Column : It?s much more than rotting grain

?India lets grain rot instead of feeding the poor?. Last week?s headlines highlighted a damning contrast: even as…

?India lets grain rot instead of feeding the poor?. Last week?s headlines highlighted a damning contrast: even as policymakers debate the extent of the Food Security Act?s safety net, millions of tonnes of grain have rotted or are vulnerable to damage. There were over 60 national and regional articles on the topic last week, blogs are chattering, and MPs questioned the minister of agriculture, food and public distribution about damage to foodgrains. Penal action is being taken against some FCI employees. The Supreme Court has requested a response to the investigation from the government.

On the face of it, last week?s news flurry looks like an illustration of Amartya Sen?s ideas in action. His 1981 book Poverty and Famines showed that famines are as much a function of inequitable distribution of food as overall lack of food. He argued that the opportunity to protest is an antidote to the first factor and an early warning system against the second. The alarm bell clearly sounded last week.

But does it mean that the system works? Is this a reassuring sign that lively public debate in India creates enough guardrails for policy to ensure that things cannot go too wrong? No. The ?rotting foodgrains? news cycle also demonstrates some of the dangers of relying on alarms to avoid policy failure.

First, if we are going to rely on catching mistakes to keep policy in line, the mistakes have to be caught and acted on faster. Yes, the minister reported 11,700 metric tonnes (mt) of damaged foodgrains in response to the fortunately-timed starred question no 30 in the Lok Sabha last week, but neither questions nor answers were new. He had reported similar figures on rotten foodgrains in 2002, 2003 and 2004 in response to question 3,771 in August 2004. There was actually more food rotting, 13,000 mt of grains, in 2002-03 and 2003-04. So it?s actually somewhat impressive that there is as little reported damage as there is, given the increase in stock being held.

The same question asked for data on total storage capacity state-wise, but the response did not differentiate between godowns (buildings, good) and ?covered and plinth? (tarpaulins, not so good). Nor did anybody follow up until question no 346 on April 20, 2010, asked for data on foodgrains ?lying in the open?. The minister?s response to starred question no 346 stated that more than 6.5 million mt of wheat held by the FCI and state government agencies were under tarpaulins. He reported a likely storage gap of 1.2 million mt for the next harvest in Punjab alone. Five other questions in the Fifteenth Lok Sabha were about similar issues.

Second, one has to ask whether this storage of public food stocks is really an issue that should have come to the alarm stage. The public scrutiny seems to be promoting quick fixes in this case rather than directing more attention to the deeper systemic reasons that the state?one of the largest and most regular ?customers? for not particularly high-tech grain storage?could have had so much trouble for so many years finding adequate space. Some heads at the FCI may roll, and blame will migrate between state and central agencies, but will the more important and complex questions about the efficiency of public investment and constraints on private investment, in what can be a reliably profitable industry, be revisited?

Third, if we are expecting the system to direct attention to issues in food storage, the alarms are selective. Storage for public stocks is important, but reliable storage capacity for small farmers could fundamentally affect their incomes (thus their need for a safety net) by allowing them to hold crops instead of selling right after harvest for whatever price they can get. Empowering farmers to choose the timing of their sale is not quite as simple as just building storage lockers for small lots, since farmers often sell at harvest time in order to pay off pre-harvest loans and have cash on hand for holidays. But reliable, fair storage creates the possibility for the stored grain to become an asset against which farmers can borrow to meet cash needs while they wait for the right time to sell. And waiting seems to be a good strategy. The IFMR Trust?s pilot foray into providing storage and post-harvest finance to farmers in Gujarat, for example, left the participating farmers with respectable double-digit annualised returns after paying back their loans.

You can take your pick of where the system failed: Parliament didn?t ask enough questions, the media failed to report on those that it did ask, the ministry made mistakes, and the vulnerable did not have enough of a voice. But the headlines reveal more than just rotting grain.

The author is director, Centre for Development Finance at the Institute for Financial and Management Research, Chennai

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 03-08-2010 at 20:20 IST