The UPA Government is confronted with a daunting challenge in announcing concrete measures for taming the prices of agricultural commodities, in the budget of 2012-13 after the recent election losses in major States.
The stakeholders of this sector as well as the common man are eagerly looking towards revitalisation of the growth momentum in agriculture which has improved marginally following the good monsoon in 2011-12.
Global agricultural commodity prices are on the upswing, driven both by the increase in consumption demand and subsequent stagnation in production.
The Food and Agriculture Organisation (FAO) has indicated that the global prices of sugar, cereals and edible oils are now appreciably higher than Indian market prices. The opportunity to use imports as a weapon to contain domestic food prices is quite limited.
According to studies of various weather forecasting models the year 2013 is expected to be the year with abnormal monsoon following reports of disturbances in Indian and South Pacific Ocean and prospect of return of El -Niño, which would dampen the prospects of the 2012-13 Kharif crop leading to further escalation of prices.
Expectations
With the implementation of New Food Security Bill the food grains requirement for the buffer is expected to increase enormously putting increased pressure on food grains production. So, more support is expected from the government to increase yields.
New medium to long term irrigation projects to be adopted as National Projects by Government.
There is a need to address the problem of food grains distribution to arrest the price rise in food items. Timely release of food stocks and their sale in the open markets needed to be properly monitored.
Increased cooperation is required from the State Governments for lifting surplus stocks allotted to them and for strengthening of the public distribution system.
There is need for developing a new system which involve a direct transfer of subsidy to farmers and also a system that would promote nutrient-based subsidy regimes.
Warehousing issues
Food warehouses in India have been traditionally marred with the problem of sub optimal size, in-adequate design & air movement, improper maintenance, poor hygiene conditions and lack of technology based inventory management system.
A modern, technologically aided, integrated warehousing infrastructure is the need of the hour for sustaining managing India's massive and widely dispersed food storage demand and ensuring food security and for this more and more incentivised support is needed from the government.
If the above mentioned areas are adequately addressed, Indian agriculture is bound to improve and move towards increased profitability and a better and sustained growth could be achieved.
(The author is Head - Trade and Commodity Intelligence Group).