CACP trashes food Bill, says farm sector to be hit

Written by fe Bureau | New Delhi | Updated: Dec 22 2012, 16:14pm hrs
FoodCACP chief Ashok Gulati and his co-authors point to major lacunae in the Food Security Bill. (reuters)
Even as the government readies to come out with a Food Security Bill (FSB) by the next Budget, the head of the Commission for Agricultural Costs and Prices (CACP) has come out with a striking critique of the programme.

The jointly authored study is hosted on the CACPs website while saying the views are those of the authors and not necessarily of the organisations they work for.

Apart from saying the FSB will likely cost double the R95,000-120,000 crore the government estimates it will cost each year, CACP chief Ashok Gulati and his co-authors point to other major lacunae in the Bill. At the outset, they wonder why, when the government is working on Aadhaar-based cash transfers to take care of the problem of huge leakages in most government programmes they estimate leakages under the targetted PDS at over 40% it should be looking at expanding the existing PDS in such a massive manner.

While FCI is already groaning under the burden of the current levels of procurement around 50-55 million tonnes annually and doesnt have the space to store the grain, the FSB will require FCI to procure around 25-30% more. Right now, while FCI has around 80 mt of grain, it only has covered or pucca storage facilities for 45 mt; another 17 mt is kept under tarpaulin on raised blocks (covered and plinth storage, in jargon), leaving the rest in the fields in the open. In other words, even before the issue of leakages in grain distribution, there will be a 10-15% loss just due to inadequate storage facilities.

As it is, Gulati argues, FCI and state government procurement is edging out private trade from major grain markets, the FSB will only make things worse.

The paper has a lot worse to say in terms of the impact of the FSB on the agricultural sector and on the countrys water table. For one, it points out, there has been a dramatic fall in the yields of wheat from the 1990s to the 2000s. Given this, and the fact that there has been a dramatic fall in the water table in major rice and wheat-producing states, the FSB will mean the water table will be further damaged and major investments will need to be made to achieve higher rice and wheat production.

Given that the need of the sector is to increase diversification this fetches higher yields and is less water-intensive the CACP paper argues the FSB will also slow down or even regress the process of overall diversification in agriculture, and go contrary to the emerging demand patterns in the country while people are consuming more proteins out of choice, the wheat-rice-oriented FSB will be delivering something else.

Literature on best practices around the world, Gulati and his co-authors say, shows that income policy approach (cash transfers of the Aadhaar kind) rather than price policy (selling grain at lower prices) is more efficient in achieving equity ends and this has been adopted successfully by many countries.

The paper draws attention to an amusing part of the FSB, a force majeure clause to ensure neither the central nor state governments have any liability in the event of war, flood, drought, fire, cyclone, earthquake or any act of God. While this comprehensive force majeure clause that would make any insurance company proud will help protect the government, the authors say, it is precisely in these conditions that the poor and vulnerable would depend on government to ensure their food security.