Food economy’s persistent rot

Food economy’s persistent rot

It is not every day that we have more than 60 million tonnes of foodgrain in our granaries. It must be an achievement, considering we were living literally from ship to mouth even in the 1960s. Unfortunately, what could have been a matter of pride has turned out to be a national shame, that too the second time in this decade (the first was in 2001). As Karl Marx said, history repeats itself, first time as tragedy, and second time as farce.

Both in 2001 and now, the Supreme Court has had to intervene to ensure that the foodgrains are used to feed our hungry millions, instead of being eaten up by rats. But now, though the matter has been debated in Parliament, it does not appear that we will be able to get rid of the excess stocks.

What the discussion in Parliament and the Supreme Court has done is to bring to attention this mismanagement in the food economy that has continued unabated year after year. I raised this issue in a column eight months ago (“Overflowing granaries and empty stomachs," Mint, 16 December). Since then, the situation has only worsened. The total foodgrain stock with the government in December was 48 million tonnes—32.2 million tonnes more than the buffer norms and strategic reserves. By the end of June, the stock had swelled to 60.9 million tonnes—44 million tonnes more than the buffer norms and strategic reserves. Eight months ago, the grains were rotting and being eaten by rats. The monsoon has only worsened things.

Also See Artificial Scarcity (PDF)

What is unfortunate is the kind of yarn that mandarins at the agriculture ministry have been able to spin to justify this gigantic waste. With the Supreme Court and elsewhere, the problem has been projected as one of storage: Foodgrains are rotting because the government does not have enough storage capacity and is, therefore, forced to keep them in open spaces. And to show the urgency with which the government is responding to the situation, some Food Corporation of India (FCI) officers have also been suspended.

However, the real issue of why we have so much foodgrain in our stock at a time when food price inflation is still high has faded from the media glare. At fault is a reactive government responding to public pressure rather than a proactive one willing to take pre-emptive measures to prevent hoarding of foodgrain.

The accompanying graph compares the movement in food price inflation with the build-up of foodgrain stocks. It also raises a few questions. First, though it was fully aware that FCI was sitting on excess grains as far back as July 2009, why did the government not offload the stocks last year when most of the country was suffering from drought, and the food price inflation was close to 20%? Two, what was the need to procure more grains when stocks were rotting in its godowns? It is obvious now that the unnecessary stocking of foodgrains contributed to the upward pressure on food prices by creating an artificial scarcity and speculation on prices.

Needless to say, procurement is not in itself a problem. The problem is that the government is clueless as to what should be done once foodgrains have been procured. Its inability to offload grains derives from the systemic failure of the Public Distribution System (PDS), as well as the lack of political will to ease inflationary pressures and hunger.

The failure arises at every step of the government machinery and is now obvious to everybody except the food ministry. The foodgrain pipeline is not only clogged at every stage, but is also rusting due to the callousness of successive governments. Unfortunately, these leakages also provide a convenient pretext to not distribute food. The other excuse is that distribution costs may add to the fiscal burden. But this argument is self-defeating. Since the expenditure on procurement has already been made, distributing the foodgrains or offloading them in the market will only help the government recover the money it has spent. This holds true even if the government decides to distribute the grains for free, as directed by the Supreme Court: Even in this case, the government will save the storage and handling costs. Either way, the solution is getting rid of the stocks at the earliest before they are diverted for exports or to the distilleries.

What is also worrying is that none of these concerns about the delivery mechanism is being debated. Instead, the discussion on the proposed food security Bill is stumbling on the quantum of food to be given to eligible families and the prices for it. But there is little discussion about how the grains will be delivered, or about how FCI or PDS can be reformed.

The solution is not to create more storage capacity and, therefore, build up stocks. The solution lies in making sure that grains reach those who deserve it. Hopefully, the food security Act being debated by the National Advisory Council will look at the delivery mechanism with some seriousness. Even a well-intentioned Act will fail to deliver if the delivery mechanism is clogged and rusty.

Himanshu is an assistant professor at Jawaharlal Nehru University and a visiting fellow at Centre de Sciences Humaines, New Delhi.

Comments are welcome at