The Prime Minister has recently visited Germany, France, and Denmark. After his return, the Prime Minister convened a meeting to discuss the situation of wheat supplies, inventories, and exports. The Prime Minister ordered the officials to fully implement the quality standards of wheat so that India can be established as a grain exporter.
Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) provides the poor of the country with 5 kg of food grains at a cheap price per month (even free if elections are held in the state). The Food Ministry has written to the Food Corporation of India requesting that the monthly wheat distribution to the underprivileged under PMGKAY be slashed. The earlier allocated 18.2 million tonnes of wheat has now been reduced to 7.1 million tonnes. Rice allocation has been increased from 21.6 million tonnes to 32.7 million tonnes.
In such a situation, now the question arises where has the bumper surplus production of wheat, which has been happening every year, gone? Where did those huge pictures of wheat that were printed in the newspaper every year go? Did the farmers suddenly stop growing wheat? Has the earth reduced the yield of wheat?
The answer is no. There is no real shortage of wheat, but this shortage is being created deliberately.
This year in the month of March it was very hot. The records of 20-25 years were broken in the summer. It is important to note that the wheat crop is in the ripening stage in March, and due to the heat, the crop matures early. Due to early ripening, the wheat grain remained weak, which reduced the yield. However, the lack of production was not severe enough to cause wheat scarcity in the country. The game is something else. Let us understand how this shortfall is being created.
Governments have not even bought wheat:
Four days ago, a report was published in the Economic Times newspaper that this year the government procurement of wheat has been reduced by 44% by the central government (in some states it was reduced by 60%) so that its friendly traders can get a free hand to export wheat. According to government figures, 162 lakh tonnes have been procured till May 1, which is 44% less than last year’s figures. Last year during the same time, this figure was 288 lakh tonnes.
If there are any strong mandis in the country, they are in Punjab, where just 89 lakh tonnes were purchased this year, compared to 112 lakh tonnes the previous year. Haryana is in far worse shape. During the same period last year, i.e., until May 1, 2021, Haryana procured 80 lakh tonnes, however this year it procured 37 lakh tonnes. Similarly, Madhya Pradesh has procured 34 lakh tonnes this year, compared to 73 lakh tonnes last year. While reading these numbers, keep in mind that the wheat harvest has reduced faster this year than in previous years due to record-breaking temperatures in March.
The government had set a target of 444 lakh tonnes of wheat procurement this year. However, based on the current situation, it is certain that this procurement will not surpass 200 lakh tonnes. A total of 162 lakh tonnes has been purchased. In such a case, government procurement may be less than 50%. 250 lakh tonnes less government purchase, implying that the government has let so much wheat slip through its fingers and into the hands of big traders looking to profit.
Unbridled Export of Wheat:
India’s private players are benefiting from the Russo-Ukrainian war. Russia and Ukraine are both major wheat exporters. Wheat production and exports have been impacted by the war, which has produced an international demand for wheat. The Indian government permitted the unrestricted export of wheat by repressing the concerns of ordinary Indians and prioritizing the concerns of its friendly traders’ coffers.
Until April 21, 2022, more than one million tonnes of wheat has been exported, whereas this figure was not even 1.5 lakh tonnes in 2021. This amount was 1.33 lakh tonnes as of April 21, 2021.
Under the Wheat Open Market Sale Scheme, the central government used to buy wheat from farmers and sell it to big traders on the open market. Because of this sale, the prices of wheat, flour, maida, and other grains remain stable throughout the year. This year that too has been banned. Not only this, but the central government has also asked big traders not to wait for this scheme. That is, the government has no intention to buy from farmers in the near future and sell it in the open market. Private players have been granted the freedom to buy and export on their own.
Why does this happen?
This is not the first time this has happened. This is known as black marketing. These are various techniques of creating scarcity by limiting the supply of something in the market, and when the price suddenly rises owing to less supply and more demand, profit is earned by supplying at a higher price. Last year, one of the three agricultural laws that farmers were protesting permitted private dealers to stockpile enormous amounts of grain. If it had been adopted, there would have been no need for foreign exports, and demand could have been created by storing it in the country itself.
The formula is simple and clear:
Produce in excess ⇾ Hand over the reins to private players ⇾ Create artificial and artificial shortages of the same commodity (by disrupting supply/export) ⇾ Crying about “shortage” until it becomes a crisis ⇾ exploit opportunity in crisis.
Big businessmen have been doing this in the past as well. Talking about the last few months, the biggest examples of this come out in the form of vaccines and coal. Now wheat is the new source… what next?
How will it affect the general public?
If the effect continues, flour prices will soar. In the month of April, the average price of flour across the country stood at Rs 32.38 per kg, which is a record. It is nearly 10% more expensive than the previous year. When the wheat stock is depleted and wheat and flour costs are out of reach for the average citizen, the same government’s sympathetic traders will import foreign wheat and profit handsomely.
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