Volume 7, No. 7, August-September-October, 2006


Food Scarcity in Peril


The govt. of India (GOI) is moving surreptitiously to dismantle the pubic distribution system (PDS). Whatever little food security the poorest of the poor has that too is going to be dwindled. This plot has been orchestrated by the imperialist institutions like the World Bank, IMF, and WTO etc. And this very plot is being implemented by the UPA Govt. adopting one after another policies which go against the interest of the country and its people. It is nothing strange to see that a Govt. committed to serve imperialist forces, does not hesitate to implement their dictates when the every-day media cover the harrowing tales of hunger, starvation deaths, suicides and malnutrition.

Recommendations of Food and Public Distribution department

Amid this appalling condition of the people, it is revealed, that the department of Food and Public Distribution has prepared a note for the Cabinet Committee of Economic Affairs incorporating their recommendations. All these recommendations are for further downsizing the provisions of food security. Under "Prudent food management with special reference to management of wheat stocks" the following recommendations have been made – Withdraw food grains allocation from the Samporna Grameen Rozgar Yojana as part of wage payments; reduce wheat allocations to the states; allocate coarse gains instead of wheat; reduce allocations for drought hit areas; increase in prices of food grains for APL (above poverty line) and BPL (below poverty line) cardholders; reduce quantity of food grains by 5 kg from the existing 35 kg for both APL and BPL cardholders; stop sale of wheat in the open market to control market prices.

Some of these recommendations have already been implemented. The GOI has reduced wheat supplies to states. The fair price dealers’ Association in Bengal expressed their resentment and placed a memorandum stating that the GOI had reduced the quantity of wheat allotment for both APL and BPL cardholders. It was 2.22 lakh tones in ’04-’05 and in the current year it is only 1.05 tones. According to Madhura Swaminathan, in Kerala, which is well known for its most effective rationing system, the ration shops are closing down. The income of the ration shops had reduced to such on extent that those are becoming unviable. The average monthly sale per ration shop was 7500 kg of rice and 2000 kg of wheat in the early 90s. These figures have reduced to 1400 kg of rice and 200 kg of wheat by 2001 and gross monthly income of a fair price shop was Rs. 3,711 prior to March 2000 and it has dwindled to Rs. 1,493 in August 2001. This is according to an official estimate of the Kerala State Govt. It can well be said that since August 2001 to these days the situation has become far more precarious. Now more than five lakhs fair price shop owners are facing a disastrous condition. The All India Fair Price Shop Dealers’ Federation accused the UPA govt. of its policies to destroy the public distribution system and threatened to go on indefinite strike if the problem was not solved. The senior vice-president of the organization Srikant Labh, talking to media persons, stated that despite no shortfall in production the govt. had to import wheat due to its policy of allowing private agencies uncontrolled procurement of wheat from the domestic market. He further commented, "The big private players managed to buy the entire buffer stock in the country creating an artificial crisis."

The GOI has also reduced the quantity of wheat which was provided as a part of the daily wages payment in the Samporna Grammeen Rozgar Yojana. Instead of 5 kg at present it is 3 kg. Even this 3 kg is not available now. Most of the states have complained that wheat allotment for this programme has infact stopped. The Department of Food and Public Distribution’s prudent management of wheat stock is also remarkable. In five major centres FCI godowns do not have stock at all. In April, ’06 though dispatch instructions were given for 59 rakes, only15 rakes actually arrived.

Big Players in Agri-retail market

This condition was created by the GOI deliberately. Wheat procurement is being reduced every year. In 2001-02 it was 206 lakh tones. This year ie ’06-’07 it is only 92 lakh tones. This low procurement is not the result of low production of wheat. For the last several years there was no shortage of wheat production. It was around 70 million tones. This is the result of the pro-traders policy of the GOI. The Agricultural Produce Act has been changed to serve the traders. So far everyone had to buy wheat from the market through artheyas (Commission Agents) on license. Now traders have been permitted to go into the remote villages to buy wheat directly from the farmers in the major wheat producing states. They need not to wait in the market for the arrival of wheat, whereas FCI has to purchase wheat from the market through artheyas. Moreover, as the private traders do not purchase from the market they evade market charges which the state agencies have to pay. The argument of the govt. is that these changes in policy help the farmers get a better price for their produce. In fact the farmers get slightly higher prices than the procurement price of Rs. 650. Thus on the plea of providing benefit to the farmers the GOI allowed the private traders in the retail market in Agriculture. Who are these private traders? They are both the indigenous and foreign big companies like Cargil, ITC, Australian Wheat Board and Reliance. By April this year these big companies almost completed their purchases, the GOI entered into the market and offered a ‘bonus’ of Rs. 50. If the GOI played its role in proper time offering bonus, the FCI would have benefited and consumers too need not pay such high prices. Moreover the FCI could have better stocks for distribution through PDS. But the GOI averted this path. It wants to serve the interest of MNCs and the comprador big bourgeoisie. It wants to dismantle the PDS following imperialist dictates. Consequently the role of the FCI in procurement and distribution of foodgrains in being weakened more and more. The ability of the GOI to intervene in the market to control prices has also reduced. The UPA govt., champions of the market economy, is not concerned about that. Rather they are very busy to provide more and more scope to the MNCs and comprador big companies to penetrate into the agricultural market. ITC, Cargil, Austratian Wheat Borard, Bharti, Pantaloon, Godrej, Mahindra and Mahindra, and Reliance Retail are into agriculture. Reliance Retail is now in the process of grabbing about 900 acres in Punjab to process grain, fruit and vegetables. On June 25,06, the Punjab State Council of ministers approved Mukesh Ambani’s proposal to set up a Rs. 5,000 crores agricultural project. It has also planned to develop 52 rural business hubs and 300 sub rural hubs in different parts of the state. Reliance Retail will sell agricultural products from these hubs through its 22,000 outlets. It has also planned to develop similar projects in Himachal Pradesh, West Bengal, Haryana and Andhra Pradesh. Other MNCs and comprador big companies are not sitting idle. They are also preparing their projects to enter into the agricultural market in a big way. Thus the retail market for agri-produce is going to be dominated by the big companies. These big companies – MNCs and their subservient indigenous companies will pressure, board and distribute food grains. And the process of weakening the FCI will be further intensified endangering food security of the countrymen.

Duel Pricing System

The plot to dismantle the PDS does not end here. The GOI is also going to finalize a system of dual pricing for the public procurement of food grains. One will be a fixed minimum support price (MSP) recommended by the Commission of Agricultural Cost and Prices (CACP). This already exists.And the other one will be "a variable procurement prices system at the discretion of the department of food, depending on market conditions in different seasons and regions of the country." It is argued that with the introduction of a dual pricing system for public procurement, the GOI would procure necessary quantities of food grains to meet the needs of both buffer stock and PDS, in competition with MNCs and the monopoly houses. At present the FCI procures at MSP rates with no fixed limit. In the dual pricing system FCI would procure food grains upto a fixed limit at MSP rates. It is further argued that as the MSP is higher than international market prices of food grains it rendered country’s food grain export uncompetitive and has reduced domestic consumption as the price of food grains become unaffordable for the poor. According to the GOI in the dual pricing system MNCs and big companies will have a greater role in improving the efficiency in distribution of food grains and help minimize subsidies which can be used as public investment in agriculture.

The intention of the GOI is very clear. By introducing a dual price system more space will be provided to MNCs and domestic big companies who will happily spread their tentacles throughout rural India. Instead of open-ended procurement of food grains which is at present in practice, the GOI will procure a fixed quantity of food grain through the FCI at MSP rates; and the MSP will be determined in competition with MNCs and domestic big companies (Private traders). Consequently, the importance and role of the FCI will be undermined and large numbers of farmers will not be able to sell their food grains at MSP rates to the FCI. These farmers have to sell their food grains to the private traders who will export food grains to the private traders at a price even lower than the MSP. As the private traders will export food grains, they will fix procurement prices according to international market prices of food grains, as far as possible. This will affect formers adversely. These private traders will dominate and control the domestic market of foodgrains, will enhance the sales prices of food grains and sell those through their distribution centers all over the country. The fairprice shops will become more and more irrelevant. This is what the GOI wants to do following imperialist dictates.

Prudent Food Management Policies, as it is termed by the GOI, have already led the FCI to a devastating condition. Its buffer stock cannot meet the demand of the country. It has slashed the allocation of wheat for APL from around 14 lakh to 1.9 lakh tones and for BPL by about 1 lakh tones. The GOI has imported 5 lakh tones of wheat at a price Rs. 789.20 per quintal from the Australian Wheat Board who bought wheat directly from the farmers at a price slightly above Rs. 650. The GOI has also decided to import another 57 lakh tones at an exorbitant cost. The first consignment of 5lakh tones, as it is reported by the Chennai Port Committee, contained pesticides which if consumed could cause serious diseases and fungal infections. It is also complained that imported wheat is sub-standard, disease-stricken and contaminated. The GOI does not bother about that. It has allowed MNCs and domestic big companies to procure standard wheat direct from the farmers at a price lower than the imported one for export while it has been importing sub-standard wheat at a higher price for the countrymen. It is really a unique food management policy! A policy to serve imperialists and the comprador big bourgeoisies subservient to the imperialists! A policy to keep crores of people in hunger, starvation and in malnutrition. A policy to smash the food security of the countrymen!




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