, the need for wheat import could, perhaps, be averted.

Moreover, the timing and manner of wheat import, too, has been faulty. Food and Agriculture Minister Sharad Pawar announced the import of first batch of 0.5 million tonnes of wheat in January when the local crop was still in the field. This laid the foundation of the officially-sponsored scarcity psychosis which was strengthened further with another mistimed move to announce further 3 million-tonne import when the domestic procurement season was underway.

What is worse, the government simultaneously offered the bonus of Rs 50 which pushed up the market price to make procurement at the minimum support price all the more difficult. Things would, most probably have been different if, instead of importing on the government account, wheat imports had, right from the beginning, been allowed under the open general licence. Market forces would have taken care of the demand-supply balance, blunting the scarcity feeling.

Where wheat production is concerned, it is evident now that the average crop yield is likely to be down by 8 to 10 per cent in the Punjab-Haryana wheat belt due to frost in February and high temperature in the beginning of March. The early planted crop was hit the most. Though the temperature dropped sharply after rains and thunderstorms in mid-March, it could not fully redeem the damage done earlier. There has also been some shortfall in wheat output in Madhya Pradesh where about six lakh hectares of traditional wheat area remained unsown for want of necessary soil moisture.

But the real worry is over lack of growth in wheat output since 1999-2000. Though many experts blame it on the climate change that has been causing erratic and unfavourable weather during the wheat growing season, the technological failure to pierce through the productivity barrier is also a significant factor that cannot be overlooked. While the wheat output has hovered around 72 million tonnes, the per hectare productivity has been stagnating at around 27 quintals in all these years. Unless wheat scientists can come up with new economically and ecologically viable technology to give a fresh push to wheat yields, the future of this green revolution crop would be in jeopardy and the country might turn a regular wheat importer.