Traders caused the onion price rise, new food minister

Departing from the noncommittal statements of his predecessor Sharad Pawar, the new food minister KV Thomas has squarely blamed traders and intermediaries for the recent spike in onion and vegetable prices. Thomas, discussing the matter for the first time after taking over as independent minister of state for food, public distribution and consumer affairs, said the government intends to curb the clout of intermediaries by establishing new ‘farmer shops’ in big cities. He also said that the government has prepared a list of ‘suspect’ commodities that are vulnerable for similar jacking up of prices by traders in the immediate future.

“I am not against anybody. I can understand that there is an intermediary-system functioning in this country for a long period. But, we will not allow anybody to loot either the farmers or the consumers,” he said after attending the north-zone meeting of state food ministers and officials.

Thomas said that his ministry’s studies have revealed that there was no actual scarcity of onions to justify the steep price increase that the commodity went through for nearly a month. The steep increase in prices of vegetables was one of the primary reasons for his predecessor and NCP honcho Sharad Pawar to lose his food and consumer affairs portfolio to his junior. It has been alleged that Pawar, due to his position at the head of many farmers’ co-operative federations that engage in agri-trading, was ill-suited to take action to bring down prices.

Thomas said he was under the mistaken impression that the price hike was caused by a genuine scarcity induced by untimely rains. “When I took charge, the first report that came in the media was that there is a loss of 80%-90%. We also found that farmers are getting only 6 to 8 rupees [per kg] while in Delhi it was [selling for] 80 rupees and in my constituency, it was 74 rupees. Later I found that there is only 10% loss. There is just a 10% loss and 10% was also the export. We banned the export. So, the question is, why did it happen?” he said.

Thomas, however, said he was not interested in leading a witch-hunt to find out the perpetrators of the price-hike game, but was definitely interested in preventing a repeat. For controlling the agricultural commodity system, the centre wants to put in place a “farm-gate to home-gate” distribution chain. He said the centre is keeping a watch on a list of essential commodities. “The Delhi government will submit a model to establish ‘farmers market’ in the city, so that both the consumers and farmers are benefited,” he explained. Thomas, however, refused to name the ‘watch-list’ commodities as any such statement may be seized on by traders to again jack up prices.

Thomas also said that he expects the through-put of the Public Distribution System to increase substantially when the Food Security Bill is passed by the Cabinet, indicating that the Rangarajan Committee report, which had suggested a lean food security mechanism, may be junked. The Committee was appointed by the Prime Minister Manmohan Singh after the Sonia Gandhi headed National Advisory Council (NAC) proposed its own scheme involving distribution of subsidized food grain to 75% of India’s population.

Former food minister Sharad Pawar had dismissed the idea pointing out that the Centre would have to spend nearly Rs 90,000 crore on subsidies if it was implemented. The NAC recommendations, if implemented, would also require nearly 40% of India’s grain production of 200 million tonnes to be bought by the government, stored and dispatched through fair price shops at discounted prices. The government has already faced flak for storing grains in the open after stocks touched 56 million tonnes against a storage capacity of 43 million tonnes.

Thomas, however, said the government was gearing up for the mega-scheme, pointing out that storage capacity will be increased within two years to 60 million tonnes to accommodate the food security bill fall-out. “We know how much the demand [on storage] can go up.. So we want to be prepared,” he said, when asked whether the preparations meant an acceptance of NAC recommendations.