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Problem of plenty after bumper wheat harvest

Problem of plenty after bumper wheat harvest
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First Published: Thu, May 05 2011. 10 25 PM IST

Wheat is packed in gunny bags for transportation at Khanna mandi in Ludhiana.
Wheat is packed in gunny bags for transportation at Khanna mandi in Ludhiana.
Updated: Thu, May 05 2011. 10 25 PM IST
Kurukshetra/Patiala/Ludhiana: Lallu Paswan from Bihar was a regular in Punjab during the harvest season—until 2009, that is, when he found the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which promises 100 days of employment every year to every rural household, to be a more attractive alternative.
This year, Paswan is back in the ranks of migrant labourers who come from Bihar to assist in the harvest season that will go on until mid-May. The vagaries of being a migrant labour, he said, are easier to handle.
“Job cards as also 100 days of work is a dream for poor people like us. It’s meant for people close to the sarpanch (the head of the panchayat, the local governance body),” said Paswan.
He, along with six other labourers from the same district, was hired by a contractor from Moradabad, Uttar Pradesh, to work in Punjab.
“At least work is guaranteed here. And since the harvest is good this time, we have more gunny backs to shift, which means more money,” said Harekrishna Paswan from Begusarai, Bihar, who claims to earn Rs 250-300 a day.
Wheat is packed in gunny bags for transportation at Khanna mandi in Ludhiana.
This year’s bumper harvest and associated spike in demand for migrant labour has made it that much easier to decide. Agriculture minister Sharad Pawar had said in April that India was headed for a record foodgrain output of 235.88 million tonnes (mt) in 2010-11, up over 8% from the previous year, mainly on account of the highest ever wheat production at 84.27 mt.
These labourers, along with several others, prefer to be part of the government’s procurement scheme through which the central procurement agency, the Food Corporation of India (FCI), buys wheat and paddy in grain-rich states and transports them to other states, where they are distributed to the poor through the public distribution system.
FCI projects a total procurement of around 26 mt this year for the country as a whole, against 22.5 mt in 2010-11 (April to March).
In the last couple of years, Punjab and Haryana have faced acute shortage of labourers, who mostly came from Bihar, Jharkhand and eastern Uttar Pradesh, because of MGNREGS. Some farmers were even forced to adopt mechanization, increasing input costs.
“This time, there’s no shortage of labourers,” said Bhagwant Singh, a farmer with five acres of land in Jakhwali village of Punjab’s Fatehgarh Sahib district. He pays Rs 800 for the rented thresher per acre to separate wheat from the husk and the rest of the work is done by the labourers, who are paid Rs 250 each a day.
Mixed blessing
Haryana and Punjab together account for three quarters of the country’s wheat procurement. Uttar Pradesh, Madhya Pradesh and Rajasthan are some other wheat procurement states.
The buoyant mood of the farmers is also reflected by arhtiyas (government-approved middlemen), as also officials at FCI and six state procurement agencies in each of the two states.
With a national food security Bill—which aims to distribute 35kg of wheat and rice a month to poor households—in the making, a projection of 11 mt of wheat procurement in Punjab and 6.5 mt in Haryana this season, and an overall record production of wheat, can only mean good news to policymakers, said FCI officials.
“Not really, with the country’s total procurement expected to touch 27 mt, there is no miracle that the government can perform as far as storage is concerned. This is an accumulated problem that has been going on for years,” said agriculture economist M.S. Swaminathan, who also toured Punjab and Haryana to see wheat procurement.
He added that some programmes such as the integrated system of rural godowns and a national grid suggested by him are yet to be operationalized.
“With food security soon going to be a legal entitlement, the country cannot afford to let wheat rot or lie unused in godowns,” said Swaminathan.
He added that FCI’s initiative of partnering Adani Agri Logistics Ltd to create silos made of steel, and a dedicated railway track at Moga (Punjab) and Kaithal (Haryana) should set an example. “If you visit the US, you will see such silos in every farm. That’s what India needs,” said Swaminathan.
Economist S.L. Rao said the real problem lies beyond the procurement states, with diversions happening at every stage —from state government godowns to fair-price shops. He also questioned transportation and spoilage of wheat. “What is the guarantee wheat will not get spoilt this year?” Rao asked.
A railway ministry official agreed with Rao. “Although the railways provide trains to carry grains at timely intervals, there are logistical problems at FCI’s end. Let’s see how FCI handles it this year,” the official said.
Siraj Hussain, chairman and managing director of FCI, is defensive. “FCI is doing its best to protect the quality of wheat as also its timely transportation. If wheat gets diverted from state godowns, it’s for state governments to take action,” he said.
He added that FCI was trying to create an additional storage capacity of 4.2 mt of grains along with the Central Warehousing Corporation as also the state warehousing corporations. While some will be owned, others will be leased on a guarantee period of 7-10 years. “This capacity should be created in the next 18 months,” Hussain added.
Both Haryana and Punjab currently have seven-year guarantee schemes under which they rent out warehouses with a promise to pay a predetermined price.
Inflation pressure
To encourage procurement of wheat, the government has been constantly raising the minimum support price (MSP) over the last four years. MSP is the floor price at which FCI buys grains from farmers. For 2011-12, MSP of wheat is Rs 1,170 (with a bonus component of Rs 50) per quintal (100kg), a rise of Rs 70 over the rate last year.
At Rs 1,170 per quintal, an average farmer will make a 100% profit on his produce this season.
Kartar Singh, who owns two acres of land, just sold his wheat in Nadampura mandi (wholesale market) in Punjab’s Sangrur district. “With a total input cost of Rs 9,000-10,000 per acre, I make around Rs 20,000. But with input costs going up in the last couple of years and high inflation, it hardly means anything,” he said.
Randhir Singh in Ludhiana’s Khanna mandi is not complaining. “The MSP is alright, so is the harvest. I can double my money that I spent on inputs. What the government needs to do is to curb inflation,” he said.
Laxman Singh, an arhtiya in Khanna mandi, said with MSPs rising, there are a lot of incentives for farmers to grow wheat. He gets a commission of 2.5% to collect wheat from farmers and deliver to FCI or state agencies.
High movements of wheat by arhtiyas are also keeping procurement agencies’ officials on their toes. They are making sure the benefits of a good harvest are not short-lived.
“Although wheat has to be kept outside because of limited covered area, we have taken full care that the gunny bags are covered well under two layers. Then, as stipulated by the government, we have to ship out old stock from last year (mostly rice) by 30 June, well before monsoon, so that more space is created inside,” said a senior FCI official of Haryana, who did not want to be identified as he is not authorized to speak to the media.
sangeeta.s@livemint.com
Aman Malik in New Delhi contributed to this story.
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First Published: Thu, May 05 2011. 10 25 PM IST