January 8, 2013
India sees another bumper wheat harvest in the 2013-14 crop season which might push up food grain stocks to 100 million tonnes by June 1 as rice purchases are also expected to be a record.
The situation can be salvaged to a certain extent if the government manages to clear 10-15 million tonnes of inventories either by way of exports or through domestic sale in the coming financial year.
Grain stock as on December 2012 was estimated to be around 68.3 million tonnes, more than double the required the quantity.
"This would clearly show the huge imbalance in our production basket, as also in our policies that favour wheat and rice over other crops and would be like a crisis, and will have to be tackled sooner than later," eminent agriculture economist and chairman of Commission for Agriculture Costs and Prices (CACP) Ashok Gulati said.
Officials said wheat production in 2013-14 season that starts from April 1, is expected to be between 85 and 90 million tonnes as sowing till Friday is around 458,000 hectares more than last year. This year, the country harvested a record 94 million tonnes of wheat compelling state agencies to procure an all-time high 38 million tonnes, a staggering 10 million tonnes more than 2011-12.
Wheat and rice procurement seasons are different. Rice procurement starts from October every year, while wheat begins from April. However, all this will not come at a low price. In fact, with government increasing the minimum support price (MSP) of wheat for 2013-14 season by INR65 (US$1.18) per quintal, the food subsidy burden will straight away rise by INR2,275 crore (US$412 million).
In 2012-13 Union Budget, the food subsidy has been pegged at INR75,000 crore (US$14 billion).
The burden will also be no less on consumers as wheat prices along with that of wheat flour will further move up. The direct fallout of over-emphasis on grains, which the CACP sought to correct by recommending freezing the MSP of wheat for 2013-14 season is that import of edible oils and pulses is expected to cross INR65,000 crore (US$12 billion) in 2012-13 financial year, a steep jump of almost 16% from the previous year.
