Pitfalls of Skewed Food Policies

In its last three price policy reports, the Commission for Agriculture Costs and Prices (CACP) has reiterated its demand that the government liquidate excess foodgrain stocks. It further suggests that the smaller stocks will reduce carrying costs and also the storage space constraints. Contrary to CACP’s expectation, grain stocks have continued to grow to a record level of 108 million tonnes by June 2021. This includes rice and wheat stocks of 90 million tonnes, and 28 million tonnes of paddy, which is about 18 million tonnes of rice. So, now the grain stocks are close to treble the maximum seasonal buffer stock norms of 41 million tonnes.

How did these huge stocks pile up? The large stocks are mainly due to the pickup in grain production and the stagnant offtake from the stock pool. India’s grain production, which touched 100 million tonnes in 1970–71, took around 30 years to produce the next 100 million tonnes. But more recently, grain production has increased by another 100 million tonnes in just 21 years, pushing total output to 303 million tonnes in 2020–21. And this achievement in grain production is also mirrored in the overall performance of the agriculture sector. Growth of the sector has now registered an uninterrupted run for 18 consecutive years since 2003–04. This is a major achievement as sustained agricultural growth has never extended beyond a four- or five-year term in earlier decades.