Indian farmers get short shrift as country imports wheat

Published: Thursday 15 November 2007

-- In February this year, Union Agriculture Minister Sharad Pawar announced that the country could export wheat in the near future. "If the current weather persists and the country's wheat production exceeds 72.5 million tonnes, I will allow exports," he said. But the minister seems to have done a volte-face on his statement. India has entered the wheat market all right, but as an importer.

Have the imports been necessitated by a shortfall in production? Not quite. Data recently released by the Directorate of Wheat Research, Karnal, shows that wheat production in 2006-2007 was 74.9 million tonnes. That's not a bad output. Yet in June this year, the State Trading Corporation stc) imported more than 511,000 tonnes of wheat at an average price of us $325.6 a tonne. This was us $120.28 above the price at which 550,000 tonnes of wheat were imported during 2006-07. Now New Delhi is planning to import a further 530,000 tonnes at even higher rates.

Eight suppliers are in the reckoning this time, and the rates quoted range from us $385 a tonne to us $434 a tonne. Assuming the ministry accepts the lowest tender, it will, at the current exchange rate, pay in excess of Rs 7,000 a tonne compared to 2006-2007 prices.
Grim global supply With Russia and Ukraine being hit by drought and erratic weather affecting agriculture in North America, global wheat suppliers jacked up prices to Down to Earthan 11-year high on the Chicago Board of Trade over the past one month, leading India to spend a lot more on the commodity. Though the impending tightening of global supplies was known to New Delhi as early as in May, there was no planning to deal with the situation.

New Delhi often proclaims that subsidies to farmers in the us and the European Union are throttling Indian agriculture. But then it has done precious little to safeguard the interests of the country's wheat farmers. In May this year when Ajmer Singh Lakhowal, chairperson of the Punjab State Marketing Board and leader of the Bharat Kisan Union, prevented Punjab's wheat farmers from selling their produce at the minimum support price of Rs 850 for 100 kg, many in the country's agricultural establishment denounced Lakhowal for holding the nation to ransom.

But at us $385 a tonne, the country will now end up paying almost double what the agriculture ministry promised Indian farmers (us $385 a tonne means that at current exchange rates foreign suppliers will be paid about Rs 1,600 for 100 kg).
Biofuel threat Such negligence towards farmers is sure to affect the country's food security. Already food production is trailing population growth. Agricultural production grew by just 1.6 per cent per annum in the 1990s while the country's population by 1.9 per cent.

Matters get compounded in the light of the recent craze for biofuel. Experts are unanimous that increasingly biofuel will take up the lion's share of the global sugarcane, maize and oilseed rape output. In 2006, for example, more than a third of the maize crop went for ethanol production, a 48 per cent increase over 2005. A un study says that the area under biofuel could double in the next decade, leading to a sharp increase in food prices.

While higher food prices are profitable for big farmers, they would threaten economies of food-importing countries. This is where India needs to be vigilant. Higher food prices will also mean additional investment for livestock farmers, who must buy feed. A rush to energy crops is bound to propel industrial agriculture, while sustainable food production will fall.

How should the country meet the emerging situation? Unlike China, India has been unable to bring out any spectacular wheat or rice varieties. The wheat import simply illustrates the supply-demand mismatch. Most of the funds earmarked for agricultural research are used to pay salaries.

It will be suicidal if India's farm policy is not "grain-centric". The pay-out on wheat import could have been put to better use.

K P Prabhakaran Nair is a well-known agricultural scientist

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