The Hindu Business Line : The wheat imbroglio

That the Centre has slipped up on the foodgrains management front is clear from the wheat imbroglio. In output estimation, inventory management and demand forecasting, policymakers have woefully lagged market developments. New Delhi has been at a loss even to identify emerging trends in production, consumption and prices, as is evident from the knee-jerk reactions to adverse developments rather than proactive preventive decisions. The estimate of the current season's output has been steadily pared, down to 72 million tonnes now. That the output of this fine cereal has been stagnant for three years in a row should ring alarm bells in Krishi Bhawan; but there is little evidence of anyone being worried.

Demand, on the other hand, is galloping with rising incomes. The Rs 50 a quintal bonus announcement failed to motivate growers who expected more; worse, it came at least two weeks too late by which time much of the crop had been marketed. Procurement by the Food Corporation of India is way behind target; and, indeed, far short of last year's level. At this rate, the Government will be able to service only 50 per cent of the requirement of the Public Distribution System and welfare programmes. To augment public stocks, 30 lakh tonnes of wheat are to be imported, all through State Trading Corporation of India (STC). This has raised the hackles of the farm lobby, which feels short-changed, while a section of overseas suppliers perceives conditions in the recently issued tender as restrictive and helpful selectively.

There is no reason why wheat imports should not under Open General Licence, for, the envisaged quantity is large and no single agency, much less a monolith such as the STC, would be able to handle it efficiently and cost effectively. Anyway the private sector is more likely to succeed in buying at competitive prices and organising early shipment. As for quality specifications, it is absolutely essential that lobby pressures do not sway the government. More important, OGL imports will have a salutary effect on the market, which has flared up because of unfettered speculative activity. It would be naïve to believe that the import of 30 lakh tonnes will rein prices in.

Clearly, too much money is chasing, and is being allowed to chase, tightening wheat stocks. Does the Government's reluctance to check the speculative activity in the market not go against consumer interest? As an immediate step, the Government should do everything to remove the speculative froth from the grain market. Simultaneously, it must address all the weaknesses of the foodgrains policy.