NEW DELHI: At long last, the Centre is likely to open up foodgrain exports, albeit in a capped manner. Food minister K V Thomas said here today that his ministry was “not averse” to opening up grain exports “at the earliest.”
“We’re not negative to it. We’re reviewing grain needed for servicing the right to food bill and the EGoM will take a decision soon. The core ministry has suggested in a note to Commerce that exports initially be opened up urgently “in order to advantage farmers,” based on the production estimates given by the agriculture ministry. “Whenever the EGoM meets next, this will figure on its agenda,” the minsiter said. Indications are that the farm and food ministries are keen that once exports are opened up, farmers will begin to get a good price in the open market for their produce this kharif marketing season, thereby reducing the procurement and storage pressure on the Centre which currently runs into several hundred crores in holding costs and balloons the food subsidy bill. Having had to face stringent criticism over food grain prices plummeting below declared MSP in the just gone rabi marketing season, the government wants all the more certain that farmers, in the thick of the sowing season for the summer season, will be benefitted.
Grain output targets have exceeded estimates marginally but the farm ministry had suggested that 2mt of wheat and one million tonne of rice be exported. The food ministry itself, it is indicated, is keen on one million tonne each of rice and wheat in exports. “We have to be somewhat cautious since the IMD has forecast the possibility of Below Normal monsoons,” minister Thomas said. However, there is no decision yet on the quantity and on whether exports will be from the Central pool or by the private sector. That decision is likely ot be also taken by the EGoM.
“While the foodgrain stocks with the Centre are invaluable in ensuring food security, it is simultaneously a challenge to ensure that storage and distribution are efficient and economic costs kept down,” minister Salman Khurshid stressed at a press briefing on the contentious grain storage subject here. The Centre’s food subsidy bill projections for this fiscal is an estimated Rs 83,000 crore to Rs one lakh crore.
Why the change in stance on exports, especially since the government has put off the sensitive decision for months despite a Central grain stock exceeding 65mt, citing food law needs assessment? “We’re now fairly clear on how much we will need for the food law, an average 62-65mt.,” minister Thomas said. More importantly, there are clear indications that the food law, even if approved, may be implemented for less than six months, entailing far less than annual estimate of offtake by states. That has opened up possibilities for export further.
Currently, Central procurement is around 29% of the total grain production. Once the food law is implemented, that is likely to go up close to 40%. But concerns over food inflation, now around 9%, besides the proposed food have stayed the government’s hand so far.
Significantly, the parent ministry is now preparing a draft report to submit to the relevant minister panel. The report, to be finalised within the week, will reconcile the draft food law recommndations of the NAC__recetnly cleared_ and the suggestions of the EAC. Interestingly, the draft food law has designated the mother as the head of the family primarily in order to ascertain that neither grain nor cash, should it subsitute grain in any part, is siphoned off for other uses apart from meeting the bare necessities of the family unit.
On the issue of inflationary impact of the food law on open market grain prices, Mr Thomas said “Some apprehensions have been expressed by experts and government is cognizant of the possibility. The food law is meant to guarantee essentials to the neediest in the country during times of high food prices and inflation and we as government and Congress party are committed to fulfill our poll promise on this. So we have worked out several antidote measures should inflationary pressures start showing up significantly in the open market.”
India, one of the world’s biggest producers and consumers of wheat and rice, has kept a tight control over grain exports since 2007, allowing only overseas sales of aromatic basmati rice, to ensure it can provide cheap food grains to the poor. More recently, the Centre allowed a capped quantity of select rice varieties such as Ponni and Rose Matta besides Sona Masoori for exports but the quota has yet to be used up. According to ministry sources, that is because inferior varieties are being exported, leaving better varieties for the home marekt where grain prices are firm.
Farm minister Sharad Pawar has been repeatedly calling for opening up farm produce exports including food grains and sugar, especially since stocks are overflowing after three years of bumper harvests and the onset of the monsoon has raised concerns stocks outside could be damaged, adding to pressure for sales.