Record foodgrains production in 2011 facilitates Food Bill

The agriculture sector performed exceedingly well in 2011, with record foodgrains production of over 240 million tonnes giving enough leeway for the government to lift a ban on exports of wheat and non-basmati rice and introduce the Food Security Bill in Parliament.

Farmers' long-standing demand for crop loans at a 4 per cent rate of interest was met during the year, although with a rider that the facility would be available to only those farmers that pay their crop loans on time.

A sharp rise in the farm credit target by Rs 1,00,000 crore to Rs 4,75,000 crore and the launch of new schemes with a total outlay of Rs 1,500 crore to raise production of nutri-cereals, fodder, palm oil, vegetables and protein supplements were the other major highlights of the year.

These items -- and not wheat and rice -- were the major contributors to food inflation, which remained high almost throughout the year before falling sharply to nearly a four-year low of 1.81 per cent for the week ended December 10.

Helped by timely and bountiful rains last year, the agriculture sector bounced back with a record harvest of 241.56 million tonnes of foodgrains in the 2010-11 crop year, with production of wheat, pulses and coarse cereals touching an all-time high.

In the 2009-10 crop year (July-June), foodgrains production fell by 16 million tonnes to 218 million tonnes due to a severe drought in 2009.

A noteworthy performance was seen in pulses and oilseeds production, on which the government has focused its efforts to make India self-sufficient and reduce dependence on imports.

The country produced 18.09 million tonnes of pulses and 31.1 million tonnes of oilseeds during the year, an all-time high for both these essential items. The development had an immediate and positive impact on imports, which declined by 6 per cent in the case of vegetable oils, while inward shipments of pulses fell by over 20 per cent.

Sugarcane output also improved and as a result, sugar production exceeded domestic output after two years.

From a net importer in 2010, the country turned exporter of the sweetener this year.
The bumper farm production was reflected in the growth numbers. The agriculture sector grew by a healthy 6.6 per cent in the 2010-11 fiscal, as against 0.4 per cent in the previous year.

Record foodgrains production, coupled with overflowing stocks in FCI godowns, prompted the government to allow exports of wheat and non-basmati rice under Open General Licences (OGL) in September this year after a long gap.

While wheat exports were banned in early 2007, overseas rice shipments were restricted in April, 2008, as part of the Centre's measures to tame high inflation.
At the fag end of the year, the UPA government tabled the landmark National Food Security Bill, 2011, in the Lok Sabha, thus fulfilling the promise made by the Congress Party in its election manifesto in 2009.

The proposed Act seeks to give a legal right to cheaper foodgrains to 63.5 per cent of the population -- up to 75 per cent of rural citizens and up to 50 per cent of urban dwellers.

Eligible persons falling in the priority households category -- namely the below poverty line (BPL) families under the current public distribution system -- would get 7 kg of rice, wheat and coarse grains per month at Rs 3, Rs 2 and Re 1 per kg, respectively.

In the general households category, the Bill proposes to supply at least 3 kg of rice, wheat and coarse grains per person per month at a rate not exceeding 50 per cent of the minimum support price (MSP).

It was not a smooth ride for the government to bring this Bill, which saw strong opposition from Agriculture Minister Sharad Pawar, who relinquished the Food portfolio in January this year. He had raised concern over the huge financial burden involved in implementation of this law on many occasions.

However, it was not just Pawar who expressed reservations about the proposed food law.

In the beginning of the year, an expert committee headed by Prime Minister's Economic Advisory Council Chairman C Rangarajan to examine the proposals suggested for the Food Security Bill by the UPA Chairperson Sonia Gandhi-headed National Advisory Council (NAC) disfavoured the NAC's proposal to give a legal right to subsidised grains to 75 per cent of the population.

Instead, the panel recommended "assured delivery of foodgrains at Rs 2/kg for wheat and Rs 3/kg for rice, to the really needy households and the coverage of the rest through an executive order, with a varying quantum depending on the availability of foodgrains".

Notwithstanding the opposition from certain quarters, the draft Food Bill was finally released on the Food Ministry website in September for public comments, with full backing from Sonia Gandhi.

Food Minister K V Thomas introduced the Food Security Bill in the Lok Sabha on December 22 and said that Rs 24,000 crore would be the additional burden on the government once the Act is passed by the Parliament.

Till the Bill becomes a law, it would be imperative on the part of the government to strengthen its public distribution system and create additional storage space.
These are the two aspects that would prove to be crucial for delivery of cheaper foodgrains to intended beneficiaries, as foodgrains production would not be a problem, at least for the next few years.

With the country receiving good monsoon rains for the second year in a row, kharif foodgrains production is estimated at a record 123.88 million tonnes and the prospects for rabi crops also looks promising -- raising hopes that the targeted foodgrains production of record 245 tonnes will be easily met in 2012.