Punjab's paddy crisis

Print edition : October 28, 2000

Caught between the quality standards for procurement set by state agencies and their own struggle for survival, Punjab's farmers suffer over a plentiful paddy harvest that is in large measure going waste.

IN a country where millions of people cannot afford to eat two meals a day, it is impossible not to be appalled by the sight of hundreds of thousands of tonnes of foodgrain rotting.

At the Khanna Mandi, a file picture. The Union government appears to have no real strategy to deal with the long-term problems that brought about the crisis in the first place.-N. SRINIVASAN

Huge heaps of paddy had piled up along the Grand Trunk Road in Khanna in Punjab this October, driven in by farmers from hundreds of kilometres away in the hope of finding someone who would buy at least part of their crop. There was just no space inside t he Khanna Mandi, which advertises itself as Asia's largest wholesale grain market, to store Punjab's plentiful harvest. With the Food Corporation of India (FCI) refusing to pick up the harvest, prices had gone through the floor. Even then, buyers were ha rd to come by. Last year, Ludhiana farmer Kartar Singh sold his paddy crop for just under Rs.3.5 lakhs. "I've made about Rs.50,000 so far," he said grimly, "and I don't think I'll be able to earn much more." For farmers like Kartar Singh, the best harves t in years had rapidly turned into a nightmare.

On October 15, in the wake of a series of angry farmers' protests, the Union government finally intervened to mitigate the harvest season disaster. The Punjab and Union governments now promised to spend Rs.50 crores each to compensate farmers who had to make distress sales of paddy. The FCI's and the Punjab government's own foodgrain procurement agencies, mainly the Food and Civil Supplies Department, the Punjab Warehousing Corporation, Markfed, Punsup, and the Punjab Agro-Industries Corporation, were o rdered to pick up stocks of paddy at between Rs.540 and Rs.510 a quintal, depending on quality. More important, the percentage of damaged paddy that procurement agencies can accept in their purchases was raised to eight from three, overruling FCI objecti ons that the quality of this year's harvest was simply too poor for the grain to be picked up. Farmers' organisations later lifted their blockades of roads and railway lines, but the problem is not likely to go away.

It does not take much to see why the new package will not really undo the hardships that Punjab's farmers have had to face this year. For one, much of the distress sales made in the course of this season have been to private dealers. Such sales were rare ly registered with mandi authorities, and few farmers have proper receipts for the distress disposal of their paddy, sometimes for as little as Rs.300 a quintal. It is unclear, too, just how the compensation payments will be administered. Many farmers fe ar that private traders who bought the produce at rock bottom prices will be the real beneficiaries of the package, since they will be able to re-sell the paddy to government agencies at the official support price. But more important, while the package s hould ensure that stocks are lifted at least now, the Union government appears to have no real strategy to deal with the long-term problems that brought about the crisis in the first place.

Problems in the procurement process became evident soon after farmers began to bring in their harvest to the mandis in mid-September. The FCI, its storage facilities still filled with poor quality rice procured as long as two years ago, insisted on the r igorous enforcement of quality control regulations. By the third week of September, stocks of paddy were building up, and reports of distress sales began to pour in. As resentment began to build up in the countryside, FCI chairman Bhure Lal was despatche d as the head of a team to investigate the problem. On October 5, at the end of a two-day field visit, Lal announced that upwards of 80 per cent of the harvest arriving at the mandis did not meet the required standards. This, he said, was the consequence of poor agricultural practices. Since the quantum of this year's harvest is estimated to have reached 120 lakh tonnes, Bhure Lal's figures meant that the FCI and government agencies would only pick up some 25 lakh tonnes.

Even as scientists from the Punjab Agricultural University and other independent experts contested Lal's claims on harvest quality, prices crashed. The slowness of the process of procurement by State agencies clearly played a role in the price collapse. On October 5, the FCI had picked up just 4.87 lakh tonnes, and State government agencies another 9.11 lakh tonnes, This accounted for just a small fraction of the produce that had arrived at the mandis. In some places, like the Arif Ke Mandi near Ferozep ur, farmers charged that not one of the 80,000 quintals brought in had been lifted until early October. Within a day of Bhure Lal's press conference, the Bharatiya Kisan Union's (BKU) Ekta faction, backed by a spectrum of Opposition political groups, beg an blockading roads and trains outside Punjab. BKU activists also blocked the movement of a Union government survey team, led by Additional Food Secretary K.M. Sini. Matters worsened on October 9, when Sini's team announced in Moga that much of the paddy arriving in the mandis did not, in fact, meet the required official standards.

Punjab Chief Minister Prakash Singh Badal, under intense political pressure, responded by seeking a relaxation in the standards. In the countryside, however, things were going from bad to worse. On October 10, BKU activists shut down rail lines throughou t Punjab, forcing more than 14 scheduled express and passenger trains to be rescheduled or diverted. The blockades continued over the succeeding days. The frustration among the peasants was understandable. Many of them had been waiting at the mandis for the best part of a fortnight to sell their crop, incurring debts in order to spend for their accommodation and food during this time. Farmers in Punjab take loans both for agricultural and social expenditure, which are traditionally paid off after each h arvest. This time, cash was not forthcoming. On October 11, Avtar Singh from Samana village, heavily in debt after paying for the weddings of two of his children last year, committed suicide. He had failed for an entire week to sell his crop.

With rail and road traffic disrupted through Punjab on October 13 and 14, Badal's appeals to New Delhi became increasingly desperate. Although Union Consumer Affairs, Public Distribution and Food Minister Shanta Kumar was supportive of moves to relax sta ndards, in the matter the progress was not fast enough for Badal. The Punjab Chief Minister, sources told Frontline, telephoned Prime Minister Atal Behari Vajpayee at the Breach Candy Hospital, insisting that he would fly to Mumbai for an emergenc y meeting on the issue. Vajpayee responded by saying that no such meeting was necessary, but asked Shanta Kumar to expedite a settlement. The sole way out of the crisis was to relax immediately the quality control regulations that govern state procuremen t, allowing the FCI and state agencies to pick up paddy they claimed was sub-standard. That decision was eventually taken, but the decision promises to have serious repercussions.

(On October 17 it was made known that Bhure Lal had asked to be relieved of his post following a decision by the Central government to go ahead and procure paddy from Punjab, much against the recommendation of the team led by him. The move by the senior official marked an embarrassment for the National Democratic Alliance government.)

AT the heart of this year's crisis is the fact that no one wants to buy rice from Punjab. Several factors have played a role in the piling up of paddy in Punjab's storage facilities, to the point where they can hold no more. For one, traditional importer s of rice from Punjab, notably the southern states, have improved their own production levels and need less grain from the central pool. More important, subsidies for foodgrain supplied through the public distribution system (PDS) have been cut over the years. The consequent rise in prices has forced consumers to cut back their purchases through the PDS. Declining PDS offtake, in turn, has meant that the FCI and other government agencies have nowhere to store the massive amounts of paddy and wheat which arrive at their gates each harvest season. While the poor cannot afford food, huge quantities of grain have been rotting for years at storage facilities in Punjab.

But Punjab rice has also gained a uniquely unsavoury reputation on the national market. Experts argue that massive corruption in the procurement and distribution process has led the southern States to shun rice from Punjab. Private rice millers, observer s charge, have long conspired with FCI officials to push poor quality and damaged grain into the stocks supplied to the national food pool. Since consumers in the southern States have rejected this poor quality rice, demand for supplies from Punjab has f allen sharply. At a press conference on October 5, Bhure Lal made clear that "no State was willing to accept rice from Punjab". He did not, however, make clear just who was responsible for the problem, and what needed to be done about it. Many people bel ieve that the problem has not been created by farmers but by the FCI, which has sought to unload the poor quality rice purchased over the last several years under political pressure.

Bhure Lal, Chairman of the Food Corporation of India.-V. SUDERSHAN

Sadly, problems with rice procurement have become as regular as the harvest itself. In 1998, rain fell at the start of the procurement season. At dozens of mandis through Punjab, officials in charge of procurement simply failed to show up despite the urg ency of the situation. A State government survey of 24 mandis in Ferozepur district found that State government procurement agencies had not participated in bidding for paddy for half the working days before October 16. At the Kharar Mandi, State agencie s had picked up just over 100 bags of paddy by October 27, just one in a thousand of those that had arrived. The rain provided State agency officials with further pretexts, since individual lots of rain damaged paddy could now be rejected as not meeting mandatory quality standards. Large private traders and rice mill owners were the beneficiaries of the State procurement agencies' wilful lethargy. Desperate farmers, alarmed by the build-up of rain clouds before the second round of rain in mid-October, w ere willing to sell at any price.

In 1998, the NDA government was finally pushed, by its coalition ally in Punjab, to relax quality standards, as it has now. Exactly the same thing had been done the previous year. In 1997, Prime Minister I.K. Gujral had sought to expand his political bas e in Punjab by ordering an unprecedented relaxation in quality standards with regard to paddy, again in response to rain damage. Where rules mandated that rice that was 20 per cent broken, 3 per cent damaged and 3 per cent discoloured may be purchased by the FCI from millers, the Gujral government raised the threshold to 30 per cent broken, 4.5 per cent damaged and 5 per cent discoloured. Gujral got his votes in the following elections, but the rice-and-politics soup left buyers unimpressed. Kerala, Wes t Bengal, Tamil Nadu, Karnataka and Jammu and Kashmir refused to buy the relaxed specification rice. Kerala insisted that its grain needs for the PDS be met with rice from Andhra Pradesh.

No one, sadly, seems willing to make the decisions needed to address the real problem with Punjab rice. It is offensive, in principle, that rice be allowed to decay in storage while millions of people go hungry. But even if ethics have no role to play in the decision, it has clearly become imperative to make rice available to consumers at affordable prices if farmers are to be able to sell their crop. The issue of the quality of paddy procured, and the rice supplied, is even more important. Farmers in P unjab, as well as experts, have insisted that Bhure Lal's claim that this year's paddy is largely poor quality is wrong. If that claim is correct, the relaxed standards now announced could become a pretext to procure unsaleable quality paddy, which will again end up in godowns as poor quality rice no State is willing to pay for.

In a larger sense, this year's paddy crisis has also focussed attention on larger issues in Punjab agriculture. Diminishing investment in agriculture has meant that everything from storage facilities to irrigation infrastructure and processing industries are wholly inadequate to cope with changing times. Successive investigations by experts have shown Punjab farmers have been hard hit by diminishing incomes from the State's two staple crops, rice and wheat. If incomes are to be increased, there is clear ly a need for better processing facilities and crop diversification. In the years to come, as imports of agricultural produce become more pervasive, these problems will sharpen. For years, governments have bought their way out of rural discontent, spendi ng cash to alleviate immediate distress. Better answers are going to be needed if Punjab farmers are to survive.

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