Dealing with Surplus Scenario - II

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What is the issue?

Markets should develop capacity to absorb higher milk and foodgrain output.

What are the recent developments?

Falling producer prices of food crops and milk have emerged as a major issue over the last year.
The Centre has awarded increases in support prices (e.g. MSP) in the case of cereals and pulses.
The Maharashtra government has accepted the protesting dairy growers’ demand to buy milk at Rs.25 a litre.

What is the concern?

Procurement - Higher support prices sometimes lead to negative outcomes.
This is especially true if they are not backed up by procurement and additional demand.
Evidently, the total pulses procurement was over 4 million tonnes in 2017-18.
But this procurement amounted only to less than a fifth of pulses output.
So it could not arrest a fall in prices to well below the support price level.
Contrastingly, wheat and paddy prices for farmers are encouraging.
This is because, in this case, procurement accounts for a third of the output.
Approach - Falling producer prices is often mistaken to be a case of excess production.
However, this could not be relevant in all cases as malnutrition is still rampant in India.
Evidently, the net per capita daily availability of foodgrains (including cereals and pulses) has only now crossed the 500-gm mark.
For milk, the per capita daily availability of over 350 gm is just a little more than the dietary recommendation.

Inequality - Clearly, there are inequalities in food intake across income groups.
This is particularly true in the case of vegetables, fruit, milk and eggs.
So it is clear that the population can absorb a higher output of food, eggs and milk.
The real issue is thus of sorting out market limitations through a range of steps.

What could be done?

The procurement and public distribution system need to be strengthened and streamlined.
An efficient PDS -

Public kitchens, which have begun in the southern States, should be promoted elsewhere.
States can introduce milk and its products in mid-day meals and in railway stations at cheap rates.

In all, Indian agriculture needs a distribution system that can cope with much higher levels of output.

Source: BusinessLine