Consider the following discrepancies in the farm sector. The country is now the world’s largest exporter of rice, a crop grown with huge quantities of scarce water and heavily subsidised fertilisers. At the same time, it is the leading importer of pulses, which require very little water to grow and fortify the land with nitrogen to reduce the fertiliser need even for the subsequent crops.
Also, the government is sitting on mammoth foodgrain inventories worth over 66.5 million tonnes, three times the buffer requirement, even as the market prices of rice and wheat are high, hurting ordinary consumers. Furthermore, the annual production of cereals already exceeds the anticipated demand in the terminal year of the 12th Plan (2016-17). Yet the government continues to raise the minimum support prices (MSPs) and offer other incentives to ensure higher production of these cereals.
With another bumper wheat harvest in the offing, the grain stockpiles may swell to over 100 million tonnes by June, bloating food subsidy to well over Rs 1 lakh crore. For pulses and oilseeds, on the other hand, there is no incentive to boost the output — even the declaration of the MSPs is of little use, given the scant market support.
Such trends, unsound and illogical as they are, are a telling reflection on the government’s misguided agricultural and food management policies, particularly crop pricing and procurement. These have distorted the cropping pattern, tilting it disastrously in favour of cereals, at the cost of other crops equally essential for nutritional security. The muddle extends to high-value and protein-rich foods, such as fruit, vegetables, milk, meat and eggs. Despite growing at rates faster than that of foodgrain, their total output is unable to match the rise in demand, leading to price spikes and high food inflation.
All this clearly points to the need to revisit the entire gamut of farm policies and orienting them towards demand-driven production. The need for such a policy shift is now being openly voiced even by some of the government’s own think tanks, such as the Commission for Agricultural Costs and Prices (CACP) and the Planning Commission, leave alone others.
The CACP has, indeed, gone to the extent of circulating a discussion paper that makes a strong case for diversification of farm production towards non-cereal foods. The Planning Commission, too, has offered sane counsel in its 12th Plan document: that the MSP policy should be more restrained for rice and wheat and made more effective for oilseeds and pulses.
It has even pitched for more attention to protein-rich livestock products, which have received far lower institutional and resource support than they deserve, given their contribution to the rural economy. More public investment is needed in areas such as supportive infrastructure, services and animal health cover. Indeed, correction of distortions in the product mix of farming is also vital to ensure inclusive growth since such farming is scale-neutral and, being labour-intensive, suits small and marginal farmers with ample family labour. Animal husbandry in particular is ideal for tiny landholders and landless rural households.
The government should, therefore, lose little time in recasting its policies to pave the way for diversification of agriculture. Otherwise, the surpluses and scarcities of different agro-commodities will continue to coexist.