Govt Sets Record Foodgrain Production Target But Problem Lies Elsewhere: Fix The Supply Chain

The Australia Bureau of Meteorology has announced that the dreaded El Nino has ended. This was among the strongest in history and responsible for two successive droughts in India. Both Skymet, the private weather forecaster, and IMD, the state weather forecaster, have predicted above normal rains in the coming monsoon.

Buoyed by all these good omens, the government expects a good harvest and has set an ambitious target of producing 270.1 million tonnes of foodgrains in the next one year starting this Kharif season, according to Mint.

This is 18 mt more than the last year’s estimated production of 252 mt. For the past two years, the government has failed to achieve similar targets courtesy two back to back droughts.

While its good to be optimistic, the government should know this won’t necessarily translate into good news all round. There are four major problems with a bountiful harvest and a concomitant excessive government procurement of food grains.

First, the government procures more food grains than it can ‘manage’. This Mint report claims that since early 1990s, procurement has consistently exceeded PDS sales. Currently the government doesn’t have a system in place that gives it real time information on stock and the requirement. Also, babus may not want to take any chances and face a situation in case a drought happens and there ain’t enough food around to distribute. So, they hoard all they can.

Second, there aren’t enough storage capacities. This is intricately linked to the first problem of procuring grains above the requirement. Between 20087 - 2012 some 16 mt of food grains procured by the Food Corporation of India could not be stored properly.

Third, the condition of storage facilities are quite bad. Every year we are told that vast quantities of food grain are getting spoiled due to terrible storage facilities. In a reply to an RTI application, FCI furnished damning details. Between 2005 and 2013, 1.94 lakh mt of food grain was wasted.

Fourth, is the issue of rampant corruption. Hoarding and black marketeering is a big problem. As seen last year, the prices of pulses skyrocketed due to hoarding by traders. In police raids across the country, more than 2 lakh quintals of pulses were seized. The prices came down when the seized stack was auctioned and released in the market.

Here are some solutions that would help the government solve the storage crisis and ensure better food security for the poor.

First, procurement quantities should come down. Bharat Ramaswamy suggests moving from open-ended process to close-ended one. It means the government should buy only enough grains to meet its distribution requirement freeing itself from its commitment to buy whatever farmers wish to sell.

Second, the government should move fast on the e-Mandi platform implementation. The platform would allow farmers to sell their produce anywhere in the country. This system will also give them real-time information about the prices. The pilot project is already in place in 21 mandis in eight states. All 585 mandis across the country are planned to be connected in the next two years. This national agriculture market, once implemented, can prove to be a game changer.

Third, the FCI needs to drastically improve the quality of its foodgrain storages. Surely, the FCI can rent decent warehouses or build some in partnership with the private sector.

Fourth, the FCI needs to be modernised and redesigned to work in a more corporatised and professional fashion. As a chief minister, one of Narendra Modi’s main elements in his attacks against the central government used to be its inability to revamp the agency. He had suggested to break it up into three parts for handling procurement, management and distribution separately.

After coming to power, the NDA government set up a High-Level Committee to restructure the food agency. The committee submitted its suggestions January last year. Some of these recommendations are being implemented but the pace is slow so far.

Having a higher production target is a noble objective but the government needs to go beyond that and fix intermediate stages in the supply chain. Between production of food grains and making it available to the end consumer there seems to be ample room for improvement.