The Food Corporation of India, the government's grain procurement and distribution agency, is expected to better this year's record grain procurement of 51 million tonnes (28.5 million tonnes rice and 22.68 million tonnes wheat). While this might be a welcome relief for consumers, the government is certain to face a tough time managing the stocks.
As on December 1, the central pool had a grain stock of 36.17 million tonnes (comprising 15.57 million tonnes rice and 19.59 million tonnes wheat). This is about 96 per cent more than last year's corresponding stock of 18.41 million tonnes, and more than double the buffer stock norm of 16.2 million tonnes.
The monthly offtake of rice by various public distribution schemes is 2 million tonnes while consumption of wheat is 1 million tonne.
Rice procurement in the 2008-09 kharif marketing season is already up by 27 per cent at 12.9 million tonnes. Rabi wheat acreage as on last Friday was 21.36 million hectares, up 4.34 per cent over the corresponding acreage last year, indicating that the next crop might be an improvement over this year's record of 78.40 million tonnes.
"When the next wheat crop arrives, we are likely to be saddled with huge stocks and we could face a situation similar to 2002-03 when the government had to subsidise exports. The storage capacity in the country is limited. In the next rabi marketing season (beginning April), FCI may end up procuring 20 million tonnes of wheat. By June, we will have grain stock much higher than the buffer stock norm and beyond our storage capacity," said Ashok Gulati, the Asia director of International Food Policy Research Institute.
While the FCI owns a storage capacity of 15 million tonnes, it also hires the storage capacity from various warehousing bodies that together have a capacity of 29 million tonnes.
Notably, grain stock in the central pool had touched a low of 17.65 million on December 1, 2006, owing to a sharp drop in wheat procurement. A series of steps, including export ban, sharp hike in support price and tightened norms for private purchase, were put in place.
This resulted in improved government purchase and the FCI made a record wheat purchase of 22.68 million tonnes. Earlier this year, a ban on rice export was put in place.
With inflation falling to a seven-month low and rabi wheat sowing progressing well, the government, industry experts say, should consider lifting the ban on export to avoid a glut-like situation later on.