To ease pressure on storage, an expert group headed by PMEAC Chairman C Rangarajan has suggested the government to immediately export 2 million tonnes of wheat from government stocks, and make additional supply of 13 million tonnes of the grain via ration shops and in the open market.
The panel, in the report submitted to Prime Minister Manmohan Singh on Thursday, said the release of 15 million tonnes of wheat stock from central godowns would lead to subsidy outgo of Rs 16,790 crore. It also suggested wheat export of one million tonnes via private trade, for which subsidy outgo would be lower at Rs 150 crore.
Agriculture Minister Sharad Pawar, Food Minister K V Thomas and and Commerce Minister Anand Sharma on Friday discussed ways to implementing the panel’s suggestions to ease pressure on storage during the monsoon season.
“We discussed the modality of wheat export and also about additional allocations to BPL and APL beneficiaries under PDS and in the open market,” Mr. Thomas said after a meeting in Parliament House.
He said while the Commerce Ministry will deal with the outbound shipment of foodgrains, the Agriculture ministry will dwell on the issue of quality and certification of the foodgrains that would be sent abroad.
At present, the government godowns are overflowing with granaries of 71.12 million tonnes, which is higher by 20 per cent from last year period. The storage capacity is for 62.8 million tonnes.
In the report, the Prime Minister’s Economic Advisory Council (PMEAC) chief has said: “The huge stocks call for an appropriate policy for disposal. There are many options available to deal with this. One obvious choice is to allow the export of wheat out of public stocks. Even exports would entail high subsidy.”
While wheat export of two million tonnes from government stocks would cost Rs 1,500 crore in the form of subsidy, if one million tonnes of wheat export is permitted via private trade, the subsidy would be only Rs 150 crore, he said.
Noting that exports alone will not solve the problem of plenty, he said, “We need to supplement the decision to export with supply of additional release of foodgrains to BPL and APL families and in the open market.”
The release of wheat, except for export and in the open market, can be done in phased manner, he added.
The committee was set up by the Prime Minister on May 2 to suggest ways to handle excess foodgrain stocks.
Currently, wheat exports have been unviable and volumes of shipments have not picked up since September 2011. So far, only 8,00,000 tonnes of wheat exports have taken place.
The government stocks are increasing due to bumper production and procurement in the last few years. This year wheat production is expected to reach a record 90.2 million tonnes.