Reward Or Retribution?

Amidst humongous heaps of wheat, a huddle of farmers vent their frustration over this year's bumper harvest. The already bursting-at-its-seams Khanna grain mandi has scant space and scantier demand for their crop. With more harvest and hassles than most others in the gathering, farmer Karnail Singh Garcha of Fatehgarh takes the lead in detailing the grouses: "We've done too well for our own good this time. There's just too much wheat in Punjab. They say there's too much wheat in the whole country. So, other than the government, there are no buyers in the open trade to pay us better prices..."

There's more to this pandemonium of plenty. Wheat spilling out of the meagre storage spaces in and all around Khanna mandi. Heaped precariously under open skies, open to pests and theft and waiting for the rains to come lashing down perilously. "We're tremendously overstretched. It's a bumper crop. There's too much wheat arrival here but hardly any movement out. The storage spaces are desperately insufficient. The rains will attack only later, the rats are already nibbling away," confides an official in Khanna's Food Corporation of India (fci) godown, but not before he fervently wrenches out many assurances of anonymity.

Isn't that absurd, the official's fear of being penalised for stating a fact so plainly obvious? Perhaps it isn't. He is, after all, expected to play foot-soldier in a battle lost to bad strategies. Bound by duty to cover up for the fact that the government of a developing nation procuring a record 14 million tonnes of wheat should ordinarily be great news, but in this extraordinary country is an embarrassment.

A shame that a bountiful harvest might be consumed by rain and rodents rather than hungry masses. That, apart from storage, transportation and upkeep problems, the cost of continual inventories and, in turn, the rise in the government's food subsidy bill, will raise India's domestic debt burden. Worse, the swollen stocks will block huge sums of money in grain that the government is at a loss to dispose of.

Offtake through an inefficient Public Distribution System (pds) is already at a record low. But sales may dip further because the prices ruling in the open market are slightly lower than in the ration shops. The roller flour mills, main buyers of government wheat, will find little sense in buying grain at fci prices that are higher than those in the domestic and international markets. Without subsidy, chances of exporting the stock seem bleak. But with subsidy, India pays to feed other countries even as many of her own scrounge for food.

Not that Saru Ram Nanda, president of the Khanna Commission Agents' Association, has any inkling of the national foodgrain mess. Rare owner of an air cooler in the sweltering hot, messy mandi, the trader nonetheless heats up while discussing the deteriorating management of grain over the years. Every year, he scowls, the kisan produces better and every year the sarkar manages things worse. "We give out advance loans to the farmers that see them through the year. And at the time of procurement, we serve as links between them and the government. We get a commission on sales. But with things managed so badly, there's hardly any money coming back. The government stops buying after its procurement quota is over-and how do we get back what we have invested in the farmers?"

But those who have invested toil and sweat in the overflowing fields have the most troubled tales to tell. They talk of commission agents who scare them into distress sales with waves of hand at the surfeit of wheat scattered in the mandis. Rues Gurmukh Singh Jindal from Ajner village: "Because of bad weather last year, I had borrowed a lot of money. Now I just have to sell, to the agents who lent me the money. Small farmers like me have no option. Even in good times, we can't store in anticipation of better prices later. At whatever price, I have to sell. The agents tell us that the sarkar will soon stop buying."

The threat is exploitative, but true. With Punjab's initial procurement target of 7 million tonnes (MT) already met, the target has now been raised by just half a million tonne. The central grain pool, already brimming with an estimated 21.6 MT on the eve of the wheat procurement season this April, is 5.8 MT higher than the minimum buffer stock requirement. With an anticipated 14 MT more coming in, the total wheat stock will rise to 24 MT by next month. Add to that the 12 MT rice inventory and the country's total foodgrain stocks shoot up to a whopping 36 million tonnes.

At last year's prices, the value of the stocks works out to Rs 32,600 crore of blocked funds. Which is bound to increase uncomfortably once costs of this year's storage and inventories are added. Further, this unabated accumulation of grain will hike the food subsidy, rising every year, much beyond the Rs 8,700 crore provided in the budget.

If a good harvest is such a crushing burden on the fci, why can't the government make farmers produce less? On the contrary, every year, through a hefty rise in minimum support price (msp, the price at which fci buys to ensure that the poorest farmer gets his due), the government gives more incentive to farmers to produce more. The wheat msp for Rabi '99 was hiked from Rs 510 a quintal last season to Rs 550 a quintal. Result: a never-ending crop which, instead of benefiting the poorer farmers, may soon force them into distress sales.

"It's unfortunate that the government has managed to bulldoze itself into a demand crisis in a country where millions go hungry. More unfortunate is that the demotivated farmer in rural Punjab thinks it's a crisis of over-produce. It's a morale killer for the farmer," says Dr Pramod Kumar, director at the Chandigarh-based Institute for Development and Communication. Having co-authored a report on Suicides in Rural Punjab, he feels the poverty of prosperity will continue to claim small farmers till agriculture policies aren't hammered out keeping their interest in mind (see Outlook, December 28, 1998).

But Punjab's agriculture minister Gurdev Singh Badal has little time to spare on policies so nuanced. Surrounded by obeisant local media and farmers in crisp Allen Solly shirts, Badal gloats over Punjab's record wheat production. Does the minister know why the small farmers are unhappy despite the remarkable achievement? "We have produced, the rest is not for our department to think," says the minister, offering lassi perhaps as a substitute.

Next stop then, the right department. Food and Supplies minister Madan Mohan Mittal who launches into a critique of the National Front government and its 'anti-farmer' policies. "There's just too much work and unsorting to do. We are hiring private premises for storage," he says busily, "All this because they imported so much wheat that today our farmers are suffering."

Yet, all may not be lost. The bottomline is we have food in storage and we need it. Abhijit Sen, chairman of the Commission on Agricultural Costs and Prices (cacp), suggests some ways out: moving the stocks through an efficient pds into grain-deficit regions-the most obvious one, and perhaps the most difficult; selling wheat in the market, even if at a lower price; hiking the grain ration quota for below-poverty line households; and introducing job schemes paying food for work. Is anybody listening?

Who benefits from a bumper harvest?