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September 17, 2006
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September 17, 2006




Page: 7/42

Home > 2006 Issues > September 17, 2006

Money Matters

Wheat import fails to hold price line

By Geeta

It is a tender time. Those who thought that the agencies like the State Trading Corporation and MMTC Ltd had not much role left after the collapse of Soviet Union and Rupee-Rouble Trade would not have realised that these government agencies would come handy for food imports for a country which till recently was proud of being self-sufficient in food. The UPA government is getting into one after the other mess, so far as the policy of food management is concerned. Thanks to utter neglect of the agriculture sector, the wheat production at 69.5 million tonnes was far below the target of 75.5 million tonnes for 2005-06. Wheat procurement dropped to 9.2 million tonnes, the lowest in the last seven years, thanks to the inability of the Food Corporation of India (FCI) to pay a remunerative price to the farmers who found an alternative in the private traders like Cargill and ITC lifting their stocks at better price. When the FCI announced a bonus on the wheat price to retrieve the ground, it was too late in the day and the damage was done. The Agricultural Ministry, instead of keeping its cool, panicked and this led to further crisis. It announced big plans for imports of wheat sending the international prices high, which have now touched over 261 dollar per tonne instead of 170 dollar per tonne in February, 2006. Even if the procurement was low, a smart move would have been not to panic triggering the price rise. After all, the stocks procured by the private traders, instead of the FCI, would also have come out in the market where adequate supplies from these players would have had a dampening impact on prices. Instead, the government made bigtime announcements of going in for imports. Just a few months after the NDA government had demitted office in May 2004, 19 million tonnes of wheat was stored with the FCI. Another 15 million tonnes were procured in 2005 but the stocks were reduced to a paltry two million tonnes by January this year, partly on account of liberal exports. If Agriculture Minister Sharad Pawar thinks that allowing private traders to import wheat at zero duty would help him tide over the crisis, he is mistaken. The STC, in any case, was allowed to import at zero duty and if the STC has failed to get adequate stocks, what gives Mr Pawar confidence that the traders would succeed? Besides, the prices in the international market have shot up because of ill-timed moves made by the UPA government. Meanwhile, speculators are making money in the future markets where they are betting on wheat, rice and other foodgrains and pulses. The future food security has been thrown to the future markets whose functioning, neither the farmer, nor the consumer understands. It is only the high-heeled trading investors who drive the markets to a level where farmers themselves are made to buy their foodstuff at exhorbitant prices. Atta, which was available at Rs eight to nine a kilo during NDA government, would soon sell at Rs 20 a kg. They are living up to their slogan?Congress ka haath; aam admi ke saath!




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