Could anyone have imagined even five years ago that India would be exporting 22 million tonnes (mt) of cereals in 2012-13? But that is precisely what has happened. Not just that, in 2013-14.

India exported 18-20 mt of cereals. So, in two years, India exported more than 40 mt of cereals — essentially rice, wheat and corn which it has never done since Independence, and probably not even in its entire written history of more than 3,000 years.

On top of this largest-ever export, Indian granaries are overflowing, with public stocks touching 80 mt in July 2012 and 74 mt in July 2013.

This is all the more surprising, especially when in 2006-07, India had imported 6 mt of wheat and had banned export of wheat and common rice in October 2007 in the wake of rising global food prices. Then how did the panic and cereal deficit turn into huge export and surplus of cereals in just five years?

The answer lies partly in the National Food Security Mission that India launched in 2007 with an objective to increase food grain production by 20 mt — rice 10 mt, wheat 8 mt and pulses 2 mt — over the following five years. It gave priority to delivery of better seeds and farming practices in hitherto untapped areas of eastern, central and southern India. The result was dramatic: India increased food grain production by 42 mt in 2011-12 over 2006-07.

Free market helps cereal exports, but tax on input-intensive commodities needed But was this only a technological catch up? If so, why did it not spread earlier as there was nothing really new in the seeds? The answer lies in a conducive price environment. Despite ban on export of wheat and rice, the minimum support prices (MSPs) for wheat and paddy (rice) were raised by more than 30% in 2008-09 over 2007-08. This was partly to catch up with global food prices. This changed the incentive structure for wheat and rice dramatically, encouraging farmers to increase production and productivity.

Source:- economictimes.indiatimes.com