PYQ Relevance[UPSC 2024] Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss. Linkage: This PYQ is central to GS-III themes of food security, MSP, PDS and price stabilization. It links with the article’s focus on excess stocks and distorted procurement, showing why India’s buffer-stock management is becoming unsustainable. |
Mentor’s Comment
India faces a cereal management crisis marked by procurement distortions, crop diversification failures, import dependence, and systemic leakages. This article unpacks the urgent concerns raised in “Time to sort out India’s cereal mess” and restructures them into an exam-oriented format that aligns with GS II and GS III themes such as food security, agriculture, subsidies, MSP, PDS, and federal coordination.
Introduction
India’s cereal ecosystem, procurement, storage, distribution, and diversification, stands at a difficult juncture. Excessive focus on paddy and rice under MSP, escalating procurement costs, growing import dependence in edible oils and pulses, and logistical inefficiencies have created structural vulnerabilities. The current controversy in Tamil Nadu’s paddy procurement highlights deeper national issues in cereal governance.
Why in the News
Tamil Nadu’s short-term kuruvai paddy procurement turned contentious due to time overruns and corruption charges, exposing systemic weaknesses in the procurement architecture. Despite years of surplus stock, India faces a paradox of simultaneous overproduction of rice and wheat and rising import dependence on pulses and edible oils, with 55% of edible oil demand met by imports. The scale of misalignment, such as rice stocks at 536.14 lakh tonnes in October, five times the requirement, reveals an unsustainable cereal management model requiring urgent correction.
Understanding the Current Procurement Distortions
- Excessive Paddy Procurement: Tamil Nadu’s system led by TNCSC and FCI shows delays, over-coverage, and corruption, with farmers preferring paddy due to assured returns.
- High Central Pool Stocks: Rice stocks reached 536.14 lakh tonnes (Oct 2024) against norms of about 102.5 lakh tonnes, reflecting procurement far beyond requirement.
- Skewed Crop Incentives: Procurement levels for rice and wheat remain consistently higher than norms, reducing incentives for diversification.
Why India’s Cereal Supply is Misaligned
- Surplus in Cereals: India maintains abundant stocks, e.g., rice procurement averaging 322 lakh tonnes over three years, indicating oversupply.
- Deficit in Pulses & Oilseeds: Despite large-scale cultivation, imports form a major share: India meets 55% of edible oil demand through imports.
- Stagnant Diversification: Farmers hesitate to shift due to uncertain support systems, weak price assurance, and inadequate crop guidance.
Rising Import Dependence and Its Consequences
- High Import Bills: Edible oil imports breached 30,000 crore in 2023-24 despite domestic production dips from 157 lakh tonnes to 138 lakh tonnes over a decade.
- Geopolitical Risks: Events like the Russia-Ukraine conflict directly increased global edible oil prices, impacting domestic inflation.
- Oilseed Production Stagnation: Even after 2004 reforms, domestic acreage rose but yields and self-sufficiency remained stagnant.
Structural Issues in India’s Crop Diversification Strategy
- Weak Extension Services: Farmers lack assured technical guidance and support for alternative crops.
- Higher Risk in Non-Paddy Crops: Limited MSP procurement outside cereals increases production risk.
- Fragmented Procurement Framework: Multiple agencies (FCI, State Corporations, NAFED) lead to inconsistent practices across states.
Why Procurement Reforms are Urgent
- Inefficient FPO Integration: FPOs, though expanding, remain nascent and face poor access to credit, logistics, and markets.
- Leakages and Diversions: Instances of paddy moving outside the procurement chain due to better prices in open markets distort the system.
- Need for Commodity-Specific Strategy: Uniform procurement policies for cereals, pulses, and oilseeds fail to reflect regional agro-ecology and market diversity.
Conclusion
India’s cereal management crisis is not of shortage but of imbalance, overproduction of rice and wheat coexisting with deficits in pulses and edible oils. Procurement distortions, poor diversification incentives, and high import reliance underline the need for structural reforms. A shift towards agro-ecology-based diversification, procurement redesign, and FPO strengthening can realign India’s food security architecture.
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