According to the third advance estimate, India’s foodgrain production in the current farm year (to end in June 2011) will be a record 235.88 million tonnes, including an all-time high wheat output of 84.27 million tonnes against 81.47 million tonnes projected earlier. Ahead of the wheat harvest, the country had buffer foodgrain stock of 47 million tonnes at the start of 2011 in the central pool.
A buffer close to double the size of minimum stock requirements in January was more than sufficient to discharge obligations under the targeted public distribution system (PDS) and various welfare schemes of the government. Now, with the storage capacity at the country’s disposal, it may be in a situation of embarrassment of plenty, allowing food to rot in the open as wheat harvesting gains pace. Finance Minister Pranab Mukherjee has announced a number of initiatives to create new storage capacity using government agencies and the private sector in order to cut wastage of foodgrain, which in the absence of sufficient number of silos and proper sheds are perforce kept in the open in many places.
Of all the new storage facility building moves, the most important one is to fast track creation of 15 million tonnes of capacity involving private parties and warehousing corporations. At this point the storage deficit is for over 8 million tonnes of grain. How much of India’s food is wasted after harvesting? Mukherjee says 40 per cent of fruits and vegetables is perished on farms because of inadequate ‘storage, cold chain and transport infrastructure.’ According to one estimate, a third or more of food is wasted in developing countries.
So, when the country is having bountiful food crops and storage will remain an issue, it is in order that Agriculture Minister Sharad Pawar should be nudging the government to restart export of wheat. India, the world’s second-largest producer and consumer of wheat, put a stop to export of the grain in 2007, in the wake of low production of 69.4 million tonnes in 2006 and 75.8 million tonnes in the following year.
Wheat production in the next three years was not big enough either to have justified resumption of exports. The ban was an attempt to boost domestic supply when bad weather and or pest were taking a toll on the crop. But, conditions this year have changed because of a good crop and a highly comfortable buffer.
While releasing the latest food estimates, Pawar said the government now had to take a serious view of ‘storage, allocation to states and exports.’ Some moderation in food inflation also makes a case for wheat export. Prices of cereals and pulses, the production of which are forecast to be up 18 per cent to 17.3 million tonnes are likely to fall with the arrival of new crops. But, when it comes to food price inflation in the country, the real culprits are fruits, vegetables and poultry items.
Pawar’s urgings for wheat exports may not spur the government to act fast. An official of Roller Flour Millers Association has rightly said that New Delhi’s risk appetite on issues relating to food is ‘very low’. For instance, Pawar first floated the idea of resumption of sugar exports in mid-December. But, the official notification permitting export of 500,000 tonnes of sugar came in only yesterday.
Food articles being highly politically sensitive their price rises could bring people into the streets. Countries, including our own practise export switch on and off depending on the harvest size. Suspension of overseas sale of food articles is, however, done without sparing a thought for how the move would impact the importing countries. Generally food surplus countries would not be blamed if they see in food shortages and high prices the tinderbox for protests.
When a country puts a ban on food exports to give relief to its people, it amounts to shifting of risk to perennially food deficit countries. There are clear evidences that costly food – wheat prices are near to 30-year highs – added a dimension to upheavals in the West Asia. The market may not have run out of steam as poor weather visits the US wheat belt and the winter-spring drought could lay waste to a portion of the Chinese crop. Prices will take another leap from here if China starts importing wheat. The world has now experienced the second food price spikes since 2008. Nearly two dozen countries, including some in south and south-east Asia witnessed violent riots triggered by sharp run up in prices of cereals last time.
The Economist has given a list of things that happen during a food crunch like ‘panic buying by importers’ to stock up and a ‘weaker dollar making imports cheaper in local currencies.’
Food inflation once it starts because of crop failures and strained supply situation sets in motion a vicious cycle. High food prices create public unrest as happened in the West Asia which in turn create condition for rise in energy prices and since that is the major cost element in making nitrogenous fertiliser, farming becomes that much more expensive.
The challenge for policymakers and scientists is to evolve a strategy to break the cycle. Unquestionably the strategy will have to be built around a new green revolution.
