[Reader-list] RTF (Right to Food) Articles - 7

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Wednesday, May 30, 2001
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 MSP muddle and food exports -- Boasts aside, can we make the grade?

   K. P. Prabhakaran Nair

BOTH the US and Canada have cried foul and dragged India to the World Trade
Organisation's dispute settlement body complaining that India is `exporting'
`subsidised' wheat in violation of WTO norms. North America, the world
leader in wheat production and export, has been stung by India's successful
foray into the world grain market.

Three decades ago, President Richard Nixon wrote of India as a ``basket
case'', starving itself to death. However, the recent export of 16,92,022
tonnes of wheat to Bangladesh, Myanmar, the Philippines, Malaysia, South
Korea, the United Arab Emirates, Om an and Yemen has surprised the world.
There is even perhaps a false sense of glee within the agricultural
bureaucracy that, after all, India has come of age on the food front. Both
Russia and Iraq also import Indian wheat. The `export' was officially rou
ted through the Food Corporation of India (FCI) through a global tender at
the end of last year. Exporting nearly 2 million tonnes of wheat at a
`competitive' price -- at $102 per tonne f.o.b. compared to the superior
North American varieties at $101 -- the ``export exercise'' seems
praiseworthy.

However, not content with this effort, the Centre proposes to export another
5 million tonnes of wheat through a global tender this fiscal, based on the
demand by exporting agencies such as State Trading Corporation, NAFED and
MMTC. The Minister for Publ ic Distribution and Consumer Affairs has
declared that the basic rate would be raised from $89 at present to around
$92 per tonne. The carrying cost of FCI wheat works to around $5 per tonne
per year and the Government had no option but to admit that the gap between
the economic cost and the issue price for export was only `notional' when
contrasted against the savings effected in more than two years of carrying
cost of foodgrains. So, what is the big deal in exporting wheat and, in
turn, raising the Mi nimum Support Price (MSP), when nearly a third of
Indians -- including pregnant mothers, working women, undernourished
children -- go without two square meals a day? Exporting any commodity has
many implications -- overt and covert.

A country does not export a commodity, much less an agricultural one, either
to flag itself off to the rest of the world of its ``coming of age'' in the
production of any marketable produce or to play to the galleries -- both
internal and external -- whi le denying its citizens their needs. One is
reminded of what happened on the Indian export front immediately after
Independence. `First grade' woollen knitwear was exported to Russia, while
only an inferior grade was made available locally. In contrast, a `Made in
Germany' or `Made in Japan' commodity -- of the same quality -- was made
available locally or exported.

The phoren mania either in forward or reverse gear never seems to wear off
the Indian psyche. But the tragedy of it all is that we are exporting food
while 204 million Indians starve. But leaving aside the sentimental and
compassionate aspects of the que stion, instead of being goaded forward only
by the thrill of ringing registers, we should concentrate on the bare
economics and science of it.

With its latest decision to jack up the MSP for newly-harvested wheat by 5
per cent over last year's MSP, the Government would be buying a quintal of
wheat at $13.12 and route it through STC, NAFED, MMTC, etc for export at
$8.92 -- losing $4.2 per quinta l in the bargain. If the Government does
export 5 million tonnes of wheat, this would mean a net drain of $21 million
-- about Rs 100 crore less in the national kitty at the purchase level.
India now has 46 million tonnes as buffer-stocks, thrice the min imum norm
at 15.8 million tonnes. The additional cost of maintaining the excess stocks
beyond the prescribed minimum of 19 million tonnes this April will be about
$100 million -- a colossal Rs 465 crore per annum. This does not include the
mountains of g rain waiting to be sold or disbursed since the last two
years.

The final picture reveals that on the one hand the Government is ceaselessly
enriching the fat-cat farmer lobby, and on the other exporting wheat at
prices that seem beneficial only to the foreign buyer. Thus, the domestic
consumer, rich or poor, is left in the lurch and pays something like +/-Rs
15 a kg of atta from the open market -- atrocious, considering India's very
low per capita income.

The muddled `MSP syndrome' and the directionless agricultural policies make
a mockery of India's food management, especially when food should be at the
centre of India's developmental efforts. It is ironical that despite more
than half a century of passi ng the Universal Declaration of Human Rights in
1948, where the right to food was acknowledged as a basic human right, the
Government governs this vital sector with such insensitivity that it seems
as though it is nobody's business to ensure that no Indi an goes hungry. The
economic cost of FCI-stored wheat has escalated from $178 to $194 a tonne
with the latest MSP revision upwards.

The common refrain among the farm fraternity is that the country's granaries
are overflowing and only the lack of purchasing power has led to this glut.
This is a half-truth. If the government stops pampering the farming lobby to
draw political mileage, the mountains of grain would vanish. Why do we not
freeze the MSP and set a ceiling on the procurement volumes? If the compound
growth of agriculture were to be analysed crop-wise, in the last two decades
food production declined 31 per cent. Between 198 0-81 and 1991-92 and
1992-93 and 1999-2000 cereal production plummeted 32 per cent, rice 40 per
cent, and wheat stagnated. So, the abundance of grain with the FCI is not a
reflection of our enhanced productivity. Admittedly, the scientific
fraternity is clueless over how to pierce the yield plateau, though much
noise has been made and generated on the `biotechnology revolution'.

Enhancing productivity is not an easy as there are a number of determining
components. It is perhaps a myth to presume that farmers want ever higher
prices every year. Access with ease to inputs, effective marketing
opportunities and cost-of-production-l essening techniques -- primarily soil
management, since more than 50 per cent of crop productivity is determined
by this factor -- are some of the key elements. Unfortunately, neither the
policy planners nor the scientific community is able to provide si gnificant
alternatives.

The current spate of exports' is a myth and mirage. It will add to the Gross
Domestic Product superficially when the balance-sheet swells with the inflow
of a few million dollars in the financial year ending in 2002. But at what
expense? It will be an ir ony if this Government fails to translate the most
basic of human needs, food, as a basic right of every Indian, especially
when the FCI godowns are overflowing. In an address to the nation over three
years ago, the Prime Minister declared that agricultu re was his first
priority and he would strive to make India ``hunger-free'' in ten years.
Will it remain yet another unfulfilled promise?

 (The author is senior fellow at the Alexander von Humboldt Foundation,
Germany.)

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