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Home > Business > Special

Creating a wheat crisis

Surinder Sud | February 27, 2007

Wheat output seems set to recover remarkably this year though the disinformation being spread by vested interests would have us believe otherwise. Unfortunately, the government, still in panic, is unable to make a rational assessment of the crop size and take appropriate wheat procurement decisions. This is reflected in the reports, not officially denied as yet, that the government has informally asked the private trade to refrain from buying wheat in the main grain bowl of Punjab, Haryana and adjoining areas. Should it happen that way, it would hurt the interests of both wheat growers and consumers.

There are basically three issues at present. First, what will be the actual production of wheat? Second, what happens if the private trade does not mop up enough stocks to sustain comfortable wheat availability in the open market through the year? And third, how can the government procure adequate wheat to meet the needs of the public distribution system and other grain-based official schemes?

Where the wheat output is concerned, most indicators available so far point to a good harvest. These include substantial expansion of nearly 1.8 million hectares in area planted under this crop, timely sowing in most areas, good fertiliser consumption and lower incidence of weeds and plant diseases. However, the paucity of rainfall has been causing some concern, especially for the rainfed wheat, but the dry spell has since been broken in most parts of the wheat belt. In any case, nearly 85 per cent of the wheat acreage in the north-western wheat bowl has assured irrigation facilities.

The reports of loss in wheat output due to rise in temperature towards the end of January and early February have proved unfounded. For, the crop growth in most regions has been excellent so far. Though the temperatures had breached the normal range, this happened when the crop was at a stage of its growth when such an abnormality is inconsequential.

In fact, a study by the Karnal-based Directorate of Wheat Research has indicated that the minimum temperature is more crucial than the maximum temperature. What matters really is the minimum temperature in the second half of December (which affects the early stages of plant growth) and again in the latter half of March (which affects grain growth). Abnormal minimum temperatures during these phases had hit wheat output in 2004-05 when it plummeted to 68.64 million tonnes and again in 2005-06 when it remained low at 69.48 million tonnes.

This year, fortunately, the temperature during the first crucial phase was ideal for crop growth. The excellent stand of the crop bears this out. The weather conditions have, indeed, been akin to those obtaining in 1999-2000 when the country bagged the peak wheat harvest of 76.34 million tonnes. The temperature in the second fortnight of March is yet to be known. If that turns out to be normal, the wheat output this year may set a new record.

Even assuming that the temperature in March may not be unfavourable for the crop, the wheat output will still be higher than last year's because of larger area coverage, if nothing else. Taking the average wheat productivity of 2.7 tonnes a hectare (against the normal of above 4 tonnes a hectare in Punjab and Haryana), the reported 1.8 million hectares additional area should throw up about 4.8 million tonnes extra output.

Under these circumstances, if the government commits the mistake of preventing the private trade and the wheat-based industry from buying enough grain to meet their business needs for a year, the consequences would be grave. For one, it will hurt the interests of the wheat growers by denying them prices upwards of the minimum support price of Rs 750 a quintal. This will also dissuade them from raising production, needlessly perpetuating the wheat crisis. Besides, it will curtail wheat availability in the open market, keeping the prices high to the detriment of the consumers.

Regarding the government procurement for the PDS, there should normally be no problem in view of the anticipated higher production. But the best course for the government, in any case, will be to buy the required wheat at the rates the private trade will be willing to offer to the growers. The time has come to make a distinction between the MSP and the procurement price. Not doing so would prove counter-productive in the longer run.

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