Keralas retail arms double up to keep prices at bay

Written by M Sarita Varma | Thiruvananthapuram | Updated: Apr 29 2008, 02:01am hrs
Kerala, which was told by the Indira Gandhi government to opt for export-oriented cash crop cultivation during Indias foreign exchange-scarce days, is now food-deficit. Being at the farthest point from food-producing markets also makes it worse for the state at a time when inflation is striking hard.

The gravity of the situation is evident in the latest National Sample Survey Organisation report, which shows Kerala topping the countrys household monthly per capita consumer expenditure chart, both in rural and urban areas. In rice, vegetables, milk, eggs and meat, the states dependency is growing. A rough estimate is that about Rs 1,000-crore worth vegetables arrive daily in Kerala from neighbouring states.

Kerala planners are in a fix on whether to subsidise current consumption or subsidised the creation of excess capacities in food production. State Planning Board vice-chairman, Prabhat Patnaik, has shot off an advisory to the VS Achuthanandan government to ramp up paddy production by at least 3 lakh tonne within a year.

Interest subsidy for food crop farmers and setting up of seed-banks are in the pipeline. But funding issues (Plan or non-Plan) are stalling the capacity-building exercise, says state agriculture minister Mullakkara Ratnakaran.

Meanwhile, the price crisis has snowballed to proportions that call for urgent intervention. In this, Keralas vibrant public distribution has had a fair amount of success through its retail arms, Supplyco, Horticorp and Consumerfed.

The Kerala consumers favoured Andhra-origin rice variety, Jaya, is in short supply. Supplyco sells this rice at a subsidised rate of Rs 18 per kilo. But in the open market, consumers have to cough up Rs 21-22 per kilo. In desperation, Supplyco has been lobbying with the Andhra government to waive rice levy. The first consignment from AP reached Kerala this week, say traders in Kollam.

But this offers little relief. While exports gained, the states paddy output has shrunk. One, against its annual 40 lakh tonne rice offtake, Kerala produces only 6.5 lakh tonnes of paddy per year. This is because, at the Centres behest, to feed the countrys cash-crop kitty, Kerala farmers had migrated from paddy to pepper and from tapioca to rubber.

Two, unexpected summer rains damaged paddy crops in Kuttanad, cashew in Kasargode and vegetables in Idukky. Three, to add to the state's woes, the Centre last month trimmed Keralas PDS rice quota by 80%.

In vegetable sourcing, Kerala is facing stiff procurement competition from retail majors like Reliance Retail, which has notched up bulk sourcing contracts with Idukky-based farmers. The LDF government has opened 200 more Horticorp vegetable shops selling at subsidised rates.

Bitter at the inflationary odds piling up against it, the government is blaming its United Progressive Alliance partners at the Centre. It is upset at the axing of PDS rice quota and slow approval to the compensation package for crop damage.

But then, full backward integration in supply side capacities is equally urgent, say sources. While the state's retail armsSupplyco, Consumerfed and Horticorphave been doubling up to keep price rise at bay, it's evident that their procurement is full of hiccups. State planners have already identified low food production as the culprit. All that is required now is that central policymakers and Keralas coalition bury their hatchets and get funds flowing to beef up the granaries.