Despite the expected output increase, policymakers must closely monitor food availability and prices while keeping speculative forces at bay.
It is a matter of relief, albeit limited, that the first advance estimate of 2010 kharif crop production shows a rebound from last year's weather-affected decline. But the crop size is nowhere near a level warranting a sense of achievement. If anything, that in many cases (rice, coarse cereals and oilseeds), the current output estimate is lower than for 2008 and 2007 is a cause for concern. Despite output increase, the current per capita availability of basic food commodities is still lower than in the previous three years. There has also been demand expansion due to the rise in purchasing power and increase in population in recent years. This means continued tightness in supplies , firm prices and continued dependence on imports in some and limited export surplus in others over the coming months. It is some consolation that public stocks of rice and wheat are rather high; but cynics would ask what use buffer stocks are if they are allowed to rot in warehouses rather than get distributed to the poor and needy. Importantly, if the south-west monsoon which, under normal conditions, should exit by this time, extends into early October, there are risks of harvest delays, quality deterioration and even crop damage.
A heartening aspect of the kharif harvest is the big jump in pulses output to about 60 lakh tonnes (43 lakh tonnes); that will bring relief to consumers reeling under high prices. Sugar production for 2010-11 too is likely to be around 240 lakh tonnes, enough to meet domestic demand. Coarse cereals and oilseeds have just about returned to their normal output level, though still below the country's overall needs. Given this, the Government has to continue to be cautious as there is no need to tinker with trade and tariff policies. Duty-free imports have to continue, while restrictions on foodgrain exports will have to be reviewed constantly. The Minister for Food and Agriculture has ruled out, for the time being, lifting the ban on rice and wheat export; but that need not prevent New Delhi from liquidating a small part of the current stocks of wheat in the overseas market, even if only to vacate some storage space for kharif rice.
It also time for the country to look ahead. The rabi output has to be maximised to bridge the supply gap left by kharif harvest. Currently, soil moisture conditions are uneven across the country. While eastern Uttar Pradesh, Bihar and Assam face deficient precipitation, in Madhya Pradesh, Orissa, Jharkhand and Chhattisgarh total rainfall is barely above deficient level. This can potentially impact rabi planting and harvest size. Thus, it is imperative that policymakers continue to closely monitor food availability and prices while ensuring that speculative forces do not manipulate the food market where availability may remain tight.
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