The long-term policy on foodgrains submitted by the Abhijit Sen panel
will open up huge business opportunity for the private sector — handling
around 30-40 million tonnes of rice and wheat.
Business
opportunities will open up in setting up new markets/purchase centres,
grading, storage, transportation, processing and marketing including
exporting much larger quantities than now. Companies like Reliance
have evinced interest in the business, apart from food majors such
as Hindustan Lever, Cargill, etc.
The
report, commissioned by the ministry of food and consumer affairs,
has invited criticism for retaining the system of open-ended purchase
at an officially determined minimum support price (MSP).
This
would appear to overlook the fact that the central pivot of the report
is sharp reduction in the MSP. Slashing the MSP is recommended as
a short-term measure to bring down the present gargantuan stocks and
as a long-term measure to institutionalise the government’s role in
foodgrains as price stabilisation and food security.
It is important to note that what the committee has recommended is
not continuation of the present system of MSP, but its transmutation
to take into account three things: the new open trading regime and
the possibility of reducing costs through imports; inter-crop parity
and shifting procurement from the surplus regions of the north-west
to central and eastern India where distress sales occur (farmers sell
at a price less than cost).
All three considerations dovetail into a revamped strategy where government
intervention seeks to achieve price stabilisation and food security
for the poor and call for sharp reduction in the current MSP.
The current strategy where the Food Corporation of India’s so-called
‘economic cost’ reins at a level higher than international prices
and open-ended procurement is concentrated in Punjab, Haryana and
Andhra Pradesh is one designed to allow surplus farmers of these regions
make whoopee at public expense, not to stabilise price at a level
affordable by the majority of consumers. MSP must cover costs and
nothing more and typically rule far below the market price, so much
so that procurement to meet the buffer stocking norm will have to
be done at higher market prices.
Open-ended
purchase at MSP would mean that FCI acts as a buyer to whom farmers
sell as the last resort.
The committee has recommended abolition of the levy system and further
amendment of the Essential Commodities Act to take normal trade out
of its ambit and make it operational only in exceptional circumstances.
It has recommended variable import and export tariffs to stabilise
prices, a system of using warehouse receipts as negotiable instruments
and an actuarial calculation-based insurance system to stabilise incomes.
Thus, while strongly endorsing an activist role for the state in the
food regime, the report wants to take full advantage of the market
to help farmers and consumers.
The
public distribution system (PDS) should regain its original role of
stabilising food prices and transferring food from surplus regions
to deficit regions. For this, the present targeted PDS should be replaced
with a universal PDS.
The
use of food coupons and private/co-operative/NGO outlets in the PDS
should be encouraged. Subsidy for the poor should be taken out of
the function of the central PDS. The Centre can give states cash,
linked to offtake of grain, for giving subsidised grain to the poor.
Ending
levy on millers, shifting procurement from the North-West to central
and eastern India where farmers are forced to sell their produce below
cost and reducing the MSP will slash official procurement in the traditional
surplus regions and create new opportunities for private trade.
NEW
DELHI: T K ARUN|
TIMES NEWS NETWORK
[ WEDNESDAY, AUGUST 07, 2002 4:25:51 AM ]
