Regular imports of agricultural commodities in small quantities will ease supply-side constraints and help in food price stability, says the Economic Survey, 2011-12.
The report carries several references to inflation and high food prices during the 11th Plan period with suggestions that a compositional shift in the food basket of a common household was a major factor responsible: “The recent spurt in food prices was mainly driven by increase in items like fruits, vegetables, milk, meat, poultry and fish, which account for 70 per cent of the wholesale price index basket for primary food items.”
In a significant observation, the Survey points out that food consumption expenditure during 1987-88—2009-10 revealed a shift in expenditure towards milk and milk products, eggs, fish, meat and fish and vegetables in both rural and urban areas, whereas consumption of cereals in the total food basket went down. The shift has been responsible for high food prices.
“As a strategy, regular imports of agricultural commodities in relatively smaller quantities with an upper ceiling on total quantity could be considered.'' This could be done after assessing the domestic production and consumption requirements.
With a 1.2 per cent share of world trade in agriculture in 2010, India's farm imports were valued at $17.5 billion that year.
Indicating that Foreign Direct Investment in multi-brand retail was imminent, the Survey calls for opening up mandis and setting in place organised trade in agriculture. “Considering significant investment gaps in post-harvest infrastructure of agricultural produce, organised trade in agriculture should be encouraged and the FDI in multi-brand retail, once implemented, could be effectively leveraged towards this end.”
Traders as agents at mandis
A greater number of traders must be allowed as agents in mandis. Anyone who gets better prices and terms outside the Agricultural Produce Market Committee or at its farm gate should be allowed to do so. For promoting inter-State trade, a commodity for which market fee has been paid once must not be subjected to a subsequent fee in other markets including for transaction in other States. Only user-charges linked to services provided may be levied for subsequent transactions.
In addition, the government should step up creation of modern storage facilities for foodgrains, says the Survey.
