FOOD GRAIN MANAGEMENT

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Dr. C.T.Sunil Kumar
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FOOD GRAIN MANAGEMENT

Food grain management in India has three objectives 1. Procurement of food grains from farmers at remunerative prices (MSP- Minimum Support Price). 2. Distribution of food grains to customers particularly vulnerable section at affordable prices (CIP- Central Issue Price). 3. Maintenance of food buffers for price stability and food security. In 1947 agriculture supported 80 % of the 350 million populace or 280 million people. Today it is supporting over 620 million with 82 % farmers holding less than 2 hectares of land of which 60 % are depending on rain. The share of agriculture in GDP has shrunk from 61 % in 1951 to 19 % in 2008. It means that now people are now dependent on a smaller size of the pie.

In first time in the history of independent India, food grains production has crossed 227 million tonne and government procuring 210 lakh tonne. The bumper output is equated to the agricultural policy of UPA government in providing with large agricultural credit and increased MSP. The paradox here is in one part of the country having plenty of food grains accumulated in its godowns and on the other part starvation, poverty and hunger deaths taking place. With storage and PDS (Public Distribution System) proved to be a failure. Is this bumper crop going to provide government with storage and transit losses? Similar to 2007-08 the years 2001-02 also witnessed high levels of stock build up in the Central pool. The food grains stocks reached a peak of 64.7 million tones an all time record, in June 2002. The year 2003-04 witnessed a general easing of foodgrains stocks in central pool because of relatively lower procurement of rice and wheat following a bad agricultural year in 2002-03 combined with relatively high offtake of foodgrains, especially for drought relief operations. The new procurement is triggering worries of storage capacities for the future.

Food Security comes under the “Directive Principles of State Policy” as embodied in the constitution. As Article 47 says: ‘The state shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as, among its primary duties”.

The Central Government buys paddy at Rs 10 per kilogram (MSP- Minimum Support Price) and translates it into Rs 16.66 per kg of Rice and further add freight and others storage costs and the price could touch Rs 20 , post procurement. (The MSP for Rice in the year 2007-08 was Rupees 850 per quintal and in 2006-07 was Rupees 620 quintal.) On the other hand we are having an increase in price of Rice in the open market from Rupees 14 to Rupees 20 per kilogram. Is the price in open market due to increase in MSP? Is there any need to provide farmers with better remunerations? Is it so that the agriculture is operated on the principle that the farmer must subsidize the produce for consumers? Is it high time for a public policy change in the sector?

The households are expecting food grains to be issued to them under subsidy whilst it’s incurring government Rs 20 per kg to procure and process it. The CIP Central Issue Price under various categories is Above Poverty Line (APL) Rs 7.40, Below Poverty Line (BPL) Rs 5.65 and Anthoydaya Anna Yogana (AAY) Rs 3.00 per kilogram. How long can we provide subsidies and go further with this huge difference in procurement and issue price ?. Do the APL households really require subsidy?. Other than APL , BPL and AAY FCI also takes care of other Welfare schemes such as MDMS (Mid Day Meal Scheme), Food for Work. OMSS ( Opem market Sale Scheme).

A policy as a program SGRY ( Sampoorna Grameen Rozgar Yojana ) a scheme for employment generation in rural areas and safeguard food security was introduced in the year 2001 with a cash outlay of 10,000 crores. Under this scheme 50 lakhs tonnes of food grains amounting to Rs 5000 crores has been provided to every states and UTs free of cost. The remaining funds was used for material cost and cash component of wages. The program is to be implemented with the co-operation of Central and state governments and there were co-existence of several normative orders. There are different SGRY allotments namely stream I , stream II and special component for flood, drought etc. Every worker seeking employment under the SGRY, have to be provided with minimum 5 kgs of food grains (on kind) per mandays as part of wages. The SGRY scheme is materialized through state government departments with the help of project officers.

In the state of Kerala which the schem stared operating in ( 2002-2003) with a total allotment of 188105 Metric Tonnes of Rice and 9839 Metric Tonnes of Wheat. Heavy offtake was also witnessed on account of this scheme. Out of the allotted quantity 89.14 % was lifted. The subsequent years also witnessed offtake of foodgrains to the tune of 90 %. Whilst implementing the scheme by the street level bureaucrats. Discretion was shown by sabotaging the priority list as well as the FIFO (First in First Out) principles so as to enable the contractors to sell the allotment in open market.


Legitimization of corruption was there and the term “corruption” was treated as “co-operation” as the policy in its implementation ignored the cost of transportation of foodgrains and the cost of lifting the stocks from FCI. “ Attikasu” ( meaning amount for staking of food grain bags). The system of “Attikasu” is a regular practice and is now treated as a legitimate right of the head load worker rather than corruption; even if the law prevents it. This kind of legal pluralism is seen in almost all activities inside the depot from contract work implementation to casual labour engagement.

Whilst analyzing the output and outcome of this policy of generating employment with the surplus food grains was a failure for all these years and any analysis of this policy at higher level took place or not is ignorant to me but with the field experience I am having the policy was defeated due to the following reasons 1. In the State of Kerala the labour were not interested in taking food grains as there remuneration. 2. The policy when percolated down failed to deliver its purpose in the implementation stage as the policy failed to address the issues regarding lifting of stocks from FCI.

The food grains are issued as per the directions of the DRDA authorities and are lifted by some authorized agents who in turn will lift the stocks from FCI on behalf of DRDA. The agent then sells the foodgrains in the open market to have liquid cash to give wages to the employees under the scheme. The formulation of the policy itself was failed to address this issue. Lifting of the stocks from FCI godows and selling it in the open markets involves many hidden costs which vary as per situations. The amount after all deductions was utilized for the developmental schemes on the account head of SGRY.

The year 2007-08 is witnessing a bumper crop and the central government agencies have already purchased 223 million MT. It is likely that, SGRY scheme with additional component will be there as a scapegoat for our storage inefficiencies. The long storage of surplus food grain stored will result in huge storage losses and will force to have schemes like SGRY. The stock postions as on 18-06-2008 in FCI Kerala region is 74.20 % (4.6535 Lacs Tonnes of foodgrains with an effective storage capacity of 4.67 lac tonnes.) and more wagon in pipeline to reach the state of Kerala. It is high time to have proper analysis of previous policies in food sector and to have Analysis for policies.