Govt rushes to keep food prices in check during elections
When an industry body recently urged the government to allow at least some sugar export, it was curtly told not to press for the issue until first week of June. The reason was obvious. The government does not want to take any step that has the slightest chance of inflating food price, particularly of essential commodities.
Planning is being done now to maintain the prices even after June. One such step among many is to start selling wheat from the official reserves from mid-June.
Among other steps, the government has banned rice, wheat and onion exports while sugar is practically restricted as no permit has been issued except for some quantities on specific requests from foreign countries. In the case of rice, only Basmati rice at a minimum export price and parboiled non-basmati variety with 20 per cent export duty are allowed for export while all other varieties are not permitted.
Recently, when onion farmers protested against the continuation of export ban, the government announced procurement of 0.5 million tonnes (mt) at market rates from farmers to boost farm-gate prices but ruled out lifting the export restriction. With Rabi season-grown onion, which has a 70-75 per cent share in annual production, set to fall 18 per cent to 19.3 mt in the 2023-24 crop year (July-June) from 23.6 mt year-ago, the Centre does not want to take any chances as there may be a severe shortage towards Diwali if exports are allowed.
With regard to sugar, Food Secretary Sanjeev Chopra told businessline that the first priority for the government is sufficient availability in the domestic market. When there is a surplus, it can go for ethanol. Sugar export comes third on the priority list, he added. On lifting of ban on wheat export, Chopra said that whenever there is a comfortable situation, the government would like to first restore the allocation under the public distribution system (PDS) rather than export.
Currently, the government distributes 18-18.5 mt of wheat annually through PDS whereas it was around 24 mt two years back when the allocation was cut and replaced with rice due to a shortfall in wheat procurement.
In case of edible oils, despite the industry requesting for an increase in import duty so that the domestic oilseeds prices improve, the government is in no mood to oblige at least until the first week of June when elections will be over, sources said. The average mandi price of mustard, the main Rabi-grown oilseed, is about ₹4,850/quintal in the largest producing state Rajasthan this month, down by 14 per cent from its minimum support price of ₹5,650/quintal. In March, the average mustard price in the state was ₹4,875/quintal in mandis.
However, the impact of excessive focus on price control is such that last week Manoj Kumar Singh, Agriculture Production Commissioner (APC) of Uttar Pradesh, had to intervene and send a letter to officials where it was mentioned that there should be a balance in the need to ensure that farmers get better price and no restrictions on trade.
The issue pertains to restricting large traders, stockists and multinational companies from buying wheat in UP till the government achieves the targeted wheat procurement of 6 million tonnes (mt). After the last month’s ‘unofficial order’ communicated by Uttar Pradesh government to some 40-odd companies not to buy wheat from market, the message was interpreted differently by some mandi samitis who issued orders disallowing processors like flour millers to buy wheat from the mandis, sources said.
Referring to such orders, Singh has directed the concerned official to cancel such orders issued by different mandi samitis to ensure that farmers are not disadvantaged from selling their wheat.
“The food and agriculture departments of UP should sit together and decide what to do as both farmers and traders are two sides of a coin and restricting one is like restricting the other,” a farmer leader said.