On wheat imports, time to go against the grain

Diversification into non-grains and improved productivity of grain farming are two sides of the same coin and the ‘‘grow-more-flowers-only’’ liberalisers don’t understand that one or the other can be ignored only at one’s own peril.

When Congress president Sonia Gandhi asked me to give a presentation to the Chief Ministers of the Congress ruled States at their conclave in Mount Abu in November 2002 on agriculture and rural development, I had argued that it would be a mistake to ignore the strengths built up in the foodgrains area.

Earlier, advising Punjab and Haryana to adjust to the WTO, we said India must ride through the global grain price cycle and the country must put its might behind technological support to the sector.

New technologies including the hybrids must get off the research success stage. If price policy gave appropriate incentives speciality wheats like the Durhams and the rice economy in MP, Chattisgarh and the East would revive. Shorter duration cereals would pave the way for diversification to oilseeds, pulses, fruits and vegetables. Instead, Punjab I believe was wrongly advised to ask the NDA Government for procurement prices for non-grain ‘diversifying’ crops, which the Centre shrugged off.

Markets and their development and processing were the key, I argued, and not only FCI mindsets. When will we learn to trade efficiently? Some years the country exported huge quantities of wheat, while in others, it went in for massive imports. Export exceeded half per cent of domestic production in 1987-88, 1991-92, 1995-96 and 1996-97; import in the years following, exceeded FOB (free on board) price by about 80 per cent, 138 per cent, 15 per cent and 10 per cent.

In wheat and rice, transport and quality differentials must be assured to the farmer by market reform and strategic alliances must be encouraged.

At Mount Abu, I lobbied that The companies Second Amendment Bill, 2002, designed by a committee I chaired for coops to become companies and producer associations, must pass. Pranab Mukherjee saw the Bill through a Parliamentary Committee.

For the NDA Government India was shining. I learnt later from a press report that this aspect of my Abu presentation had raised controversy. I got a lead article with my speech in a volume of the Rajiv Gandhi Foundation on panchayats designed as rural hubs by Mani Shankar Aiyar, but it was nyet all the way to the grain and diversification strategy.

Babus looking after procurement who reportedly convinced the Uttar Pradesh government that high market prices for wheat are a disaster must be forced to desist, so also others who won’t introduce high quality wheats, the hybrids, allow trade differentials or allow paddy lands in the Godavari delta or in Alleppey to move to mixed fish-paddy culture.

India’s granaries are empty as a result of faulty policies over a decade and a half. Our wheat prices have been kept well below world prices. Therefore, in a framework of open economy macro economics, the present import will lead to large welfare losses for Indian farmers, without any benefits for Indian consumers and an increase in the revenue and fiscal deficits. If ideological blinkers against grain farming are removed a policy response could, for example, apart from the procurement bonus already announced, consist of a ‘‘transport’’ refund to farmers in deficit states for paddy procurement, a “quality” differential for the special varieties of rice grown in the different regions like the Assam Japonica varieties, special Kerala varieties, etc.

These would only reflect existing market differentials, be market savvy policies, giving the trade the right signals and if strategically implemented would be revenue neutral. The road map for each crop, articulated by a committee on agricultural pricing reform under my chairmanship and announced by the finance Minister in the Budget last year, was if at all meant to give an edge to the farmer on trade prices.

We had given the numbers for market friendly policies for wheat and paddy. But actually Indian prices are well below world prices. Only cut flowers are covered by tariff policies. This needs remedy. In a diversification strategy there have to be well defined transition paths for a majority of the existing farmers.

Hybrid seeds were discovered by a special technology mission initiated personally by the late Rajiv Gandhi, tragically abandoned by successor governments. China now covers over 5 million hectares under hybrid paddy. India has gone below 2 lakh hectares. The ICAR has at long last recommended these seeds this year and India should cross the target of 5 million under hybrid paddy already achieved in China.

The technology programme for wheat, particularly quality wheats, should be in by September, for field extension in the next rabi. Government should set up a regulatory mechanism so that a farmer has access to quality seeds on a reasonable price. Also the system must, as in the past, cover the last mile, if necessary with fixed period initial financial support. Otherwise more suicides are on the agenda.

In our WTO Review meetings, under the chair of Mary Whelan, we are told that grain imports should be made easier, India’s approach to the world in a globalizing trade dominated agriculture remains an enigma. The answers are well known. Setting up another Committee is not one. Well defined action is.

(The writer is Chancellor, Nagaland University, and former union minister for power, planning and science)