The Hindu : Opinion / Editorials : TROUBLE AHEAD IN WHEAT

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Tuesday, Apr 27, 2004

Opinion

Opinion - Editorials

TROUBLE AHEAD IN WHEAT

AMIDST THE STRING of good news on the economy, there is one negative development brewing in agriculture. Production of wheat, which is concentrated in the rabi (winter) season that has just ended, is likely to be substantially less than the target of 78 million tonnes. This will have an adverse impact on procurement, which in turn will affect official stocks that have already been run down close to buffer holdings. Global wheat stocks too have come down, world prices have remained steady, and the outlook for the rest of the year is that the demand-supply scenario will be tight. Prices are therefore likely to harden within the country as well. Wheat imports are not yet a certainty, but they are not an unlikely event either. All this will pose a challenge to the new Government that will assume office in the middle of next month. There is no sign of any crisis developing in the food economy. There is, however, cause for concern.

The good monsoon of 2003 was expected to boost the kharif (monsoon) and rabi crops. While the kharif harvest was a bounty, the expectations for rabi have not been fulfilled. First, adverse weather conditions in winter in the main wheat growing tracts of Punjab, Haryana and western Uttar Pradesh lowered the advance estimate of wheat production in 2003-04 to 76.12 million tonnes. More serious was the change in climate just when the crop was beginning to ripen. An unusually hot spell in March in north India has had an unusual impact on the wheat crop. The fields have matured much earlier than expected and yields have come down substantially. There has been no official assessment of the impact on production but independent estimates place the total output for the year at no more than 70 to 72 million tonnes. The immediate effect will be on government stocks of wheat. The Government now expects to procure no more than 15.8 million tonnes, as against the 20 million tonnes hoped for. This will not be a disaster since Central government stocks on April 1 stood at 7 million tonnes, compared with the minimum norm of 3.7 million tonnes. However, official agencies had hoped to replenish stocks from what was projected as a bumper wheat crop. That they will not be able to do this is a real problem.

The present buffer stock norms were drawn up in the mid-1990s when offtake was largely channelled through the public distribution system; rural employment programmes were the only other major avenue of distribution. Yet in recent years a number of new welfare programmes like Antyodaya and the national mid-day meal programme have been launched and they are dependent on supplies from government stocks of cereals. In wheat, the total annual offtake, which varies from year to year depending on general economic conditions, is now in the range of 18-22 million tonnes. If supply in 2004-05 is no more than 23 million tonnes (procurement of 16 million tonnes plus an opening stock of 7 million tonnes), the Government will have very little room for manoeuvre. This is an unfortunate situation for a new Government to confront, considering that the problem in recent years was of over-flowing godowns. For instance, in April 2002 wheat stocks rose to 26 million tonnes. But over the past two years, the Government in its anxiety to reduce stocks to manageable levels has aggressively pushed exports at subsidised prices. Close to 12 million tonnes of wheat have been sold in this manner. The outcome now, in the absence of adequate planning, is that for the first time since 1994 India may have to return to the world wheat market as a buyer.

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