The controversy over the issue of wheat import is unlikely to settle down soon. The ministry of agriculture defends the government’s decision on the grounds of national food security. But the import of wheat — at nearly double the price that the government is offering to wheat farmers — is bound to generate anger among the wheat growers. It smacks of implicit taxation of agriculture continuing from the pre-liberalisation era. This time Indian farmers are denied international prices through an export ban and the exclusion of domestic suppliers of wheat from participating in the bidding. Ironically, this is in the backdrop of India’s aggressive posturing in the WTO, against the trade distorting subsidies doled out to farmers in the developed countries, eroding the export competitiveness of Indian farmers.

The government has come under fire for scrapping the earlier tender, under which as it turns out, the price would have been lower than the price at which the government has agreed to import later (that is, around Rs 1500 per quintal). But what if the import price were less than this, say Rs 1200-1300 a quintal? The criticism against the government’s decision would have perhaps been less severe. But it would still be wrong. This policy, to keep food prices down, is what has kept rural India poor. But this central issue has largely been missing from the debate.

The imports of grain by the government have always been plagued by controversy as was the case last year. Isn’t there a simple method to determine the right import price? The fact is, as long as the government is importing, one can never be sure if the import price is appropriate. The issue is not that of corruption. The international market is volatile. And government by its very nature is not equipped to make correct decisions in such volatile situations. The wheat prices indicated by the Chicago Board of Trade (CBOT) indicate only trends in the future international prices. It is important to be aware that most of the wheat consumed in India is not traded there. Therefore, it is intrinsically impossible to know reliable futures prices to make the import decisions.

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