Volume 2, No. 6-7, June-July 2001

The policy on foodgrains is nothing short of criminal. A murderer may kill one or two individuals; this policy kills thousands. It is a double-edged sword. It strikes down the farmer, pushing hundreds to suicide. It strikes at the poorest, pushing thousands to starvation deaths. And along this path strewn with corpses, created by the rulers, the frankensteins of the international foodgrain conglomerates, march into the country. Enter Cargil (and others); with the Shanta Kumars, Yeshwant Sinhas and Vajpayees doing a belly-dance (swadeshi-style) welcoming his highness’s arrival. The monster is pleased. His agents have done a good job, but warns; if food riots occur, they must shoot to kill. The agents scurry off, promising high returns; they promptly issue orders, to shoot at sight any rebellious starving person.

And so, to the foodgrain policy of death by suicide and starvation, is added, death by government bullets. The essence of this policy is : flood the country with large cheap foodgrain (particularly wheat) imports; disband the FCI (Food Corporation of India) and privatise grain purchases; and dismantle the PDS (Public Distribution System) and end the subsidy on foodgrain distribution to even those Below the Poverty Line (BPL).

In August 1998 the government allowed the Open General License (OGL) import of wheat directly by the roller flour mills. This was done inspite of the fact that the government had 3 1/2 million tonnes (mt) over-and-above the minimum buffer stock. No sooner was this policy announced, that millers began importing wheat, which then cost Rs. 675 a quintal at southern ports as against Rs. 730 per quintal for FCI wheat.

In 1999, even though wheat stocks grew further to 21.6 mt, wheat imports continued, at an even lower rate of $135 per tonne (compared to the government equivalent rupee rate of $173 per tonne). Within the one year after wheat was put under OGL, 2.5 million tonnes of wheat was imported at a cost of Rs. 1,300 crores. Simultaneously, wheat stocks grew even further to 24.6 mt — i.e., 10 million tonnes in excess of the buffer stock norms.

So, while private millers were importing wheat (channeled through government agencies like STC, MMTC, etc), FCI stocks piled up, incurring a huge ‘carrying cost’ to the exchequer. It is estimated that in the year 1999-2000, imports forced the FCI to hold up to 1.5 million tonnes more of foodgrains. Hence the additional cost to FCI on account of the wheat import policy was over Rs. 257 crores (@ of Rs. 1.7 per kg.). In other words, in order to please foreign agri-business, the government was willing to incur huge excess expenditures.

The reason the government gave for putting wheat on OGL was that it would bring down prices for the consumer. But, the benefit of low prices only accrued to the roller flour mills and the TNCs who have begun marketing packaged atta at exorbitant rates. Moreover, even after the build-up of huge excess stocks, the government did not lower the ration prices or even the open market sales prices, but continued to allow imports to displace sales of domestic wheat.

It was only after the farmers took the path of agitation, did the government reluctantly impose a 50% import duty on wheat in December 1999, which was raised to 80% in April 2000. But, these duties are only temporary. Compulsory wheat imports are, infact, a part of the WTO stipulations !!

The World Bank has time-and-again stated the need for winding up the FCI. Once again, in its report titled, India : Foodgrain Marketing Policies — Reforms to Meet Food Security Needs (August 99), the Bank maintained that "India’s foodgrain procurement, distribution and buffer-stocking policies have repressed the private foodgrain marketing, under-cutting its potential contribution to long-term food security."

The essence of all such statements is a clear ultimatum to the government to wind up public procurement and allow traders to take control of the market mechanism. But to take such an open step, which would hit at, not only the farmers and the PDS system, but also the large number of employees of the FCI, it would result in an upsurge of the masses against the government. So the BJP-led government devised a two-pronged attack on how to kill the FCI surreptuously.

First, it flooded the media with articles, talk-shows etc., on the uselessness of the FCI — the corruption, the high salary costs, the inefficiency, the huge storage costs. Second, it created a crisis within the FCI itself by a deliberate piling up of stocks.

Over the last two years the government has continuously hiked procurement prices, ensuring high procurement even in years of relatively poor crops, while hiking the issue price in ration shops, ensuring low offtake. It is obvious that high procurement plus low offtake equals burgeoning stocks.

By January 1999 excess stocks, over the buffer requirements, already amounted to 7.6 mt. To dispose of stocks the government ought to have reduced the PDS rates. But it did not; it in fact increased it in April ’99. The offtake therefore dropped further. The stocks therefore continued to rise. By January 2000 the excess stock increased to 14.7 million tonnes, over the buffer-stock required (of 13 mt) reaching 27 mt.

But, yet again the government raised the PDS prices in the Budget of the year 2000. This time the hike was substantial and also included the BPL category. Result : the PDS offtake declined even further. By end September 2000, foodgrain stocks crossed a gigantic 42 mt. With the FCI having a capacity to store 27 mt, private storage had to be resorted to at high cost. Just storage charges were amounting to Rs. 14 crore per day.

With such massive stocks, an atmosphere was created through the media, that it would be impossible for the FCI to intervene in purchases of the Kharif paddy crop expected in the third week of September 2000. By August itself the Union Minister of Food, Shanta Kumar, stated that the FCI would prefer the "levy route" for procurement of rice from the millers, who in turn "should be forced" to purchase at least 50% of the paddy that arrives in the grain market. This was an open declaration to hand over procurement to the private traders. The government, in fact, plans to put a 75% levy on the rice millers and purchase their entire stock from them.

By September 20, 2000, thousands of tonnes of paddy began reaching the grain market in Punjab. But the FCI was not to be seen (in the previous year they had begun purchases from that date). The FCI began stalling and issuing contradictory statements. By end September the FCI issued instructions not to purchase rice with broken quantity above 25%. Farmers at the mandis became desperate. Many resorted to distress sales as low as Rs. 300 per quintal (MSP Rs. 540).

Further adopting delaying tactics (in order to push the farmer to sell to traders) the FCI, on October 3, dispatched its chairman, Bhure Lal, to Punjab to "investigate the problem." After two days of "investigation" he declared that 80% of the paddy reaching the mandis did not meet the required standards and could not be purchased by the FCI. Though scientists of the Punjab Agricultural University opposed this claim, Lal refused to retract. With that, all hell broke loose in Punjab with rail-rokos, rasta rokos, meetings, dharnas etc. Also, reports of a number of suicides began coming in, of desperate farmers, unable to sell their crop, after waiting even upto 10 days at the mandi.

With this agitation growing militant, the Akali-BJP alliance feared for its future and announced some concessions to those who had sold to the traders.

Besides Punjab, similar reports of distress sales came in from all parts of the country where the FCI dragged its feet. For example, in Karnataka the prices of paddy this year crashed to Rs. 400-500 per quintal compared to Rs. 730-800 last year. The situation of course grains was even worse : Maize prices dropped to Rs. 300-350 per quintal this year compared to Rs. 750-950 last year and Jowar fell to Rs. 350-400 per quintal this year compared to Rs. 1200-1300 last year.

The government first divided the PDS ration card holders into two — the BPL (Below Poverty Line) variety and the APL (Above Poverty Line) variety. It then hiked the prices of APL to above market prices, making purchases in this category meaningless. As, of the total PDS, roughly 60% went to the APL category, this meant, defacto, disbanding PDS for the 60% consumers. As for the balance, BPL category, in most states they have not been, as yet, properly categorised. Moreover, with the rates being increased to such high levels in the budget last year, the poorest sections would not be able to afford this. In other words, it also removes this poorest section of the people from the PDS. Even though stocks are rotting in government godowns, and drought struck large parts of the country, the government was not prepared to reduce rates, as their aim is to create such conditions that would lead to the winding up of the PDS system.

And this is exactly what is happening. The offtake from PDS has fallen drastically. Offtake of wheat, for example has dropped form 8 million tonnes in 1998/99 to 5 million tonnes in 1999/2000. After the March 2000 PDS hike, in the first quarter of 2000 (April-June), the offtake was 70% down from the previous year. So, the offtake in the current year will be minimal.

An example, of the present fate of the PDS can be seen from what is happening at Delhi, the capital of the country. The city has 36 lakh ration card holders; yet the bulk were only lifting sugar. The difference in rates between APL rates and open market rates will explain why (There is NO BPL categorisation in Delhi).

As against the monthly quota of 42,640 tonnes of wheat, the Delhi government did not lift a single grain. In the case of rice, where the quota was 13,610 tonnes, the government lifted only 6 tonnes. It lifted the entire quota of sugar. No wonder, the FCI godowns are overflowing with stocks !

Also, there are enormous differences in the method of identification of the BPL population. The official estimates place it at a mere 15 crores or 17% of the population. But, the Planning Commissions estimates put the figure at over double that — 32 crore people, which is 36% of the country’s population (both based on the 1993-94 survey). This variation in the states was :

In other words, with less than half the BPL people being categorised, and of this, with a small fraction being "identified" as BPL, barely 10-15% of the actual below poverty line people would be eligible for BPL grain — i.e., just 3 to 4 crore out of the total 32 crore. Not being categorised as BPL, they would come under the APL category, thereby, defacto, writing them off from the PDS system.

Added to all this, are the big frauds in the PDS system. The CAG Report says that in 1999 as much as 31% of the total PDS foodgrains, and 23% of the sugar was diverted from the PDS to the open market. Moreover, the CAG report said that the PDS was "overcharging" consumers defeating the purpose of providing cheap grains at uniform rates. It said "consumers were charged Rs. 436 crores in excess due to passing on extra expenditure to them instead of absorbing from state budgets."

The situation reached such farcical proportions, that, when the government was desperate to dispose of stocks, and unable to export wheat due to lower international prices, it decided to sell 5 million tonnes of wheat in the open market. It decided to sell it at Rs. 6.5 per kg to the traders while the PDS rate was Rs. 8.3 per kg (the so-called economic cost). In other words, it was now going to sell to the traders at a rate 38% below what it sells to the poor in the PDS (APL). In the name of cutting the subsidies, the PDS price was hiked; now, by selling it at 38% below the ‘economic cost’, the government was defacto transferring the subsidy from the poor to the traders.

With the privatisation of procurement and public distribution, the situation is ripe to be handed over to TNCs like Cargill, who have been waiting to swoop down on the country. In due course the monopoly of the public sector will be turned into the monopoly of the TNC. Instead of FCI there will be Cargill. Already, in 1999, Cargill began to procure wheat. In that year it purchased 4,000 quintals. It has also begun contracting directly with the farmer. Cargill would control seeds and fertilisers, it would provide credit and buy back the entire produce. The contracts stipulate that the farmer cannot sell their produce to anyone else. Such bonded systems of farming is the essence of the ‘contract system’ spoken of in the New Agricultural Policy. Besides Cargill, the comprador giant, Reliance, plans to buy 2 lakh acres of agricultural land in Karnataka. The path for this too is cleared by the NAP’s corporate farming policy.

The agrarian economy is destroyed; the farmer is devastated; the poverty stricken are further starved; and the TNCs/compradors enter with their ‘corporate farming’ and monopoly control over the agrarian market — that is the essence of the BJP-led government’s New Agricultural Policy.

The sparks of protest by farmers have already begun in the last year, particularly in the grain bowl of India — Punjab. Throughout October 2000 Punjab farmers agitated against the failure of the government agencies to procure their paddy crop. Rail rokos and road blocks in large parts of Punjab brought life to a standstill. They also blockaded the movement of a Union Government survey team, led by additional food secretary, K.M.Sini. The militant agitations forced the government to give some compensation for the distress sales.

In Karnataka, a bandh was called in Raichur and Koppal in the last week of November, to demand government intervention to hold the price line. In Bellary, farmers organisation formed a struggle committee, and forced the government to open procurement centres. In Bihar, farmers have resorted to rail and road blockades at several places with their paddy-laden tractors, to force the Centre to procure paddy at the minimum support price.

But, more than the sporadic outbursts, what is disturbing is the trend of suicide by farmers, with reports coming in from all over the country. With all parties, promoting the economic reforms, they see no possibility to stop the ‘economic reforms’ that is devastating their lives. For all the noise now being made by the Congress(I), CPI/CPM and other opposition parties on the agrarian crisis, people know that it was these very parties that were also responsible for the various agreements signed with the WTO when they were in power. It was the Congress(I) who introduced the economic reforms; the ‘United Front’ government quickened its pace; and now it is the BJP-led government that has not only pushed it forward with unbelievable speed, but has made it all-encompassing, to cover every aspect of the economic life of the country.

If the government was not so desperate to serve the interests of the imperialists/compradors and the trader/bania classes, with just a little planning and expenditure huge amounts of grain could be saved. A recent study estimates foodgrain post-harvest losses at 7 to 10% at the farm-to-market level; and another 4 to 5% at the marketing and distribution level. This means a loss of 12 to 16 million tonnes of grain — sufficient to feed 70 to 100 million people. But none of the governments, whether at the Centre or the state-level could really be bothered.

No appeals, petitions or peaceful actions can stem the rot that is enveloping Indian agriculture. It requires a militant force to reverse the present policies. Of course, the people will soon realise, that it is better to die fighting for a brighter future, than to commit suicide or die of hunger.

Today, farmers are breaking out into spontaneous agitations against government policy all over the country. The rising militancy can be seen from the fact that last June the Haryana police registered a case against nine senior leaders of the BKU (Bharatiya Kisan Union) for making supposedly ‘provocative’ speeches. Besides, many are getting organised into mass action forums like JAFIP (Joint Action Forum of Indian People against WTO) which is a conglomeration of 50 farmers organisations and others like the AIPRF (All India People’s Resistance Forum). The farmers are soon realising that all the political parties follow much the same WTO/World Bank dictated policies, and that it is only through their mass revolutionary actions and militant struggles, that their interests can be protected.

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