A bumper crop but a bitter harvest

NEW DELHI // Rohit Pandit, a farmer from Mandi in Himachal Pradesh, grows wheat, rice and fruit.

This year his farm harvested 1,700 kilograms of wheat, 300kg more than last year. He was not alone in having a bumper crop. Overall, Indian farmers harvested more than 90 million tonnes of wheat, a 21 per cent increase from last year.

Mr Pandit sold the grain to the government, which buys and stores about 75 million tonnes of wheat and rice to stabilise prices for farmers, supply cheap grains to the poor and maintain an emergency food supply. "We were lucky that we went early and [were] able to sell our load," said Mr Pandit.

But he said many of his fellow farmers were not so fortunate, as much of India's record-breaking wheat harvest is rotting on the ground. A broken government procurement system means that about two million tonnes of grain have gone to waste.

"We don't have many avenues to sell, so my neighbour was desperate and turned around and sold it at a loss to the landlords," said Mr Pandit. Those landlords are now sitting on hundreds of kilos of wheat, hoping that as government supplies run down, the prices will rise.

"In a country where 40 per cent of the population is malnourished, taking these grains away and putting them in storage and letting them rot is a criminal waste of food grains," said Himanshu (who uses only one name), a professor of economics at Jawaharlal Nehru University in New Delhi.

Mahabir Prasad Agarwal, who runs a wholesale grain store in Chandi Chowk in Delhi, described the situation this way: "A bumper crop is a curse for farmers."

The increased supply depresses prices and the government cannot buy all the grains, which encourages hoarding by those who can afford to do so.

"Prices are low right now, but hoarders keep it in cold storage and wait for the prices to go back up when supplies are depleted," Mr Agarwal said.

The problems brought on by large harvests have also been exacerbated by the Indian bureaucracy's bungling attempts to adapt to the fluctuating supply, he said.

Rice and wheat should be stored in burlap gunny sacks to protect them from vermin and the elements.

The Indian government agreed to purchase 400,000 of the sacks, also known as jute bags, from Bangladesh, far below the amount needed to store this year's harvest.

"There has been a bumper harvest this year, which the Indian government has completely misjudged," said a Kolkata-based official in the Jute Corporation of India, who spoke on condition of anonymity. "Since the government mandates that food grains can only be packed in jute bags, there has been a severe shortage of these bags, and we've been desperately trying to fill that.

"In fact, short of actually burning the bags or using them as elephant condoms or something, I can't imagine how the government could have messed this up more."

The Indian government also requires that all gunny sacks be purchased by the end of May. That means that even if there is currently a shortage of the sacks, no more can be purchased this year.

Mr Himanshu questions why the Indian government creates these headaches for itself.

"Why do we even need to store? Governments procure to distribute - that is the whole idea. Storage is only for buffer requirements or some kind of a reserve, for situations of emergency. Say, in case there is a drought," Mr Himanshu said.

The reason the government persists in perpetuating the system is politics, said Mr Himanshu. "The procurement is to help out farmers, and that's fine. But because of politics, farming communities have to be given a sop. In 2009, there were general elections. In 2010, elections in Maharashtra. In 2011, in West Bengal. In 2012, in Punjab. So if you don't procure, it is suicidal for any political party."

Consumers would benefit from depressed wheat prices, but Mr Himanshu says that the Indian government chooses to hoard the grain for political and accounting reasons.

"Once you offload it in government ration shops at that cheaper price, it becomes a subsidy, and the government takes a fiscal hit," Mr Himanshu explained. But when you procure and store, it doesn't show up as subsidy. It's an accounting thing."

Normally, the government would try to hide its mistake by exporting the wheat, "but even there they will take a fiscal hit," said Mr Himanshu, "because world wheat prices are down worldwide."

sbhattacharya@thenational.ae

ssubramanian@thenational.ae