It is presumably the latter possibility that explains the CACP’s decision to recommend a substantial hike in MSP’s for oilseeds and pulses that would encourage a shift in acreage away from cereals to these kinds of crops. While this may have a short-term impact on procurement and stock levels, in the long run diversification ensured through the procurement price mechanism would lead to the recurrence of the same problem. With trade in agricultural commodities liberalised under the WTO, the high floor price for oilseeds and pulses may lead to a situation where the market is dominated by imported varieties that are cheap, rather than domestic supplies procured at a cost-plus price and routed to the market through the procurement system that would be expensive. The consequent fall in offtake of domestic oilseeds and pulses may force the government to hold large stocks of these commodities. The structure of official stocks may change from cereals to other commodities, but stocks could remain high keeping subsidies required to finance carrying costs high as well.
 
This implies that the problems of existing and likely future accumulation of food stocks cannot be dealt with from the side of supply, so long as the procurement system is seen as a necessary support to Indian farmers, which it is. Instead, the problems have to be dealt with from the demand side. This requires not just the strengthening of the public distribution system through which subsidised food should be supplied to all those wanting to access such food supplies. It also requires a change in mind-set. Food stocks need to be seen not as a liability created by the procurement system but an asset, which should be put to use in food-for-work programmes geared to enhancing rural and urban infrastructure and increasing, thereby, productive employment and activity and reducing poverty. This would have economy-wide effects as well that would help restore industrial growth and contribute to an increase in government revenues. It would also reduce the food stock “burden” and help curtail subsides paid out in the form of carrying costs. Holding back on such programmes on the ground that they would require rupee resources that would widen the government’s deficit is completely indefensible.
 
Failure to emphasise the demand-side solution to the problem of excess stocks, strengthens the arguments of those who demand an MSP freeze merely as the first step towards dismantling the procurement system by curtailing its role only to that of garnering stocks adequate to maintain the minimum buffer. This is seen as a logical corollary of trade liberalisation and the effort to reduce the fiscal deficit. The needed reduction in stock levels, needless to say, cannot be ensured through a minimum support price programme accompanied by limited procurement, as some have suggested it should, since that would make the decisions as to when, where and how much to procure completely arbitrary and the system subject to misuse for political patronage. Not surprisingly, many advocates of food stock, food subsidy and fiscal deficit reduction have gone the whole way and suggested that the system created after the agrarian crisis of the mid-1960s to ensure that farmers are supported with a cost-plus, ‘remunerative’ floor should be done away with.
 
While this would deal, most regressively, with the ‘problem’ of large food stocks, by foreclosing supply to the government, it does not address the problem of pre-existing stocks. Releasing a part of these stocks in the market would depress prices to an extent that would render the effort to dismantle the MSP-based system politically indefensible. It is for reason that the government has been experimenting with the possibility of handing over pre-existing stocks at extremely low prices to exporters. This experiment with disposing off FCI stocks through exports began in November 2000, and 1.62 million tonnes of wheat were exported in 2000-01, and 3.18 million tonnes of wheat and 1.5 million tonnes of wheat have been delivered for export till February 15 of the financial year 2001-02. In this year’s EXIM policy this drive is to be strengthened by subsidising transport costs on food delivered for exports. As part of the ongoing effort to do away with the MSP-based procurement system, which is partly necessitated by the drive to reduce food subsidies provided to domestic consumers, the government finds it necessary to subsidise consumers abroad, at least for some time.
 
Fortunately, this whole misconceived effort is bound to prove politically infeasible. When farmers in the US and the EU are being subsidised in large measure through income support schemes of various kinds, a government that is subjecting domestic producers to import competition can hardly work to dismantle the little support it has provided its own farmers. The fact that the government could not implement even the recommendation that the MSP for wheat should be frozen because it has been increased to higher than warranted levels in the recent past, shows that in a period when huge concessions are being provided to domestic and foreign industrial and financial capital, the demands of the agricultural community cannot be completely ignored. Realising this, it would be best for the government to work to ease the food stock crisis through feasible, demand-side measures, in particular, through the launch of a massive food-for-work programme. But if recent evidence of the government’s incompetence on matters of economic governance is an indication, good sense is unlikely to prevail.