People's Democracy

K Varadha Rajan

GLOBALISATION is threatening our food security and the survival of our farmers; at the same time, the dismantling of food procurement and public distribution systems by the government is opening the way for giant MNCs like Cargill to turn our farmers to modern day bio-serfs through contract farming.

In recent months the demand for agricultural products has been thoroughly on the decline. There is no buyer for paddy or wheat in the market. Besides, several lakh tons are in reserve with the millers. Thousands of tons of chilly produced last year are lying in the cold storages. A lot of tobacco is also lying unsold. Similarly, several other agricultural products are left either with the millers or farmers. The demand for agricultural products has declined not because of over-production. In fact, the production of many of these items has fallen.

Further, the prices of all agricultural commodities, whether foodgrains or commercial crops, have plumetted. For example, the price of paddy has declined from Rs 650 to 450 for quintal, of groundnut from Rs 1500 to 460 per quintal, of cotton from Rs 2500 to 1800, of dry chilly from Rs 6000 to 2000 per quintal. Coffee has collapsed from Rs 58 per kg in 1999 to 30 in 2000. Pepper is down from Rs 2600 to 1300 per quintal. Coconut has come down to Rs 2 from Rs 10 per nut. The price of copra has fallen by 75 per cent. Rubber price has fallen from Rs 60 to 16 and tea price from Rs 19 per kg to Rs 5. The prices of other agricultural products such as cocoa, soyabean, cashew nut, etc, have also slumped.

The collapse of the prices of agricultural commodities is not a result of increased production or high productivity. In fact, prices are falling even as the production is falling, throwing all the theories of supply and demand to the wind. Nor are the prices of these commodities falling because of any fall in the cost of production which has in fact shot up.

Then, what are the real reasons for this slashing of prices and steep decline of demand for agricultural products. They are as below:

1. Dumping by the MNCs in Indian market, taking advantage of the removal of quantitative restrictions by the BJP government.

2. Lack of purchasing power in the hands of the Indian people.
3. The growing clout of wholesale traders, millers and other middlemen in the Indian agricultural marketing system.

Though India has a time limit upto 2004 for removal of quantitative restrictions, commerce minister Murosoli Maran signed an agreement with the USA in December 1999 to remove quantitative restrictions with immediate effect, covering as many as 1429 items of agricultural, livestock and other products. The effect is already being seen. It is feared that, once the agreement comes into full effect from April 2001, it will lead the farmers to virtual pauperisation and siphon them off from agriculture. Let us see the effects of some of the imports.

The palm oil import into our country is negatively affecting our groundnut farmers and coconut farmers. The price of palm oil is Rs 24 a kg, while that of groundnut oil is Rs 38 a kg. Malaysia declared that it would supply any required quantity of palm oil at Rs 18 a kg, at our seaports. About 60-70 per cent of our people are already using palm oil now. Further, in Kerala and in some parts of Karnataka and Tamil Nadu, people used coconut oil as the cooking medium. Since palm oil is available at a lower price, people in these places have considerably reduced the use of coconut oil. That is why the demand for coconut oil is lost and its price has slumped. The prices of other coconut products have also depressed. The coconut industry in Kerala and Karnataka is adversely affected. Coconut processing factories have closed down, further slashing the coconut prices. Coconut growers are highly agitated.

Similarly, India is importing sugar from foreign countries, including Pakistan, despite the pile of huge stocks in the country. Further, there are reports that sugar will be made available to India at Rs 9 per kg as against the prevailing domestic price at Rs 13. The continued sugar import has affected the cane growers adversely and the sugar industry as a whole is in crisis. Sugar factories have not been paying even the statutory support prices fixed by the government. Added to this, sugar factories are owing large sums to sugarcane growers.

Cotton is yet another crop facing crisis due to imports. Even garments are being imported. Because of these imports, cotton growers and the ginning, spinning and textile mills are being subjected to great losses.

Even wheat and rice imports have gone up. About 1.7 million tonnes of rice were imported last year. Thailand is reportedly ready to supply rice at the rate of Rs 6 per kg. In such a situation, one can well imagine what would happen to our paddy growers.

Regarding livestock products, more than 40,000 tonnes of milk powder and butter oil were imported in just two months time. As a result, the price of ghee declined from Rs 160 to Rs 100 a kg and of milk powder from Rs 100 to Rs 60 a kg. This is a potential threat to our 90 million dairy farmers.

One of the important components of the World Bank’s reform package was the dismantling of the public distribution system (PDS) to reduce government expenditure on food subsidies which has gone up to Rs 9300 crore in 1999-2000 from Rs 5166 crore in the mid-90s. In the 2000-2001 budget, the prices of rationed goods were increased.

The issue price for wheat, which was hiked from Rs 450 per quintal in January 1999 to Rs 682 per quintal on April 1, 1999, was again hiked to Rs 900 per quintal, a 100 per cent increase over a one year period. This is the case of rice also. As a result, the PDS offtake has declined sharply, leading to accumulation of huge food stocks with public agencies, now at more than 42 million tonnes.

The large stocks are now being used to allow entry of private traders and MNCs like Cargill in grain procurement. Cargill started procuring wheat in 1999, beginning with 3891 quintals, at a price much less than the support price. When a price raise was announced in the budget, it was pointed out that unless market prices rose very substantially (which was unlikely given the world market conditions and agricultural trade liberalisation), there would be a sharp reduction in the offtake of both rice and wheat, as the BPL (below poverty line) offtake will tend to fall. This has already been confirmed by subsequent events. Because of these huge stocks, the government has reduced the open market sale price to Rs 700 per quintal and is also planning to export foodgrain at a rate equal to the BPL rate. Thus, an anomalous situation has arisen whereby sales to millers through the open market and also to the MNCs through exports will take place at a lower rate than that for the APL (above poverty line) population through fair price shops. That means the BJP government is prepared to give subsidy to the MNCs and local big traders but not to the people of India.

It is thus very much clear that the MNCs and their conditionalities through the WTO are threatening the very survival of Indian farmers. The survival of our country and of our peasantry, therefore, depends on putting an end to the WTO rules and to the game of globalisation.