Grain drain: Poor stock management, distribution system sow seeds of crisis

Written by fe Bureau | New Delhi | Updated: Feb 28 2013, 10:45am hrs
The Economic Survey has come down heavily on the government for holding on to grain stocks, which, it says, has resulted in artificial shortages, in turn, causing a spiral in prices. The survey called for investment in stock management and improving the marketing system of agricultural produce for increasing farmers income.

This policy of stocking grain well above the buffer norms comes under criticism on the grounds of hoarding and creating artificial shortages in the market, thereby jacking up the prices of essential commodities. Urgent attention needs to be accorded to efficient food stock management, timely offloading of stocks, and a stable and predictable trade policy, said the economic survey (2012-13).

At the start of this month, the Food Corporation of India (FCI) had grain mostly rice and wheat stocks of more than 66 million tonne against the strategic reserve and buffer stock norms of 25 million tonne.

Stating that the farmers' access to markets is hampered by poor roads, rudimentary market infrastructure and excessive regulations, the survey has suggested private sector involvement in creation of an efficient market to provide farmers an alternative competitive marketing channel for transaction of their agricultural produce at remunerative prices.

With agriculture growth rate slipping below the 4% target in the last five years, the sector needs urgent reforms to boost crop yields and private investment in infrastructure, so as to motivate farmers and feed the growing population, the survey has noted. Agricultural and allied sector grew at 3.6% during the 11th Five Year Plan (2007-12) against a target of 4%.

Although the process of market reforms has been initiated by different state governments through amendments in the present Agricultural Produce Marketing Committee (APMC) Act on the lines of the model Act, many states are yet to adopt the model Act uniformly.

Recently, the government allowed FDI in retail, which has been supported by many farmer organisations as well, and it can pave the way for investment in new technology and marketing of agricultural produce in India, it noted.

The survey also observed that India's agricultural exports are booming at a time when many other leading producers are experiencing difficulties. In 2011-12, according to Ashok Gulati, chairperson, Commission for Agricultural Cost and Prices (CACP), agricultural exports by India were more than $37 billion against an import of commodities worth around $17 billion. India has emerged as the world's largest exporter of rice, replacing Thailand and Vietnam.

As per second advance estimates released earlier this month, the country's grain production is likely to decline marginally by 3.55 to 250.14 million tonne in 2012-13 from a record 259.32 million tonne reported in the previous year.