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Journalism of Courage
NEW DELHI, MARCH 24: The record grain output forecast for this year proves the agriculture ministry right after all. Krishi Bhavan had all along targeted 200 million tonnes, only to be pooh-poohed by economists and think tanks.
Of course, the weather has helped. Barring one hailstorm in March, the weather has behaved beautifully. Farmers have every reason to rejoice. Not only is a record harvest in the offing, they are also assured of a remunerative procurement price that will likely be well above the market price in a record year. Consumers are better off too. “At the very least,” says Sumiter Broca, agricultural economist at the National Council for Applied Economic Research, “cereal prices will not rise this year”.
Broca says that ideally, procurement prices could have been a little lower, say 10 per cent. That would have kept the government’s subsidy costs in check.
The procurement policy, without any futures trading in commodities which would let farmers hedge their own risks, is an “open-ended, one-sided guarantee by the government,” Broca says.
On the sustainability of this level of output, though, the news is good. India produced 66 million tonnes of wheat and 82 million tonnes of rice last year. Looking at a slightly longer period, the reduction of area under oilseeds has coincided with an increase in area under cereals. So, weather obliging, experts feel high levels of foodgrain output could be sustained.
That is all to the good, because this year’s projected farm output represents a 3.9 per cent growth: the draft agricultural policy is aiming for a sustainable annualgrowth rate of 4.3 per cent.
On the foodgrains front, the gains to the farmer are unequivocal because of procurement support which will raise rural purchasing power. On record vegetable output, however, they could actually be the losers. This is because it is the contention of economists such as Broca that even in such a bad year as last year, it was only onion production that had been seriously affected, and even there 8 lakh tonnes of onions had actually rotted.
In a record vegetable harvest year, and no government price support on this front, farmers would be vulnerable to lower prices, though consumers would be gainers. The issues, as ever, are of the Essential Commodities Act which does not allow traders to hold stocks beyond a level, no use of cold storages for anything other than potatoes, irregular power supply.
