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Rediff.com  » Business » Paradoxes of UPA's farm policy

Paradoxes of UPA's farm policy

By Bhavdeep Kang
April 24, 2008 18:19 IST
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At a time when "a silent tsunami of hunger" is sweeping over the globe, the government has assured a record-breaking harvest and healthy buffer stocks, eliminating the need for food imports. At the same time, four state governments - Maharashtra, Rajasthan, Madhya Pradesh and West Bengal - were given the go-ahead to import wheat in order to meet the demands of the PDS (Public Distribution System). Clearly, India's food worries are far from over, despite the picture of plentitude painted by the Ministry of Agriculture.

This discrepancy is only one of the many characterizing the UPA's agriculture and food policy. There have been so many volte faces and inter-governmental disputes that nobody

Take the dramatic turnaround on WTO mooted by a prime ministerial aide. A day before the revised production estimates were announced, the press adviser to the PM said India may well have to change its established stand on trade-distorting direct farm subsidies, so as to uensure cheap food imports. Why we would need cheap imports if we indeed have a generous surplus in food grains?

India has consistently opposed direct subsidy payouts to farmers in the US and EU. It had stalled the Doha round demanding time-bound subsidy cuts. The PMO suggestion comes at a time when direct farm subsidies are under review in the EU itself (following protests that they benefit absentee landlords rather than actual farmers) and India with the support of other developing nations was beginning to get the upper hand. The fact that India may be considering a turnaround points to serious concerns about food security. The advance production estimates of the Ministry of Agriculture have come both as a relief and a surprise. Just a fortnight ago, the governments of Punjab and Haryana – the main wheat producing states – were assessing damage to the wheat crop from untimely rains and promising compensation to affected farmers.

One week ago, the arrival of wheat at the Punjab mandis was 33 per cent less than last year and Haryana had estimated a shortfall of 2 lakh MT in wheat output. Punjab reported damage of the crop on 30,000 hectares of land, while Haryana reported a loss of 25-50 per cent on one lakh hectares of land.

Ramesh Dagar, president of the Sonepat-based Kisan Club said "The advance estimates are unexpected. Given the weather conditions, we experienced crop failure to the extent of 10-30 per cent."

He points out that the happy picture painted by the Ministry of Agriculture is accounted for largely by an increase in coarse cereals – a whopping 6 million MT - rather than wheat and rice. Thus, the demand for wheat may remain largely unmet. And this may be the reason for giving state governments the go-ahead to make their own arrangements to import wheat.

As for oilseeds, farmers in Madhya Pradesh and Rajasthan said they had experienced large scale destruction of the mustard crop due to adverse weather in January and February, to the extent of 50 per cent. The bumper production assured by the Ministry for Agriculture is a credit to farmers, they said

Our buffer stocks, we are told, are in better shape than they were last year thanks to improved procurement. But a closer look at the numbers is disturbing. According to the Ministry of Agriculture, its annual demand for food grains under PDS (on 1993-94 poverty estimates) is 75.6 million MT. Taking current poverty estimates (2004-05) into account, it is 88.9 million MT.

The additional demand for food grains raised by the state governments for APL (Above Poverty Line) consumers alone stands at 8 million metric tonnes per year for wheat and 5.5 million metric tonnes per year for rice.

The total procurement last year (estimated) was 38.7 million MT. In January, the total buffer stock stood at 19 million MT. So, if there were 100 per cent offtake from the PDS, the buffer stock would be exhausted forthwith! Fortunately, the offtake has been at low levels, just 32 million MT in 2006-07.

What's disturbing the Ministry of Agriculture is the fact that offtake is rising sharply, along with food prices. Hence, it would like to exclude APL families from the ambit of the PDS or at least to severely restrict their access to it – but no member of the UPA is willing to allow it do so.

The Left parties are exercised over the fact that high food prices persist despite the generous harvest.  They attribute this phenomenon to speculation and hoarding and have demanded a ban on futures trading in agricultural commodities. The Minister for Agriculture does not agree and has, in fact, urged that the existing ban on futures in wheat, rice and pigeon pea (arhar) be lifted.

The Abhijeet Sen Committee,which has been asked to submit its recommendations on the issue expeditiously, is divided with the majority supporting the Minister for Agriculture. But the Minister for Commerce has jumped into the fray, saying that futures may well have to be banned in view of high prices. Uncertainty hangs over the future of futures.

The other contentious issue is that of bio-fuels. Both the Prime Minister and the Finance Minister are concerned over the global shift towards bio-fuels, which is a major reason for the food shortage worldwide. In India, the Group of Ministers headed by the Minster for Agriculture has mooted bringing 12 million hectares (a chunk of land larger than the state of Kerala) under bio-fuels by 2017. The FM has spoken out openly against diversion of land for bio-fuels and PMO aides say he shares this concern.

The PM has spoken out cautioning against a pet policy of his government (endorsed by the Congress party) that of contract farming. The negative feedback on contract farming, including a study conducted by the Indian Institute of Management (Ahmedabad) and the inroads being made by the corporate sector into agriculture may have prompted to the Prime Minister to say, "Collectivisation, corporatisation and land consolidation through land alienation are neither possible, nor socially desirable". While consolidation of land has been a mantra of reformists, the prospect of large-scale displacement of crores of marginal farmers is frightening for any government.

On the issue of small farmers, too, there is dispute. Responding to criticisms that the giant loan waiver proposed by the FM during his budget speech would not benefit the majority of farmers as they did not qualify in terms of size of land-holding and cut-off date for NPAs, Congress President Sonia Gandhi urged expansion of the scheme to cover more small farmers. The Minister for Agriculture rejected this proposal. A war of words is currently underway.

The most contentious issue by far is that of SEZs. While the Ministry of Commerce claims it has directed state governments and the Board of Approval for SEZs not to sanction use of agricultural land for SEZs, this is precisely what is happening. Whether in Congress-ruled Haryana or BJP-ruled Madhya Pradesh, farmers are being displaced en masse by SEZs. When taxed with this by a group of NGOs, the Commerce Minister reportedly expressed helplessness as "land is a state subject". The fact that the Congress president is sending out mixed signals has not imparted any clarity on the issue.

Is the BJP clearer on agricultural policy than the UPA? It appears to be worse off, actually. While opinion is fractured in the UPA, there is no opinion at all in the BJP. At a recent meeting of senior Sangh Parivar leaders at Jhinjauli, agricultural policy was discussed. The one fact that emerged clearly was that the BJP had no clear-cut view to offer on contract farming, SEZs, commodity futures or strategy for agricultural growth.                             

                              Government                                              Versus                               Governemnt

WTO

India's has consistently opposed  trade-distorting
direct farm subsidies in EU and USA; Commerce
Minister has refused to budge from this stand in every round of talks on the AoA (Agreement on Agriculture)

Dr Sanjay Baru, Prime Minister's spokesperson, calls for support to direct farm subsidies in the US and EU.

(TOI, FE April 20)

Biofuels

Pawar vs PM

GoM headed by Minister for Agriculture Sharad Pawar is readying a national biofuel policy, which aims to bring 12 million hectares under biofuel crops

PM says this is not a good idea, as food production is the prime consideration. FM P Chidambaram concurs.

(TOI, April 16)

SEZs

Sonia vs Sonia, Centre vs States

Sonia Gandhi says agricultural land should preferably not be taken by SEZs.
(Sept, 2006)

Centre directs Board of Approval for SEZs not to clear any proposal involving farm land.
Sept, 2006 (widely reported)

Sonia Gandhi praises Haryana government's method of acquisition of farm land for SEZs.
IANS, others (November 28, 2007)

States ignore "no-farm land" directive from Ministry of Commerce. Minister pleads helplessness, saying "Land is a state subject".

(Kuldip Nayer in the Asian Age, April 21)

Food Stocks

Pawar vs Pawar

Minister for Agriculture expressed confidence about the food stocks saying "We have over half a million tonnes of food grain surplus, over the buffer norms as on April 1 this year".
April 10, Business Standard

Four state governments are told to import wheat on their own if they wish to meet demand (HT, April 21)

Hoarding of foodgrains

Pawr vs Pawar

Central ministers urge states to take action against hoarders.
(FE, April 4)

Private companies permitted to procure subject to the proviso that they inform the state government of purchases above 10,000 MT

(Business Standard, April 15

Future Trading

Pawar vs Kamal Nath

Central ministers urge states to take action against hoarders.
(FE, April 4)

Minister for Commerce says the Government will have to issue a blanket ban on futures in the commodity market in view of shortages.

(TOI, April 20)

Loan Waiver for farmers

Sonia vs. Pawar

Central ministers urge states to take action against hoarders.
(FE, April 4)

Minister for Agriculture says loan waiver expansion not possible at the current time.

(All papers, April 21)

Contract farming

Congress vs PM

Prime Minister inaugurates Bharti's "Field Fresh" in Punjab in 2006, a large-scale contract farming venture.

Congress commits to "Contract farming, but with transparency in contracts" at its 82nd Plenary in Hyderabad.

The Prime Minister says, "Collectivisation, corporatisation and land consolidation through land alienation are neither possible, nor socially desirable".

PIB
, April 10

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