CRAZY IDEAS FOR CRAZY SITUATION!-SUGGESTION FOR FOOD STOCK LIQUIDATION

Food grain surplus available with Government of India is increasing every year due to the diligence of the farmers and decent procurement prices ( MSP) offered to them. On one hand MSP provides the farmer a safety net so that he is not exploited by the traders while increasing flow of grains into government granaries is creating an infrastructure jam in the form of inadequate safe storage facility and lack of quality and management factors. In spite of strictures from the Supreme Court on the wastage of grains year after year, very little has been achieved so far address the storage problem. Suggestions are made from time to time regarding the best way to get rid of the stored grains held beyond the food security linked storage level though Government is still not sure as to how this food surplus is to be tackled. Latest view on this subject is bizarre in that it suggests that eligible consumers are to be supplied with their 3 years' grain requirement at one go to get rid of the grain stock! Here is a take on this "hilarious" suggestion.      

The paper noted central agencies had excess stock even after taking into account what was needed for the FSB. The authors calculated that stocks with the Food Corporation of India (FCI) would be in excess of 30 million tonnes as on July 1. The value locked in these ranges from Rs 70,000 crore to Rs 92,000 crore. The paper suggested states where the Public Distribution Systems have been integrated with Aadhaar, the citizen identification number, be allowed to lift 36 months of their off take requirements at a discounted price. The discount, the authors suggested, would be equal to the cost of carrying by FCI. These states can ask consumers to lift their 36 months' quota at one go, with a discount on the PDS price. That way, consumers can get a larger quantity of grain and FCI would have more storage space. One of three other alternatives suggested is an open market sale scheme at last year's MSP, beside a maximum of five per cent taxes, cess and others.

Those who make the above suggestion must be out of their mind because they have no idea as to what will happen to the quality of grains if they are stored at the consumer end. Food grains are vulnerable to infestation by insects, prone to attack by rodents and can cause irreversible changes in quality and nutrition progressively with time. Even the FCI, government's food grain procurement and storage arm finds it difficult to prevent spoilage in spite of their scientifically constructed storage structures and how can one expect that a family can keep the grains safe for 3 years? One should not forget the oft repeated claims by food experts that post harvest food losses in the country can be any where from 25% to 40%! Both Planning Commission as well as the government officials including the Prime Minister routinely talk about such food wastage in the country though at the ground level not much is being accomplished to save these grains from spoilage! This suggestion is outlandish and it only will enable the government to shift its responsibility of protecting the food to the poor citizens.  

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

AGRI-EXPORTS-YESTERDAY'S DECISION POSTPONED FOR TOMORROW!

When a government "elected" to govern vacillates on practically every major national issue, who is supposed to bear the consequences of "no decisions" and "delayed decisions'? The honest and hapless citizen, of course! It is well known that government granaries are bursting with food grains, carried forward from year to year with no guarantee that the quality of grains is fit enough for human consumption. Yet government does not take decision as to how these huge stocks of grains are to be disposed of or utilized, forcing the country's judiciary to intervene and order its distribution free to the poor people of the country. A courageous government would have gone for massive exports as a part of a barter arrangement to get them back if a need arises in future. But like the proverbial "Dog in the Manger" policy, government assumes the posture of the classical "see no evil, hear no evil and speak no evil", allowing the precious food to rot in the open! Latest example of prevarication is with regard to export policy vis-a-vis cotton and sugar. The "serene", "saintly", "morally superior", "incorruptible" and modest Prime Minister is seeking consensus on export as if every action of his government is guided by such a noble attitude. Every body knows in this country that the whole government works on a"consensus" by a single extra-constitutional persons in Delhi and the so called meetings of the cabinet are nothing but a charade! Here is a take on this issue.

"Prime minister Manmohan Singh is meeting a group of ministers including Finance Minister Pranab Mukherjee, Agriculture MinisterSharad Pawar, Food Minister KV Thomas and Commerce Minister Anand Sharma to arrive at a consensus on trade policies especially in sugar and cotton exports. Recently, Pawar had criticized the export policies of cotton and sugar. The sugar export is a contentious issue as even after having a surplus production and international demand, the export has hit a road block in the absence of a clear policy. After notifying the export of 2 million tonne sugar in two tranches this season, the food ministry had to suspend the notification of another one million, which was decided in the meeting of a panel of ministers on March 26. The panel wanted a new and faster mechanism of sugar export, keeping in view the principles of equity and transparency. But even after the elapse of a month, the consensus is yet to be arrived at. This inertia is hurting the sugar industry, which is sitting on a heap of at least four million tonne surplus sugar. The industry wants to sell it as fast as possible to clear the cane arrears of farmers, which have touched a record high of 10,239 crore. "The government is yet to come out with a fresh mechanism. When the policy has worked well for the last five tranches over two years, what's the need to change it in the mid of the season," said a sugar mill owner. Pawar, who crafted the existing sugar export mechanism, has now become a self-critic. He believes that the existing mechanism is slow and needs to free up a bit to augment faster exports. "The policy shift is making us to wait. If there is no consensus on the alternative mechanism, let the sugar move out through the existing one. We already have lost one precious month," said another miller who was in New Delhi to attend a conference of International Sugar Organisation. Currently, the government allocates export quota to individual mills on the basis of actual average production over three years. Now the panel of ministers wants to adopt a new mechanism that could be based on 'first come, first serve' basis" 

If cotton farmers and exporters are bound to gain through exports why should the government come in the way? Is the government scared of shortages in the domestic market? With sizable foreign exchange in the kitty, such scarcity situation is always controllable through imports. Similarly why is the government so much concerned with sugar, a commodity considered the "white poison" associated with bad health world over? Will it not be a wiser policy to allow free exports and earn as much foreign exchange as possible.? India need not be concerned too much about sliding of sugar prices in the global market because such a situation has the built-in safeguard to slow down export. If domestic prices go up it should be taken as a blessing in disguise because that will force the consumers to cut down on sugar intake benefiting the whole country. Why spend sleepless nights on these mundane issues? It is time that the sugar industry is totally decontrolled and the past practice of micro-controlling sugar marketing, sitting at the air-conditioned offices at Delhi, is abandoned in the interests of all concerned in this country.

V.  H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

ESCALATING FOOD PRICES-A BLEAK GLOBAL SCENARIO!

Can responsible governments play with the lives of their people by not taking corrective policies to prevent food shortages and escalating prices unaffordable to billions of poor people? This a critical poser coming from some of the most respected aid agencies across the world after helplessly watching the continued rise in price of most food staples during the last few months. According to FAO the world stock of food grains can reach critically low levels this year if there are production shortfalls in major producing countries like China, India, Russia etc this year and the writing on the wall is clear as reflected by the 2.2% jump in the food price index recently reaching an all time high in two decades. It is not the producing countries which face the problem posed by high food prices as they take corrective measures to moderate their exports but many poor countries, not self reliant in the food front, will have to bear the brunt of the problem because of high global prices for these food grains.

"Global food prices have reached their highest point in 20 years and could increase further because of rising oil prices stemming from the unrest in Libya and the Mideast, a U.N. agency warned Thursday. Skyrocketing food prices have been among the triggers for protests in Egypt, Tunisia and elsewhere, and raised fears of a repeat of the food price crises in 2007 and 2008. Some experts point to key differences compared to those years: for one, the price of rice, an important food security commodity, is much lower today. Still, Oxfam called the hike "deeply worrying." The Food and Agriculture Organization said in a statement that its food price index was up 2.2 percent last month, the highest record in both real, inflation-corrected terms and nominal terms since the agency started monitoring prices two decades ago.It also was the eighth consecutive month that food prices had risen, the Rome-based agency said. In January, the index had already registered a record peak. The increase was driven mostly by higher prices of cereals, meat and dairy products, FAO said. Sugar was the only commodity of the groups being monitored whose price hadn't risen. Global oil prices, which increased on concerns about the potential impact of supply disruptions following unrest in Libya, are a crucial variable. "Unexpected oil price spikes could further exacerbate an already precarious situation in food markets," said David Hallam, director of FAO's trade and market division. "This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing regions are about to start."

It is true that countries like India, China and Russia do clamp on exports when significant production shortfalls take place but one has to understand their compulsions to protect their people from shortages and consequent rise in price with potential for causing political and social unrest with lethal consequences. The nexus between fossil fuel price and food price is a little difficult to understand though there is the convenient explanation that fossil fuel is involved in a big way in grain production, storage, transport and wholesale as well as retain marketing. What about diversion of food grains for bio-fuel production? Of course this is also an area of great concern since it is well known that more than 40% of corn production in a country like the US, is diverted with government blessings, for bio-fuel conversion. Against such a bleak scenario it is time that agencies like FAO, WHO, UNICEF, WTO and others sit with governments of some major countries to evolve a practical long term solution so that such contingencies as being faced now, do not pose grave threat to global peace.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com