The Hindu Business Line : Farm concerns

The threat of mid-season drought has considerably eased in the past week, thanks to heavy and widespread rainfall that has brought cheer back into the lives of worried growers and everyone else. The rains have surely helped arrest yield losses due to moisture stress, even while easing availability of drinking water and fodder for cattle. However, the situation is far from normal, and complacency on the farm front is unwarranted. At this point of time, it is rather difficult to precisely quantify the damage the three-week-long dry spell in July caused, but the impact is clearly visible. While the planted crops may be saved, there is no indication that the size of major crops in kharif 2008 season will be close to last year’s.

In 2007-08, despite record yields from the major crops, inflation soared. The current acreage numbers are far from reassuring and, even allowing for a small expansion — post the recent wet spell — the final area under major field crops such as paddy, coarse grains, pulses, oilseeds, cotton and sugarcane may fall short of the target. Thus the most likely scenario is that overall farm output in kharif 2008 season will be lower than the previous year. This is potentially explosive for food prices. New Delhi must take cognisance of the emerging situation and begin working to control the damage that lower output can potentially cause growers and consumers. Tightening availability of major food products and its implications for prices are only too well known. If the government is serious about controlling inflation over the next several months, measures must be put in place soon for augmenting supplies through large-scale imports and distribution through fair price shops.

Trade and tariff measures too have largely been well deployed in recent months to rein in food inflation, but with limited impact. Success in addressing the supply-side issues has been elusive, simply because there has been no concerted and strategic thinking on the subject. Fiscal and monetary measures can hardly be the real substitutes to augmenting domestic farm output with higher yields. Raising output, improving quality and creating conditions for smooth flow of agricultural crops to the market is the only way forward. While a number of short-term, palliative policy measures have been initiated, there have been few that have created the infrastructure for sustained and viable agricultural growth.

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