India's stretches out its bowl again for daal-roti

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And India stretches out its bowl again

May 04, 2007

When did India's Green Revolution turn a dusty brown? Is the country's hard-earned food security in danger of vanishing as the Manmohan Singh government fiddles with quotas and nuclear deals rather than concentrate on daal-roti?

When I write of 'daal-roti' I mean that quite literally, as in 'pulses' and 'wheat'. After decades of self-reliance, India's bowl is now stretched out once again to the rest of the world. And this time I am not sure if we can get what we need for love or money.

On April 30, the Government of India finally found the time to issue a tender to import one million tonnes of wheat. This is the second year in a row that this happened. Following the experience of 2006, a truly prudent ministry would have moved long before. Now, I fear we are just a bit late.

The benchmark for commodities trading is set in Chicago. At the beginning of April, wheat was trading at US $4.12 a bushel. By April 30, when our economist prime mpinister and his crack team finally realised the danger, the price of wheat had risen to US $4.9555 a bushel.

In other words, the Indian taxpayer has already been hit for millions of dollars. (And his purse may be pinched even further if prices rise at news of the Indian tender.) That is a scandal in itself, but what is worse is that the Government of India may be doing too little even at this late hour.

In 2006, India was forced to import 5.5 million tonnes of wheat. (It had to pay a higher price with each deal of course as wheat merchants across the world gauged our desperation.) Even so, we all know how dramatically prices rose, hitting our household budgets. Given this scenario, does anyone think that importing one million tonnes, less than one-fifth of last year, shall suffice?

Four or five weeks ago, Agriculture and Food Minister Sharad Pawar was speaking only of importing 300,000 tonnes to meet any shortfall. I do not have access to the same information as the Union Cabinet, but the mere fact that the actual tender calls for over triple that amount tells a worrying tale.

Which country might be able to sate the hunger of India's teeming millions? The United States was once the largest wheat exporter in the world. But the US Department of Agriculture has announced that about 54 per cent of the American winter crop was rated as being in good-to-excellent condition as of April 22. Please note that it was as high as 71 per cent as late as the first of April.

How about Canada? There, I am afraid India was pipped to the market by our northern neighbour. China had record wheat harvests in the years leading up to 1999, even becoming a modest exporter. When the harvests declined after the year 2000 China became a major consumer of Canadian wheat; sales have risen dramatically, from US $36 million worth in 2004 to over US $600 million.

This leaves the third-largest wheat exporter in the world, Australia. The problem is that Australia has been hit by chronic drought. In 2006, Australian farmers harvested fewer than 10 million metric tons of wheat, which is less than half of the normal crop. What happens if the rains fail over Australia as they did last year?

The Australians have already made their priorities clear. Late in 2006, Murray Jones, chairman of the Grains Council of Australia, said, 'We would prefer to see grain destined for export diverted to the domestic market.' He added that importing grain would be bad news for livestock due to quarantine risks.

Well, you cannot blame the Australians for placing the interests of fellow Australians first. But how about our own leaders, what were they thinking of?

I shall leave with you with a final set of figures. India bought wheat in 2006 at an average price of US $205 per tonne. In 2007, that price will be at least US $220 per tonne (according to current estimates); it may even be as high as US $240 per tonne. Imagine, if you can, the cascading effect of prices on your purse.

If the 'roti' part of the equation seems to be getting more dear by the day, I am afraid the 'daal' offers equally little reason for cheer.

On 12 April, the Cabinet Committee on Economic Affairs decided that India needed to import 1.5 million (15 lakh) tonnes of pulses. As with wheat, this simply ignores the lessons of 2006. India imported 1.8 million (18 lakh) tonnes of pulses in the fiscal year 2006-2007.

That was simply not enough to bring down prices. How will prices fall this year by importing less?

As far as I can remember, the past winter was unusually dry. Given the lack of rains, would this not translate into a poorer winter crop? And if so, surely the Manmohan Singh ministry should have acted sooner?

Readers may recall that the Union finance ministry announced a ban on pulse exports in June 2006. That means everyone knew there was a shortfall (inevitably leading to rising prices). Why then did the Cabinet Committee on Economic Affairs wait until mid-April to approve of imports? Could this not have been done in January or February, or even earlier?

I am not quite sure where the imports are to come from. While wheat is grown not just in Australia and North America but even in Europe, the pulses that we Indians eat are cultivated (mostly) in just three nations -- Turkey, Canada, and Myanmar. Finance Minister Chidambaram himself told Parliament just that in March 2007. In the same statement, he said that this situation meant that the Government of India simply could not source pulses anywhere. If that was the situation on March 6, what was the point of waiting up to April 12?

Given China's increasing interest in Myanmar, I am willing to bet that canny Chinese traders have already snapped up pulse contracts in that country. Dare one hope that India shall not be reduced to the level of buying from them at inflated prices?

I know that our lords and masters in the Union Cabinet have many pressing issues before them -- pursuing a nuclear deal with the United States for instance -- but could they also devote a little of their time and foresight to the daal-roti that is the staple of the 'aam aadmi'? Hopefully before inflation hits our household budgets even more?

150 years ago, it was said that a mysterious 'chapati' was used to ignite a war. The freedom fighters of 1857 were lucky -- they could actually afford to buy wheat and pulses at rates so cheap that chapatis could be sent forth as a coded message. What will it take today to remind our current leaders of their duties?

T V R Shenoy