The Hindu Business Line : Need to examine demands for edible oil supply thru' PDS

Press reports suggest that the Bharatiya Janata Party (BJP) has severely criticised the Government's recent measures to curb the strident price rise in essential commodities saying that the action was too little and too late.

It has also demanded that pulses and edible oil should be supplied through the public distribution system (PDS).

The scenario, then

Ignoring the "political" angle of the main Opposition party's rhetoric, there is merit in the suggestion that edible oil and pulses should be supplied through PDS to the vulnerable and really needy sections of the population.

Ironically, however, it was the NDA government led by BJP that actually discontinued supply of refined palmolein through PDS some five years ago.

Around 2001-02, the international palm oil market went through a 30-month-long bearish phase with prices plummeting to as low as $200 a tonne (current price is over $400 a tonne). India's edible oil imports then spurted to over 45 lakh tonnes.

As supplies were comfortable and open market prices consumer-friendly, the then government decided to discontinue supply of refined palmolein through ration shops. Palmolein imports for PDS were earlier done through the State Trading Corporation of India.

Little did the then government realise that commodity markets, by their very nature, were fickle and subject to price volatility. An important food product in the social welfare programme of PDS was withdrawn thoughtlessly.

But much water has flowed under the bridge since then. Palm oil prices began to move up since mid-2003 and are currently double the price five years ago.

The rate of customs duty has also been hiked to 80 per cent for crude palm oil and 90 per cent for refined palmolein.

There is now demand to restore status quo ante. Considering that open market prices of edible oil are relatively high and per capita consumption of the poor sections rather low, it is socially and politically most desirable that edible oil supplies through PDS are resumed.

Garnering PDS supplies

Indeed, such supply will not, at least for the time being, result in additional imports. PDS supplies can be garnered in two ways. The National Agricultural Cooperative Marketing Federation (NAFED) has over 20 lakh tonnes of rapeseed/mustard stock incurring avoidable storage and other costs.

This should be crushed into oil and distributed through PDS, especially in northern India where mustard oil is a popular cooking medium.

Vanaspati, an option

The second suggestion is that imported vanaspati — coming in from Nepal and Sri Lanka — should be exclusively utilised for PDS supplies.

This could be done rather easily because such imports are canalised through government parastatals. Imported vanaspati could be supplied in states where mustard oil is not so popular.

The government could beneficially liquidate huge stocks with NAFED and also bring some relief to the beleaguered domestic vanaspati industry.

Supply of pulses

As for supply of pulses through PDS, a serious examination of the suggestion is called for. A considerable part of success in rice and wheat production is owed to the government's procurement operation, which acts as a ready market for growers.

Pulses have not enjoyed that kind of marketing support; and it is time they did. There are issues of quality and grades, which have to be looked into.

But if the government is serious about mounting an assault on nutritional insecurity, it should spare no effort to ensure that poor people are supplied rice, wheat, pulses and cooking oil through PDS.

If it involves huge financial support, so be it. The government needs to find the money to support this important welfare programme.

More Stories on : Agricultural Policy | Oilseeds & Edible Oil | Pulses

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Need to examine demands for edible oil supply thru' PDS