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No wheat to eat

By Rahul Goswami

India is importing an unprecedented amount of wheat this year-often sub-standard grain bought at high rates. Domestic stocks are low and the price of wheat is increasing. These are the effects of changes in policy dictated by big agribusinesses and global cartels, which lower procurement by the government, discourage buffer stocks, debilitate the Food Corporation of India, tear apart the PDS, and facilitate hoarding and then private trading. Caught in the global grain market, India's self-sufficiency in food is at great risk

Another dry news agency report went out to the world's newsrooms on August 21, 2006: "India will have to import more wheat to feed its more than 1 billion people before the next crop in March, [the] junior food minister said on Monday." In a few terse paragraphs, the Reuters report dealt with a move that is nothing less than a landmark in India’s contemporary history of food sovereignty.

Since March 2006 India has floated tenders for the purchase of 3.8 million tonnes of wheat. Taken together with an earlier tranche of imports, this constitutes the biggest import of its kind in the last 30 years. Government stocks of wheat in the Central Pool were estimated at 8.2 million tonnes on July 1, nearly 9 million tonnes lower than the required level of 17.1 million tonnes on that date. Already, 0.5 million tonnes have been bought from the Australian Wheat Board. These purchases are part of the work-in-progress of the neo-liberal policy regime, guided by the logic of a predatory global market.

"India needs to maintain a buffer stock to ensure adequate supplies for the country's poor and to keep market prices in check," the Reuters report blithely said. Ten weeks earlier, the leaders of the All India Agricultural Workers' Union (AIAWU) had written to Union Minister for Agriculture Sharad Pawar, protesting against the renewed practice of procuring grain from foreign traders. They also objected to the debilitating anti-people policies being pursued by Pawar's ministry and the UPA government in the name of "prudent food management".

"The government has asked the Australian Wheat Board to provide some 5 lakh tonnes of wheat at Rs 950 per quintal when they are mopping up the grain in our market at a good Rs 100 to Rs 150 less. Now, US companies with substandard wheat have strong-armed the STC for another contract of 30 lakh tonnes for which moisture content and safety norms have been inexplicably changed," the AIAWU letter says.

With stagnating wheat production, the danger level in self-sufficiency has already been crossed in India. The rate of growth of production has fallen below the rate of growth of population. Last year, the production of wheat reached a low of around 68.5 million tonnes. This year it is estimated to be 71 million tonnes.

Wheat deficits of 2 million tonnes below the buffer stock norm, which lead to imports, are a result of deliberate policies to cut down on procurement on the one hand and to encourage private trade on the other. When wheat production was 69.8 million tonnes in 2001-02, procurement by state agencies was 20.6 million tonnes. This year, wheat production is estimated at 71.5 million tonnes and procurement has plummeted to 9.18 million tonnes.

"In addition to the requirements of wheat and rice under the targeted public distribution system, the Central Pool is required to have sufficient stocks of these in order to meet any emergencies like drought or failures of crop, as well as to enable open market intervention in case of a price rise," says the Department of Food and Public Distribution (DFPD) of the Ministry of Consumer Affairs, Food and Public Distribution. But the ministry has ignored this critical responsibility.

Prices of wheat and other essential commodities have shot up in the last few months. At such a time, the government must make every effort to strengthen the PDS to ensure a buffer against starvation and further malnutrition for millions of families who are severely affected by even the slightest rise in prices of essential commodities. Data from the National Sample Survey shows that the share of expenditure on food is 60% or more for nine out of 10 rural households and for six out of 10 urban households. For poorer landless sections the amount spent on food goes up to 90%.

Against such a background, the DFPD recently recommended to the Cabinet Committee on Economic Affairs that the country needs "prudent food management with special reference to the management of wheat stocks". If its recommendations were accepted, it said, the wheat deficit of 5.9 million tonnes anticipated in April 2007 would be wiped out. This is being viewed as a brutal assault on food security by the left, by farmers' associations and critical observers of the process of globalisation in India. It is also contrary to the provisions of the UPA government’s Common Minimum Programme.

Whatever the posturing of our government, the signals are clear. "A handful of countries are likely to be the main drivers behind next season's growth in world [grain] trade," observes FAO's 'Food Outlook' for June 2006. "In Asia, India is likely to lead the way with a sharp increase in imports. With rising domestic prices, low government stocks and tight supplies facing its public distribution system, India is expected to purchase significant volumes of wheat from international markets for the first time in many years."

India’s emergence as a major buyer in the world market was noted early by the United States Department of Agriculture. In its 'Grain: World Markets and Trade' circular of May 2006, the USDA commented: "With carry-in stocks very small (only 1.8 million tonnes compared to 23 million just five years ago), and a reduced harvest, prices have been climbing. Government procurement is far behind last year's level. As a result the government has announced its intention to conduct large-scale purchases from foreign suppliers."

A divisive logic has brought India to this juncture. The recommendations of the DFPD demonstrate this logic. Key recommendations include hiking the prices of foodgrains for BPL (below poverty line) and APL (above poverty line) categories, cutting allocations to both these sections of ration card holders, cutting the foodgrain component in all employment-generation schemes, and wiping out the wheat deficit by removing the food component in wages in central government employment schemes.

Meanwhile, State agencies have been battered by pro-business, pro-trade changes made to the Agricultural Produce Act. Private traders no longer need a licence or an accredited agent to buy foodgrains and pay none of the market fees which the Food Corporation of India (FCI) does; private traders can go into the market according to their own assessments while the FCI must bow before bureaucratic procedure; and private traders can go directly to the farmer while the FCI can only purchase from registered markets. If the FCI had been given the ‘level playing field’ that the globalisers chant about, it would have been possible to avoid the dismally low procurement levels.

Indian agribusiness giants ITC and Reliance went into villages in Punjab and Haryana much before State agencies and offered farmers a price that was slightly higher than the Rs 650 per quintal official minimum support price. Farmers' associations reveal that representatives of the colossal US grain trading companies, Cargill and Archer Daniels Midland, conducted similar expeditions at the same time. Only after a large part of the produce had been cornered by the private sector, did the government offer a Rs 50 per quintal bonus.

The bonus was too late to be of any real use. It is also shockingly low when compared with the price paid to foreign traders for imported wheat—about Rs 790 a quintal. The private sector traders have not only bought the wheat at prices only slightly higher than the minimum support price, they have also bought grain cheaply from farmers—as many as 94% of farmers own less than 4 hectares each. They are hard pressed to sell immediately after the harvest, and are then forced to buy grain on credit to survive. This process has also benefited from the sanctioned-by-default hoarding which has pushed market prices up by Rs 5-6 a kilo.

No wonder the AIAWU was incensed. "Let it be clear that the sort of subsidies being provided ought to be increased and not decreased as is evident from the government's criminal policy of allowing... foreign grain companies to hoard grain at Rs 750 to Rs 850 per quintal from our markets and deprive the government's own procurement agencies, which are only paying Rs 700 to Rs 750 per quintal and that too not cash down as government-permitted hoarders are doing," the union stated. It warned that this will "undoubtedly lead to spiralling grain prices and starvation of those unable to afford them."

Such stern caution may have carried some weight in normal circumstances. But these were not normal circumstances. Representatives of multinational grain companies are reported to have bluntly told government that large investments in grain trading in India would not be “sanctioned” by them unless "the potential threat posed by high stock levels is removed". These “high stock levels" were not those that the government and some planners were gloating about during 1997-2002. The MNCs were referring to the long-standing norms for how much minimum buffer stock should be maintained. The norm varies during the course of a year from 16 to 24 million tonnes. The traders want it to be drastically reduced.

They argue that if the FCI maintains enough stocks to control excessive price rise – a role that the Ministry of Consumer Affairs, Food and Public Distribution is duty-bound to perform, and for which the FCI is the primary agency -- that would pose a potential threat to their profits. Their counsel is that a small buffer stock should be maintained, which will suffice to tide over very short-term shortages and emergencies. They insist that the government can accomplish price intervention by resorting to imports, naturally from the same MNCs that also control the international grain trade. The logic of the world commodities markets is such that prices in the grain trade are likely to rise in response to increased demand from India. This would be hugely beneficial for the traders.

The attack on our buffer stocks is only one aspect of the effort to control global foodgrain procurement, price, movement and distribution. The PDS in India, even if inadequate, has been an obstacle to agribusiness MNCs. Their strategy is to foster conditions that suppress grain production in major developing countries. The MNCs work with multilateral funding agencies to dismantle the food security systems of those countries. From their perspective, any resulting suppression in demand for foodgrains and the catastrophic effects of this suppression on huge sections of the poor, is irrelevant. The oligopoly does not pursue size of trade but the extraction of higher profits even if on reduced sales.

At the farm gate and fair price shop, the AIAWU is as aware of the conditions as the government seems unaware of them. In the post-1991 liberalisation era in India, several million small and marginal farmers have lost land and farm work due to these conditions. A fatal interlinking of factors contributes to this destruction. People above the poverty line (APL) don’t buy from the PDS simply because foodgrain is not available. Besides, APL cardholders in many states have been manoeuvred out of the food security system by statistical juggling. On the other hand, a 2005 Planning Commission evaluation shows that 57% of the poor from BPL categories were given APL cards.

Linked to the issue of weakened distribution and the slashing of allocations is the fate of the 483,000 fair-price shops in the country. Madhura Swaminathan of the Indian Statistics Institute, Kolkata, and a member of the Committee on Long-Term Grain Policy, has presented evidence of ration shops being made unviable and closing down. This evidence comes from Kerala, the state with the most effective system of rationing. In the early-1990s, the average monthly sale of cereals in the state was 7,500 kilos of rice and 2,000 kilos of wheat per ration shop. By 2001, this had fallen to 1,400 kilos of rice and 200 kilos of wheat and many shops were making losses.

Independent of political hue, India's ruling juntas have adopted and pursued a cynical set of anti-people ‘reforms’. In March 2001, a cusp year for India's food security, then Prime Minister Atal Behari Vajpayee told a rural audience in Haryana that they must adjust to “global comparative advantage”. He exhorted them to "look beyond wheat and paddy" and to switch to "horticulture, floriculture, oilseeds and vegetable production" which "have good export potential". The poor farmer, the erstwhile PM explained, had to respond to the growing pressures of the world market by producing less of food and more of cash crops.

In 2005-06, Finance Minister P Chidambaram’s budget speech had a similar message. "More needs to be done," he said, to shift away from foodgrains. The Ministry of Agriculture would prepare a "roadmap for agricultural diversification". Accordingly, the largest hike in the agriculture budget is a new National Horticultural Mission, with an allocation of Rs 630 crore in 2005-06. Another Rs 400 crore is going to a new scheme to promote micro-irrigation targeted at the same sections engaged in ‘diversified’ commercial crops. This comprises about 62% of the increase in the allocation to agriculture. It will fuel the export market and processed food companies and supply the urban well-to-do. Such largesse has meant that allocations for foodgrain, oilseeds, cotton, animal husbandry, dairy development and fisheries—activities that engage the overwhelming majority in agriculture—are stagnant or reduced.

The wheat imports in 2006 symbolise the utter failure of India’s neo-liberal food policies. Successive governments since 1991 have ruthlessly set out to dismantle, in collusion with global cartels and on the advice of brokers of volatile capital, a crucial component of India's self-reliance: food self-sufficiency.

(Rahul Goswami is an independent journalist and researcher based in Goa.)

InfoChange News & Features, October 2006