The best time to make money is when there is a crisis. For then no questions are asked and no answers need be given. And India's ruling classes will prove to be good trainers on how to encash peoples' misery.

For years the government has been shouting that its foodgrain stocks are over flowing. It has allowed grains in its godowns to rot and it has even exported old grain for animal feed abroad. It is beside the point that its own people have been dying of starvation, as their purchasing power has diminished. This year also the government had been denying shortfall in production and suddenly it announced, in stages, that it would have to import wheat as the procurement in one state after the other was below expectation. Later on it confessed that the production itself was low.

Wheat production in India had reached a peak of 76.37 million tonnes in the year 1999-2000. Though the govt. has been claiming healthy growth in agricultural production, actual production of wheat last year (2005-06) has been 71.54 m.t. by govt. estimates and 65 m.t. by private estimates. Reduction in production is a consequence of long term decreasing allocation for development of agricultural infrastructure, particularly irrigation, reduction in input subsidies, increasing cost of diesel and increasing utilization of irrigated farm land for non farm activities like SEZs, industrialization, urbanisation etc. under the NEP regimes. The following chart gives figures on acreage and production of wheat.

1988-89                       24.11 m. hectares                     54.11 m. tonnes

1993-94                       25.15 m. hectares                     59.84 m. tonnes

1994-95                       25.70 m. hectares                     65.77 m. tonnes

1995-96                       25.01 m. hectares                     62.10 m. tonnes

1996-97                       25.89 m. hectares                     69.35 m. tonnes

1997-98                       26.70 m. hectares                     66.35 m. tonnes

1998-99                       27.52 m. hectares                     71.29 m. tonnes

1999-00                       27.49 m. hectares                     76.37 m. tonnes

2000-01                       25.73 m. hectares                     69.68 m. tonnes

2001-02                       26.34 m. hectares                     72.77 m. tonnes

2002-03                       24.86 m. hectares                     65.76 m. tonnes

2003-04                                   -                                   72.11 m. tonnes

2004-05                                   -                                   68.64 m. tonnes

The above figures highlight stagnation/ reduction in production of wheat and a 5 to 10% reduction in acreage over last few years. All this while our consumption requirement has continuously gone up, while there is tremendous capacity to increase acreage and output through improved facilities and subsidies for farmers. We have never been self sufficient in food grain production. Foodgrain availability in the country has continuously fallen during the period of implementation of these policies. In 1991 per capita availability was 510 grams per day and by 2001 it fell to 417 grams per day. When ruling classes claimed that there was surplus foodgrain it was mainly on account of decreasing purchasing power of the poor.

Another important reason for shortfall in production is that ruling classes have also been propagating and implementing a shift in cropping pattern from food grain to non food grain commercial crops useful for MNC agro trade companies. Food grain requirement of the government too has been limited by decreasing the outlay for PDS supplies. Along with this there has been a pressure to wind up MSP regime, not increase procurement rates and to limit government procurement.

It is important that these measures have been part of imperialism's charter in the World Trade Organisation in the form of reduction in food and input subsidies and transparency in government procurement (one of the four Singapore issues). Though all the governments have been claiming that they have safeguarded India's interests at the WTO, they have been surrendering before imperialist pressure. WTO talks have collapsed under the weight of agricultural subsidies to farm produce and trade in imperialist countries, yet our government succumbed and made govt. procurement transparent (read undermined), because India's comprador rulers gain by helping MNCs, not by helping farmers. They have opened up India's agricultural market to the vagaries and pressures of imperialist monopolies.

Unmindful of the peoples' misery the New Economic Policy forces made a hue and cry about the shortfall which immediately led to hoarding by big traders and price hike. Wheat flour in the market went up from Rs. 7 to as much as Rs 17 per kilo. Then they advocated further reduction in the PDS supply and Food for Work schemes to buffer the shortfall and demanded immediate import in the month of January.

The requirement under the National Food for Work Programme and the Sampoorna Gramin Rozgar Yojana has been 16 million tonnes. Food grain stocks were overflowing in June 2002 at 64.8 million tonnes but fell to only 15.1 m.t. in October 2005 when the minimum stock should have been 16.2 m.t. Despite this the government kept on claiming adequate food security all along. Then suddenly in February 2006 it stated that though rice stocks were adequate, by April '06 the wheat stocks will fall down to only 1.5 m.t. instead of the required 40 m.t. and hence it would be importing 0.5 m.t. of wheat immediately and a total of 3.5 m.t. finally. On April 27 it decided to increase the net import to 5.5 m.t. This is the biggest ever food grain import order by India, which has suddenly been transformed from a food grain exporter to an importer.

Though the shortfall in production has been progressive and visible, instead of making a planned arrangement the govt. has deliberately chosen to reach a crisis situation to enable panic buying.

The increase in imports has been attributed by the CEOs of a large trading company to change in food habits, prosperity and increase in wheat consumption. They cite the example of China in 1990s which used to export wheat and became a wheat importer. They ignore ground realities of production shortfall and starvation.

Wheat import order has been placed in three instalments. Initial order was placed for 5 lakh tonnes with all the conditions as set in 2003. The Australian Wheat Board (AWB) was the only supplier which could fulfil these conditions and it bagged the order. Some relaxations were made to the conditions and in the second round 8 lakh tonnes were ordered with the AWB and Agricole of Europe contending. Then on June 2, after hectic lobbying by the Bush administration which claimed that original conditions were imposed to help the AWB, the conditions were further relaxed for the rest of the order of 42 lakh tonnes. All phytosanitary conditions with regard to presence of weeds, foreign materials and fungus were relaxed.

 The relaxation of conditions created some debate in ruling circles as the US Ambassador applied pressure. But it was all sorted out with Mr. Raja of CPI 'left wondering' whether the conditions were relaxed "in national interests or under WTO diktats".

While the govt. paid @ of $170 per tonne (Rs 800 per quintal) for the February import, it was reported that at that time Pakistan government had purchased wheat from Russia @ $ 133 (Rs 625 per quintal) per tonne only a few days back. Subsequent orders have been placed by India at the rates of $ 235 per tonne, i.e. Rs. 1050 per quintal. Qualified bidders for this, apart from above are Toepfer International of Hamburg, Germany, Glencore International AG , Baar, Switzerland, Concordia of UK, Cargill International of USA and Archer Daniel Midlands of USA, the Canadian Wheat Board and the Ontario Wheat Board. Some Indian companies too are looking for an opportunity.

To further assist the imports and the final rates of the companies which are importing wheat the import duty too has been brought down from 50% to 5%. With this it is claimed that the final price of imports will match the local price. This loss of revenue on account of reduction in import duty and the hefty price paid to companies for imports could well have been paid to Indian farmers to enhance their earnings. But that does not interest the rulers.

It is worth noting that in this sordid affair the government has been aware of this acute and impending shortage of wheat. All it had to do was to declare to the farmers a special and remunerative support price prior to sowing and encourage them to increase the acreage and production. That was not done. Even later on, in January, when the discussion on wheat deficit was quite loud the government did not move to assure the farmers and announced a MSP of only Rs 650 per quintal.

Meanwhile the Indian wheat came into the market and the government permitted the private operators to procure wheat from Indian farmers. While the private operators purchased wheat for upto Rs 810 per quintal the Govt. after much dilly-dallying announced a bonus of Rs 50 i.e. a price of Rs 700 per quintal. Even at this stage the government did not announce the same price for our farmers as of the wheat it was importing. The MNCs and other private operators were left to have a field day. Earlier, in beginning of March this year, these same MNCs had purchased wheat from Gujarat to fulfil the shortfall in the Southern states and had made a handsome profit, while govt. agencies did not move. It is interesting that while there is a huge shortfall in government procurement these private companies are ready with their stocks to sell back our own grain to us at a good  profit.

The fact that the impending and arriving crises was deliberately underplayed has various angles to it. One is highlighted by the fact that in 1998 AWB paid a total kickback of Rs. 11 crore 25 lakhs to an account in Cayman Island Bank. The investigations against the then food secretary and STC chairman were never completed.

MNC control over grain trade from our mandis and government's dependence on them for imports will jeopardise the food security as well as whatever remains of the government's social sector commitments like limited PDS, AAY, BPL, SRY, NGRY etc.

The government is going to announce a new policy on imports which will be in place by Khariff season of 2007. According to Mr. Pawar, "The seminal principal is that by 2012 the food grain market in India is to be transformed from a seller's market to a buyer's market". This means that those in India who are buyers, i.e. have the money to buy will be getting a wide choice of luxuries at affordable prices. The thrust will be to guide the farmers into growing crops that can fetch better profits rather than encourage them to produce basic food grains and ensure food security. The beneficiaries will mainly be the MNC agro industries and India's elite consumers. Mr. Pawar has boasted "who is afraid of foreign trade". His personal bravado has nothing to do with the conditions of Indian people. It is they who bear its brunt and forces like him who reap the benefit.

Further this report says that the gap between domestic demand and supply of wheat is expected to go up by 2012 to 5 to 8 million tonnes and by 2020 to 12 to 16 million tonnes. But since government procurement of more than 15 to 20 million tonnes of wheat and rice will inhibit private trade, hence it states that govt. procurement will remain limited.

From next Rabi season there is a plan to invite bid for prices of wheat from companies in December itself and finalise the purchases (future trading) for April 2007 there and then. This means companies will be awarded the contracts in December and they will purchase from the government mandis. The policy here will be of a dual price level. One for PDS which will have an inbuilt floor price level support and another market attenuated price with different quality specifications for the two. PDS consumers will obviously be supplied lower quality wheat. People still remember the poor quality red American wheat supplied in 1960s.

Under the new policy only in case of distress sale the floor price level will be paid to the farmers.  There will be no regular MSP. The govt. too will purchase from the open market. The government also plans not to import wheat in future even in case of shortfall. It plans to ask the companies to do so for it. Even for PDS private importers will be tapped.

To compliment this policy the banks have proposed a new plan for agricultural advances. Firstly now agricultural loans will not be given only to farmers but also to the seed companies, millers and traders, i.e. to the entire chain. Secondly the banks will also do commodity financing, i.e. give advances against the produce. The produce will act as the collateral and the farmer would have sold his produce before it is harvested. This is a means to deprive farmers of the possibility of gain in the case of production shortfall and a good market price. The companies and banks always have a better 'advanced' idea of the market.

The procurement policy of the government will further push India's agriculture into the control of MNCs; big comprador houses and landlords who will act as their dealers. They will be further impoverished. This policy must be opposed. Patriotic farmer's organisations must force the government to provide security of cheap inputs, remunerative procurement price and assured sale. They must force the govt. to prevent take over of agricultural land for commercial purposes. Changing of cropping pattern away from growing foodgrains must be opposed. Penetration and control of MNCs in agricultural trade markets must be opposed.