By ET Bureau | 6 May, 2013,
India's granaries will overflow, with food grain production estimated to touch 255 million tonnes this year. So, it is imperative to export wheat and rice to lower official stocks. The government should go ahead and lower the minimum export price of wheat of $274 per tonne to ship out around five million tonnes of wheat. This makes sense, given that wheat exports have slowed due to a rally in domestic prices, scuttling efforts to make space in warehouses for the new harvest. Mountains of grain are stored in the open, covered only with plastic sheets, and this will rot if the offtake is low. State-run agencies now hold around 60 million tonnes of grain, thrice the buffer stock mandated for food security for April. A harvest bounty is expected to add another 60 million tonnes to this pile. If wheat cannot be exported to run down stocks, it should be used at least as cattle feed.
True, domestic prices of wheat rose sharply for over a year till March this year, thanks entirely to mishandling by the biggest hoarder, the government. Proactive policy including more openmarket sales will help bring down retail prices.
The Centre should also revamp the food management system to allow private trade to procure, store and distribute food grain. Competition will bring down costs, squeeze out the inefficiency of the FCI and cut the food subsidy bill. The government's role should be limited to procurement to maintain the minimum buffer norm. Physical handling of grain, that is prone to pilferage, can be reduced by using warehouse receipts, issued by accredited warehouses to farmers and traders, acknowledging the quality and quantity of produce deposited with them. The government should buy warehouse receipts to ensure that farmers get the minimum support price, while the warehouses take charge of grain storage.
India's granaries will overflow, with food grain production estimated to touch 255 million tonnes this year. So, it is imperative to export wheat and rice to lower official stocks. The government should go ahead and lower the minimum export price of wheat of $274 per tonne to ship out around five million tonnes of wheat. This makes sense, given that wheat exports have slowed due to a rally in domestic prices, scuttling efforts to make space in warehouses for the new harvest. Mountains of grain are stored in the open, covered only with plastic sheets, and this will rot if the offtake is low. State-run agencies now hold around 60 million tonnes of grain, thrice the buffer stock mandated for food security for April. A harvest bounty is expected to add another 60 million tonnes to this pile. If wheat cannot be exported to run down stocks, it should be used at least as cattle feed.
True, domestic prices of wheat rose sharply for over a year till March this year, thanks entirely to mishandling by the biggest hoarder, the government. Proactive policy including more openmarket sales will help bring down retail prices.
The Centre should also revamp the food management system to allow private trade to procure, store and distribute food grain. Competition will bring down costs, squeeze out the inefficiency of the FCI and cut the food subsidy bill. The government's role should be limited to procurement to maintain the minimum buffer norm. Physical handling of grain, that is prone to pilferage, can be reduced by using warehouse receipts, issued by accredited warehouses to farmers and traders, acknowledging the quality and quantity of produce deposited with them. The government should buy warehouse receipts to ensure that farmers get the minimum support price, while the warehouses take charge of grain storage.
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