Business

Food stocks at unsustainable levels

By Our Special Correspondent

NEW DELHI FEB. 27. Foodgrain stocks at 58 million tonnes were now at "unprecedented and unsustainable'' levels, the Economic Survey has said. High carrying costs had pushed the food subsidy bill to a whopping Rs. 13,670 crores in this fiscal, which was a 13.8 per cent rise over last year.

High minimum support price (MSP) has led to excess procurement that together with reduced offtake has resulted in a much larger buffer stock entailing equally higher carrying costs. The carrying costs that comprise freight, storage and interest charges had in turn raised the subsidy burden thus aggravating the attempt to contain the fiscal deficit, the survey notes.

To manage the stocks, the survey has suggested re-formulation of the agricultural price support policy framework. Policy steps should be directed to resolve the problems of excess stocks, tackle the problem of acute shortage of storage space, avoid the increasing of carrying cost of stocks and ensure the effectiveness of the price support measures for the farmers.

The survey says offtake of foodgrains has been low particularly in case of wheat on account of narrowing differential between the public distribution system and open market rates. Public stocks of foodgrains were much more than what the market of the PDS can absorb. A temporary glut can be dealt with through measures such as lowering issue prices and attempts at exporting but if the surplus situation persists because of high MSP then policy changes were required, the survey said.

It expressed concern at the above poverty line (APL) families being eased out of the PDS by raising the issue price for them close or even more than the market price. Offtake of wheat and rice has dropped to 32 and 48 per cent of the allocated quantity in 2000-01 compared to 86 and 96 per cent respectively in 1991-92. Offtake declined dramatically after the introduction of the targeted PDS in 1998-99.

The survey has proposed a PSP (production, storage and processing) campaign in view of the changing consumption pattern of the Indian population towards non-cereals.

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