Indian sugar mills association

What comes before, Agriculture

Date:	24 Oct 2011

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New Delhi, Oct 23: While differences among UPA-II ministers are now routine, this is one tussle that has been largely brewing under the radar. It involves Agriculture Minister Sharad Pawar and Minister of State (Independent Charge), Food, K V Thomas.

It was in January this year that Thomas was given independent charge of the Food portfolio after Pawar requested that his burden be reduced. So Pawar was divested of Food and the portfolio given to his junior minister.

Despite best of personal relations, the two have been sparring since. Consider this:

Sugar Exports

It was on this issue that Pawar and Thomas first clashed. Having taken charge in January 2011, Thomas sat on the matter of sugar exports despite Pawar`s announcement allowing the same in December 2010. It was only in April that Thomas allowed export of 4.45 lakh tonnes of sugar under open general licences (OGL).

Thomas further dithered on allowing a fresh tranche of exports till June, when the Empowered Group of Ministers (EGoM) decided to allow export of an additional five lakh tonnes. Another export of five lakh tonnes of sugar was later allowed in August.

The issue has resurfaced again with the start of a new sugar season this October. Anticipating a good output, Pawar has been publicly voicing his support for sugar exports and suggested that the government come out with a clear policy. Thomas, on his part, has cited a sugar output that counters Pawar`s estimate.

While Pawar says sugar output this time would be around 26 million tonnes, Thomas puts the figure at 24.6 million tonnes — only marginally up from last season`s 24.3 million tonnes.

Thomas has also boxed in Pawar with the politically sensitive punch of prices, saying he cannot even think on the lines of export till the festival season gets over. A perturbed Pawar, who comes from Maharashtra, one of the major food-producing states in the country, was forced to write a letter to EGoM chairman Pranab Mukherjee seeking a meeting on sugar export policy. But Thomas used administrative demarcation to stall Pawar, by not circulating any agenda note on sugar for the meeting called by Mukherjee after Pawar`s letter. The meeting had to be called off.

Foodgrain Exports

With the country witnessing record foodgrain output last season, Pawar started advocating exports, which have been banned since 2007-08. He sought the same ahead of wheat procurement reasoning that it would help farmers fetch good prices.

New to the job, Thomas was hesitant in the backdrop of mounting criticism of the government over food inflation. He cited the requirements of the proposed food security law to counter Pawar politically.

However, in resisting Pawar, he went too far. A government ban on exports meant little private participation in wheat purchase. The government ended up buying most of the wheat, resulting in record procurement of over 28 million tonnes. The outcome was that government stocks far outstripped the foodgrain storage space across the country.

With adequate monsoon and the wheat stocks lying open in the field, Thomas tried to offtake some of the wheat through additional allocation to states and open market sale, but this did not pick pace in the wake of oversupply in the domestic market.

Realising that a good kharif paddy crop was in the offing, Thomas recently changed his mind on wheat exports. However, Pawar now opposed it arguing that this would only benefit traders, given that the farmers had already sold their stock. The EGoM, nonetheless, allowed foodgrain exports ahead of the paddy procurement season in October.

The farmers did not get any benefit from this permit.

Onion Exports

Having witnessed public outcry over the sudden spurt in prices of onions in the month of November-December 2010, Thomas has been wary of fluctuating onion prices. It was the pressure he exerted on the minister handling the Consumer Affairs Department that led to the knee-jerk decision of banning onion exports when retail prices in Delhi shot to Rs 25 a kg late in August and early September this year.

Pawar advocated discouraging exports by raising the minimum export price beyond the domestic retail price, but Thomas insisted on a ban.

Farmers in major onion-growing regions in Maharashtra and Karnataka went on a strike, leading Maharashtra Chief Minister Prithviraj Chavan to appeal to Prime Minister Manmohan Singh to revoke the ban.

In less than two weeks, Thomas had to eat his words, with the EGoM overturning the ban, with one senior minister in the group reportedly even cautioning Thomas that such decisions should not be taken on the basis of a day`s spike in a few metros.

The Agriculture Ministry now wants slashing of minimum export prices of onion as the situation has improved. Thomas is yet to concur.

Food Security Bill

Thomas has taken it upon himself to toe the generous recommendations of Congress president Sonia Gandhi-led National Advisory Council (NAC) on the matter of the food security legislation. Having no such obligation himself, NCP supremo Pawar has not hesitated voicing his concerns.

In July this year, Pawar wrote a letter to the Prime Minister ahead of an EGoM slated to consider the proposed Bill, cautioning him against repeating the “past blunders” of 1972-73 when the government had taken control of grain trade. Just last week, he again raised the red flag and asserted that he did not want “Soviet Russia to happen in this country”.

A loyal Congressman, Thomas`s constant refrain has been that the government will implement NAC recommendations.

Minimum Support Price

This is a constant bone of contention between the two. Divested of food portfolio, Pawar has taken on the mantle of the minister fighting for better remuneration for farmers. He has now started pushing for a generous hike in the Minimum Support Price for agricultural produce.

First, Thomas put a spanner in the Agriculture Ministry`s suggestion of a Rs 160 hike in MSP per quintal of paddy, including a bonus of Rs 80. The Food Ministry under Thomas argued that this could lead to massive procurement, worsening the foodgrain storage crunch. The government finally approved Rs 80 a quintal hike in paddy MSP as an interim measure.

Pawar is also learnt to have supported a substantial hike in MSP for wheat, that may lead to massive procurement early next year. With Thomas sluggish in getting additional storage created in time, another massive procurement could add to his woes. The issue is likely to come up in the Cabinet soon and it remains to be seen how Thomas will react.

Points of difference Sugar Exports

Pawar wants exports, Thomas has stalled same, cited prices

Foodgrain Exports

Pawar wanted same, Thomas stalled, was left saddled with massive procurement, storage crunch

Onion Exports

Thomas panicked as prices rose, banned exports; Pawar finally prevailed

Food Security Bill

Thomas toes NAC line, Pawar says don`t become “Soviet Russia”

MSP

Pawar for hikes, Thomas sluggish, cautious on matter

Yet, a good rapport

Notwithstanding the friction between them over many issues, both these leaders maintain a good personal rapport. Thomas acknowledges Pawar`s seniority and respects him. Having seen Thomas`s work as the Minister of State under him, Pawar trusts the Kerala leader. So much so that Pawar had asked Thomas to pilot the Pesticide Management Bill in the Monsoon Session of Parliament. Thomas had agreed to do so.

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