The government stocks a fifth of its grain out in the open, left to be washed by the monsoon. As the UPA’s most ambitious welfare programme — food security for poor Indians — is unrolled, more grain will be collected and allowed to rot unless warehouses are built to stock an additional 35 million tonnes beyond the 110 million tonnes of storage we already have, the Planning Commission feels. The food security scheme proposes to sell grain to two out of every three Indians at a fraction of the price the government buys it from farmers. The food ministry estimates the country would need to invest Rs 350,000 crore over time in improving grain yield, bumping up government procurement and publicising the merits of the scheme. Improvements in farm productivity and food storage are welcome, but have proved elusive.
The country does not produce enough grain to be sold cheap to three-quarters of India’s 1.2 billion people, as initially proposed in the food security scheme. If we do manage to find the grain, we don’t have the granaries to stock it, building new ones will add to the food subsidy. However, creating a bigger procurement machine is also an opportunity to fix the bugs in the one we have. The carrying cost of a quintal of wheat procured by the government is twice the price the farmer gets paid for it. And the mountain of rotting grain gets bigger every year. The government is holding 56 million tonnes of rice and wheat this January, against a buffer requirement — the stock needed to feed every poor ration card-holder in the country — of 25 million tonnes. In January 2009 the government held a modest 35 million tonnes, but still in excess of the buffer. The government keeps accumulating grain, currently almost half the world’s total trade, because of rising procurement and declining distribution. On the other hand, leakage in selling food in ration shops adds to holding costs. It takes nearly Rs 7 to transfer one rupee worth of benefit to the poor through the public distribution system of fair price shops. With better targeting of beneficiaries, this figure should ideally not rise beyond Rs 1.5.
The world’s second-largest producer of fruits and vegetables loses a quarter of its produce between the farm and the table. Likewise, nearly 7% of Indian grain rots in fields and granaries. The refrigeration that would preserve all this food is non-existent, only one in seven tonnes of our veggies goes through cold storage. Inves-tment in cold chains has not materialised because India does not allow foreign supermarkets to sell farm produce. Rising farm prices are a reflection of productivity gains in manufacturing and services that have completely sidestepped Indian agriculture. There is scope to introduce capital and technology at the periphery in, say, how food travels from the farm to the plate and in how farmers contract to sell their harvests. These can be achieved without doing too much violence to the basic structure of Indian agriculture.