Opinion Ashok Gulati writes: A plan for the winter crop
Better technology and policies must be deployed to ensure farmers get their due. Abrupt export bans or stocking limits are not the best way forward
As per the MoA&FW, wheat production in 2021-22 was 107 MT and in 2022-23, it was 112.7 MT. (Express File Photo) 
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The Indian monsoon (June to September) has ended with a 5.6 per cent deficit compared to the long-period average (LPA). This is a notch lower than the normal rainfall — 96 to 104 per cent of the LPA. Despite the wide deviation in its temporal spread, especially in August — the driest since 1901 — the area planted under paddy and sugarcane is higher by 1.9 per cent and 7.64 per cent respectively, compared to last year. But the area under pulses is significantly down, by 4.2 per cent, especially arhar (tur) which has seen a 4.9 per cent fall in cultivated area. In the days to come, one will have to watch the price inflation in tur — already raging at 32 per cent in August. The only way to tame tur price inflation seems to be a million tonne of imports from African countries and Myanmar.
In Delhi, as we brace for smoke from the stubble burning from paddy fields during October-November, it is also time to plan for sowing of rabi crops. The Ministry of Agriculture and Farmers Welfare (MoA&FW) organised the Rabi Conference on September 26, under the leadership of Manoj Ahuja, Secretary MoA&FW. The Secretary of the Department of Fertilisers and the Director General of ICAR were also invited. They assured us that the country has ample fertilser stocks to take care of the demand of the rabi season.
Wheat is the main rabi crop, and it is susceptible to a heat wave. Himanshu Pathak, DG ICAR, assured us that his organisation has released numerous heat-resistant wheat varieties, which are likely to cover roughly 60 per cent of the sown area — up from 45 per cent last year. In the last nine years, India’s agri-research system has released 2,200 varieties of different crops, of which 1,800 are climate resilient. Going by these assurances, another “record” rabi crop is in the offing.
Against this backdrop, I will raise a few queries and offer some suggestions so that MoA&FW can move from a highly “production-centric” approach to a “food systems” approach — a topic on which I delivered a keynote address at the rabi conference.
Here are some questions to ponder with respect to wheat in the last two years. As per the MoA&FW, wheat production in 2021-22 was 107 MT and in 2022-23, it was 112.7 MT. But the trade estimates for these two years are far lower, below 100 MT in 2021-22 and below 105 MT in 2022-23. This huge gap in the GoI’s estimates and trade estimates creates inflationary market expectations.
We also know that in 2022, wheat procurement plummeted to less than 19MT, a drop of more than 50 per cent from the previous year. As a result, retail prices of wheat came under pressure. GoI put an export ban on wheat on May 13, 2022, fearing that the Russia-Ukraine war could escalate prices. Wheat inflation, less than 10 per cent in May, climbed to 15.7 per cent in August. When the GoI banned atta exports, the inflation did not stop there. It kept going up and in December 2022, it climbed to 22 per cent and further to 25 per cent in January 2023.
The wholesale wheat prices in mandis are hovering around Rs 2,700/quintal, while the minimum support price (MSP) for the coming marketing season of wheat is Rs 2,125/quintal. The FCI has unloaded its stocks at prices way below its economic cost, fearing that it would not be able to procure enough for the public distribution system (PDS). This was literally “dumping” to beat the market prices down to MSP levels. Offloading 3.4 MT in February-March ensured that market prices were down to MSP, and FCI was able to procure about 26 MT of wheat. Its success cost wheat farmers Rs 40,000 crore (Policy Brief 15 on ICRIER website has details of this). This is a transfer of resources from producers to consumers and indicates a typical pro-consumer bias in the policy framework.
My question is: When more than 800 million people already get free wheat or rice (5kg/person/month) under the PDS, who is the government trying to protect? The urban middle class at the cost of farmers? Is that a rational policy to incentivise farmers to produce more? Certainly not. This is what economists Ann Krueger, Maurice Schiff and Alberto Valdes called the “plundering of agriculture” in their classic work, Political economy of agricultural prices.
The story is not very different in the case of rice which faced export restrictions when there was a complete ban on non-basmati white rice exports. Then export duties were imposed on parboiled rice and a minimum export price was set for basmati rice. The whole effort has been to beat market prices down to the MSP, even if that involves “dumping”. FCI’s economic cost of rice is around Rs 3,700/quintal, but it is selling rice at below Rs 3,000/quintal. If some other country had been dumping its products in India, the government would have taken the dispute to WTO. But what can farmers do when the FCI dumps its wheat and rice at way below their economic costs?
As we go further into the rabi season, we not only need better and more accurate estimates of production, but also need to monitor the prices that farmers get. At a time when technology can track each moving car, why can’t we monitor the progress of crops every week — if not daily? We need to upgrade our patwari-based production estimate system to one that is based on high technology. This will help settle crop insurance claims, and also give enough lead time to the government to import in time if there is likely to be a shortfall.
Overall, my submission to MoA&FW was that we need better technology and better policies to ensure farmers get their due. Only then India can emerge as a powerhouse in agriculture. Abrupt export bans/stocking limits are not the best way forward.
Gulati is Distinguished Professor at ICRIER. Views are personal
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