Monsoon Affected Agricultural Policies

Source: The post monsoon affected agricultural policies has been created, based on the article “Express View on export ban on food commodities: Monsoon comfort” published in “Indian Express” on 3rd August 2024 

UPSC Syllabus Topic: GS Paper3- Agriculture-issues of buffer stocks and food security 

Context: The article discusses how India’s good monsoon has led to the government easing restrictions on ethanol production and rice usage. However, it suggests that the government should also lift export bans on rice, sugar, onions, and pulses to avoid surplus problems and support farmers. 

For detailed information on Factors affecting food production and its price outlook read this article here 

How Has the Monsoon Affected Agricultural Policies? 

The monsoon in India has been favorable this year, with rainfall 7.5% above the long-term average. July and August saw surpluses of 9% and 15.3%, respectively. This abundance has allowed the government to reverse certain restrictions that were set to control inflation. 

What Restrictions Have Been Lifted? 

1. Ethanol Production: The government lifted the ban on sugar mills producing ethanol directly from cane juice, syrup, or “B-heavy” molasses on August 29. This ban was imposed in December 2023.
2. Rice Usage: Mills and distilleries are now allowed to use up to 2.3 million tonnes of rice from the Food Corporation of India’s stocks for ethanol production. This was previously restricted since July 2023.
3. The Minister for Consumer Affairs and Food, Pralhad Joshi, mentioned that the government is considering relaxing the ban on white non-basmati rice exports, in place from July 2023.

What Is the Potential Impact of Not Lifting Export Bans? 

1. Surplus Issues: Not lifting export bans could lead to surplus problems, as evidenced by the record 45.5 million tonnes of rice in public warehouses as of August 1, potentially causing market glut and price crashes.
2. Farmers’ Losses: With high levels of production expected due to increased planting and favorable monsoon, farmers might face significant losses due to low market prices if export restrictions are maintained.
3. Economic Inefficiency: Continuation of export bans on commodities like rice, sugar, onions, and pulses contradicts the potential high yields anticipated from October-November, leading to wasted resources and economic inefficiency.

What is the government’s challenge with trade policy? 

1. Bias Towards Consumers: The policy often favors consumer interests, leading to price controls and export bans when supply is low.
2. Cobweb Model: This results in a cyclical problem of low supply with high prices, followed by high supply with low prices.

Question for practice: 

Examine how a favorable monsoon season has influenced the Indian government’s agricultural policies and export restrictions.