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And India stretches out its bowl again
May 04, 2007
When I write of 'daal-roti' I mean that quite literally, as in 'pulses' and 'wheat'. After decades of self-reliance, India's bowl is now stretched out once again to the rest of the world. And this time I am not sure if we can get what we need for love or money.
On April 30, the Government of India finally found the time to issue a tender to import one million tonnes of wheat. This is the second year in a row that this happened. Following the experience of 2006, a truly prudent ministry would have moved long before. Now, I fear we are just a bit late.
The benchmark for commodities trading is set in Chicago. At the beginning of April, wheat was trading at US $4.12 a bushel. By April 30, when our economist prime mpinister and his crack team finally realised the danger, the price of wheat had risen to US $4.9555 a bushel.
In other words, the Indian taxpayer has already been hit for millions of dollars. (And his purse may be pinched even further if prices rise at news of the Indian tender.) That is a scandal in itself, but what is worse is that the Government of India may be doing too little even at this late hour.
In 2006, India was forced to import 5.5 million tonnes of wheat. (It had to pay a higher price with each deal of course as wheat merchants across the world gauged our desperation.) Even so, we all know how dramatically prices rose, hitting our household budgets. Given this scenario, does anyone think that importing one million tonnes, less than one-fifth of last year, shall suffice?
Four or five weeks ago, Agriculture and Food Minister Sharad Pawar was speaking only of importing 300,000 tonnes to meet any shortfall. I do not have access to the same information as the Union Cabinet, but the mere fact that the actual tender calls for over triple that amount tells a worrying tale.
Which country might be able to sate the hunger of India's teeming millions? The United States was once the largest wheat exporter in the world. But the US Department of Agriculture has announced that about 54 per cent of the American winter crop was rated as being in good-to-excellent condition as of April 22. Please note that it was as high as 71 per cent as late as the first of April.
How about Canada? There, I am afraid India was pipped to the market by our northern neighbour. China had record wheat harvests in the years leading up to 1999, even becoming a modest exporter. When the harvests declined after the year 2000 China became a major consumer of Canadian wheat; sales have risen dramatically, from US $36 million worth in 2004 to over US $600 million.
This leaves the third-largest wheat exporter in the world, Australia. The problem is that Australia has been hit by chronic drought. In 2006, Australian farmers harvested fewer than 10 million metric tons of wheat, which is less than half of the normal crop. What happens if the rains fail over Australia as they did last year?
The Australians have already made their priorities clear. Late in 2006, Murray Jones, chairman of the Grains Council of Australia, said, 'We would prefer to see grain destined for export diverted to the domestic market.' He added that importing grain would be bad news for livestock due to quarantine risks.
Well, you cannot blame the Australians for placing the interests of fellow Australians first. But how about our own leaders, what were they thinking of?
I shall leave with you with a final set of figures. India bought wheat in 2006 at an average price of US $205 per tonne. In 2007, that price will be at least US $220 per tonne (according to current estimates); it may even be as high as US $240 per tonne. Imagine, if you can, the cascading effect of prices on your purse.
If the 'roti' part of the equation seems to be getting more dear by the day, I am afraid the 'daal' offers equally little reason for cheer.
On 12 April, the Cabinet Committee on Economic Affairs decided that India needed to import 1.5 million (15 lakh) tonnes of pulses. As with wheat, this simply ignores the lessons of 2006. India imported 1.8 million (18 lakh) tonnes of pulses in the fiscal year 2006-2007.
That was simply not enough to bring down prices. How will prices fall this year by importing less?
T V R Shenoy