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Wheat imports and the chaff

Farmers who have gained from wheat exports in the past, even before liberalisation began, need to remember that trade is a two-way street.

india Updated: Sep 08, 2006 03:09 IST

The government’s decision to free up the import of wheat has been facing protests from the farm lobby, and it has a willing voice in the CPI(M). Wheat imports are easy ammunition for politicians ever ready to speak up for farmers. Agriculture Minister Sharad Pawar has this week laid a rough time-window of about five months to aid duty-free import by private traders, who have rightly got the same status as government agencies like the State Trading Corp. The duty was cut to 5 per cent from 50 per cent last June. Traders need freedom to buy, consumers need reasonable prices, millers and bakers need raw material and farmers do need a measure of protection. The government is attempting to balance all interests. But there is understandable criticism that the Centre has bungled by delaying imports, ignoring production shortfalls and a looming shortage in stocks, paying little attention to rising wheat prices both at home and abroad. The STC has ordered nearly 4 million tonnes of wheat since March, while government wheat stocks were estimated at 7.33 million tonnes in August, down from 12.9 million tonnes a year ago. Government agencies have procured only 9.2 million tonnes in the current marketing year, against a target of 16.2 million tonnes, leading to a depletion of stocks. There is clearly a case to boost domestic stocks.

We can argue about the timing and manner in which import policies are being handled. But that should not take us away from a deeper concern about liberalisation as a desirable goal. India is no longer the poor nation it was in the 70s, when self-reliance was the mantra. India is the hottest growth story after China for global investors, with both manufacturing and knowledge industries having shown resilience. The times have changed and so have the horizons of some of our farmers, who are also eyeing lucrative agricultural markets abroad. Farmers who have gained from wheat exports in the past, even before liberalisation began, need to remember that trade is a two-way street. And so do their political mentors.

However, it needs to be emphasised that a nation of one billion people, roughly a quarter of which lives below the poverty line, cannot afford to ignore food security. State-run buffer stocks remain a time-tested way to manage inflationary tendencies that can harm political stability and manufacturing competitiveness.