Southwest Monsoon raises hope on farm growth

If dal roti went out of reach for the aam admi in 2009, vegetables and onion prices brought tears towards the end of 2010 and with food inflation touching a high of 14.44 per cent for the week ending December 18, the New Year did not ring in any respite from high food prices.

The sudden increase of Rs.3 per litre in the price of petrol in December — the sixth during 2010 — and the two hikes in the cost of diesel, dealt silent blows to the aam admi and farmers alike.

According to official data, 17,368 farmers committed suicide in 2009 and 2.16-lakh distressed farmers have killed themselves since 1997.

One year ago tur dal sold at Rs.90 a kg in retail markets. It is still at a high of Rs.70 a kg. Moong dal, that was Rs.83 a kg one year ago, is also at Rs.70. Urad dal, which was Rs.74 per kg a year ago, is priced at Rs.70 a kg.

Sugar, which was Rs.21 a kg two years ago and soared to Rs.50 a kg last year, is sold at Rs. 33 per kg. It is not expected to decline to Rs.21 a kg ever.

The year 2010 was volatile for the food and agriculture sector in terms of high prices of essential commodities, vegetables, milk, tea, coffee and edible oils. Even salt was not spared. And, it does not look as though the ordeal is over. The Central government is preparing for another round of hike in the prices of diesel.

Onion prices will remain volatile till the next crop. Azadpur mandi sources said the situation would continue for a while.

There are different accounts and various reasons for the price rise situation, including “gap between supply and demand, market distortions by hoarding and high-profit margins of traders and commission agents, exports, futures trading in commodities, intermediary taxations, controls, restrictions on movements of goods to lack of implementation of laws by State governments.”

In a way the recent attempts by the Agriculture Ministry to raise production of cereals and pulses got bogged down by its inadequacy to assess accurately, along with States, the production of various crops and farm products to recommend timely action on exports-imports and augmentation of availability to check prices.

On the positive side, the Ministry has made efforts to raise the production of pulses by 2 million tonnes. A sum of Rs. 400 crore has been allocated to extend the Green Revolution to Bihar, Jharkhand, West Bengal, Chhattisgarh, Orissa, Assam and eastern Uttar Pradesh. Wheat output this year is expected to be around 82 million tonnes. At an estimated 24 million tonnes, sugar production is expected to be “comfortable'' enough for the industry to clamour for exports and opening up of futures trading, which has been done.

After a bad kharif last year on account of widespread drought, the kharif output at 114.63 million tonnes this year is much higher than 103 million tonnes last year raising expectations of a 4.4 per cent growth rate in the agriculture and allied sectors in 2010-11 fiscal.

The Southwest Monsoon this year helped fill up the reservoirs and induced moisture in the soil to fuel expectations of a good rabi crop this year. There have been areas in Madhya Pradesh and Chhattisgarh where rainfall was inadequate. Even so, sowing for this rabi season has so far exceeded last year's levels.

Output of coarse cereals, however, remains a cause for concern. For the better part of the year, the Department of Food was struggling to get on top of the sugar price situation.

At the same time, most of its attention was taken up by the drawing up of the proposed National Food Security Bill. First, the Department came up with a draft Bill that was approved by the Empowered Group of Ministers. But later the entire exercise was taken over by the National Advisory Council (NAC) headed by Sonia Gandhi.

The NAC recommended that 75 per cent population be covered under the proposed Bill in two phases. Prime Minister Manmohan Singh then formed an experts group under Prime Minister's Economic Advisory Council Chairman C. Rangarajan to examine the NAC recommendations.

Dr. Rangarajan will soon submit his report to the Prime Minister and is expected to recommend implementation in “do-able'' phases.

Through the year, the government was saddled with surplus foodgrain stocks, some which was damaged for lack of adequate storage facility.

The Supreme Court had to step in for the government to take steps to enhance storage and reform the Public Distribution System.

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