Report No. 18329-IN India Foodgrain Marketing Policies: Reforming to Meet Food Security Needs (In Two Volumes) Volume 11: Annexes and Statistical Tables August 17, 1999 Rural Development Sector Unit South Asia Region U Document of the World Bank CURRENCY Rs/ US$ Currency Official Unified Marketa Prior to June 1966 4.76 June 6, 1966 to mid-December 1971 7.50 Mid-December 1971 to end-June 1972 7.28 1971-72 7.44 1972-73 7.71 1973-74 7.79 1974-75 7.98 1975-76 8.65 1976-77 8.94 1977-78 8.56 1978-79 8.21 1979-80 8.08 1980-81 7.89 1981-82 8.93 1982-83 9.63 1983-84 10.31 1984-85 11.89 1985-86 12.24 1986-87 12.79 1987-88 12.97 1988-89 14.48 1989-90 16.66 1990-91 17.95 1991-92 24.52 1992-93 26.41 30.65 1993-94 31.36 1994-95 31.40 1995-96 33.46 1996-97 35.50 1997-98 37.16 Jan 1998 39.36 Feb 1998 38.91 Mar 1998 39.50 Note: The Indian fiscal year runs from April 1 through March 31. Source: IMF, International Finance Statistics (IFS), line "rf"; Reserve Bank of India. a A dual exchange rate system was created in March 1992, with a free market for about 60 percent of forieign exchange transactions. The exchange rate was reunified at the beginning of March 1993 at the free market rate. Vice President Mieko Nishimizu Director : Edwin Lim Sector Manager Ridwan Ali Task Leader/Co-Task Leader Dina Umali-Deininger/Deepak Ahluwalia INDIA FOODGRAIN MARKETING POLICIES: REFORMING TO MEET FOOD SECURITY NEEDS Volume II TAB]LE OF CONTENTS ANNEXES Annex A. Evolution of Foodgrain Policy in India ....................................... 1 Annex B. FCI's Food Distribution Operations ....................................... 5 Annex C. Selected Government Orders Covering Grain Trading. 7 Annex D. World Bank Supported Foodgrain Marketing Projects in India: Scope and Performance ................................................... 13 Annex E. Impact of the Rice Levy on Rice Mill Profitability .17 Annex F. On-Farm Activities Prior to Marketing .19 Annex G. India's Public Distribution System: A National And International Perspective Summary Of Findings .21 Annex H. BULOG and Rice Price Stabilization in Indonesia .25 Annex I. Food Stamp Programs in Jamaica, Honduras, and Sri Lanka: An Assessment .27 Annex J. Recent Developments in the Infrastructure Sector .................................................. 31 Annex K. Options for Policy Reform--Stakeholder Analysis ................................................... 33 STATISTICAL TABLES AND FIGURES Chapter 1 Annex Tables ............................................. . 37 1.1 Rice: Sources of Production Growth ................................................................. 37 1.2. Wheat: Sources of Production Growth ................................. ............ ............... 37 1.3. Rice and Wheat Production, Area, Yield, and Percentage Area Irrigated 1949/50 To 1997/98 . ................................... .................. 38 1 .4a. Percentage Annual (Compounded) Growth in Foodgrains .............. 39 1 .4b. Coefficient of Variation of Rice And Wheat Production . .................... 39 1.5. Quantity and Value of Monthly Average Consumption of Different Cereals Per Person for States and All-India in Rural And Urban Sectors, 1993/94 39 1.6. Per Capita Monthly Cereal Expenditure by Income Group, 1993/94 ................ 40 1.7. FAPRI India Rice Supply And Utilization Projections .40 ii 1.8. FAPRI, India Wheat Supply and Utilization Projections ................................... 41 1.9. Wheat: Production, Market Arrivals, Government and Private Sector Market Shares .. .................................................... 41 1.10. Rice: Production, Market Arrivals, Government and Private Sector Market Shares .................................................... .. 41 1.11. State Procurement of Paddy, Rice and Wheat 1994/95, 000 Mt ........................ 42 1.12 Estimated Volume and Value of Physical Marketing Losses for Rice and Wheat in India, 1996/97 ............................................. 42 1.13 Rough Estimates of Costs of Foodgrain Policies, 1996-97 .... ......................... 42 1.14. Central Government Food and Total Subsidy Expenditures, GDP at Factor Costs and Central Fiscal Deficit ............................... ...................... 43 1.15. Andhra Pradesh Food Subsidy, Rs Billion, 1990/91 to 1995/96 ..................... 43 Annex Figures .................................................... 45 1.1 Regional Shares of Wheat Production, 1967/68 to 1995/96 ..... ............I.......... 45 1.2 Regional Shares of Rice Production, 1967/68 to 1995/96 .... .............. ........... 45 1.3 Rice Marketing Channel in India ............................................... 46 1.4 Wheat Marketing Channel in India ............................................. ..............47 Chapter 2. Annex Tables ........................................................ 49 2.1 Levy Rates for Procurement of Rice in India .49 2 2a Common Variety--Minimum Support Price for Paddy and State Levy Rice Prices in Selected States, 1990/91 to 1997/98 .49 2.2b Common Variety--Official Milling Margin as Percent of State Levy Price in Selected States, 1990/91 to 1997/98 .50 2.2c Fine Variety-- Minimum Support Price for Paddy and State Levy Rice Prices in Selected States, 1990/91 to 1997/98 .50 2.2d iFine Variety--Official Milling Margin as Percent of State Levy Price in Selected States, 1990/91 to 1997/98 .50 2.2e Fair Price Shop Level Prices of Foodgrains in Various States. 5 1 2.2f P'DS and Open Market Prices of Rice and Wheat 1986/87 .52 2.3 Agricultural Produce Markets Acts in Force in Various States of India . 53 2.4 Market Fee and Commission Charges for Foodgrains in Market Yards in India .54 2.5a Import Tariffs and Quantitative Restrictions on Foodgrain Trade .54 2.5b Rice and Wheat Exports 1991/92 to 1996/97 .55 2.6 Schedule of Specifications for Paddy .55 2.7 Schedule of Specifications for Rice, 1997/98 .56 2.8 Schedule Showing the Maximum Permissible Limits of Different Constituents in FAQ Wheat .57 2.9 Transport of Foodgrains, 1992-93 To 1994-95 ................................. ........ .57 2.10 F'CI Foodgrain Stocks and Minimum Buffer Stock Norms,1993-1998, million mt ..... ............................ ................................................... 58 2.11 F'CI Rice and Wheat Procurement, Stocks as of July 1 and PDS Distribution, 1971 to 1997........... ............................... 59 2.12 Central Government Expenditure on Foodgrain Subsidy and Carrying Cost of Cereals ......................................... 59 2.13 FCI Foodgrain Distribution Cost Per Unit and Cost Item Percent Shares, 1980/81 to 1994/95. .......... ............................... 60 iii 2.14 FCI Wheat Procurement Cost Per Metric Ton and Cost Item Percent Shares, 1980/81 to 1994/95 .................................................. 60 2.15 FCI Rice Procurement Cost Per Metric Ton and Cost Item Percent Shares, 1980/81 to 1994/95 ................................................. 61 2.16 FCI Paddy Procurement Cost Per Metric Ton And Cost Item Percent Shares, 1980/81 to 1994/95 ........................... .......................... 61 2.17 FCI Buffer Stock Cost Per Metric Ton and Cost Item Percent Shares, 1980/81 to 1994/95 ......................................................... 62 2.18a Official Estimates of Foodgrain Losses in Transport and Storage, 1989-90 to 1994-95 ......................................................... 62 2.18b FCI Statewise Percentage Transit Losses, 1993/94 to 1995/96 ......................... 63 2.18c FCI Statewise Percentage Storage Losses, 1993/94 to 1995/96 ....................... 64 2.19 Indicators of Efficiency of Food Corporation of India: Rice Procurement and Distribution Cost Per Quintal .................................... 65 2.20 Indicators of Efficiency of Food Corporation of India: Wheat Procurement And Distribution Cost Per Quintal ................................ 66 2.21 a Wholesale Marketing Costs for Rice and Wheat in Private and Public Channels, Punjab 1997-98 ......................................................... 66 2.21b Marketing Costs and Margins Per Metric Ton of Wheat through Different Channels in Hisar, Haryana, 1987-88 ............................................ 67 2.22 Storage Capacity for Foodgrains, 1995 ............................. ............................ 67 2.23 FCI Wheat Open Sale Price in Different States ................................................. 68 2.24 Trade Credit in the Foodgrain Sector under Selective Credit Controls ......................................................... 69 2.25 Seasonal Price Adjustment in Selected Wheat Markets .69 2.26 Seasonal Price Adjustment in Selected Rice Markets .70 2.27 Production of Rice by Season, 1970/71 to 1995/96 .70 2.28 Coefficient of Variation of Selected Rice Markets in India 1985-95 .71 2.29 Coefficient of Variation of Selected Wheat Markets in India, 1985-95 .71 2.30 Number of Different Types of Milling Technologies in India ........................... 72 2.31 Average Costs and Returns of Paddy Milling by Selected Hullers, Ludhiana District, Punjab, 1997-98 ......................................................... 72 2.32 Economics of Milling Paddy in Selected Rice Mills of Two Tons Per Hour Capacity and Throughput of Forty Tons of Paddy Per Day .......... 73 2.33 Number, Capacity and Capacity Utilization of Roller Flour Mills in India, 1987- 1997 ................................................. 74 2.34 Cost of Flour Production In Punjab .75 2.35 Average Cost of Wheat Processing in Hisar, Haryana under Different Scales of Operation, 1988 .76 2.36 Estimated Per Hundredweight Operating Cots for Various Work Weeks for Three Model Wheat Flour Mills (1975) .77 2.37 Regulatory Agencies Overseeing Grain Trading in Andhra Pradesh ......... ....... 78 2.38 Number of Regulated Markets in India, 1995-967 ............................................ 79 2.39 Time and Motion Study of Paddy Marketing in Selected Markets in Punjab ....................................................... 79 iv 2.40 Status of the Sate Agricultural Marketing Departments, Agricultural Marketing Boards and Contribution by Market Committees to Boards in Different States .................................................. 80 2.41 Major Components of Expenditure of the Agricultural Produce Market Committees in Different States of India, 1996-97 ............................ 81 2.42 Income and Expenditure of Punjab Mandi Board, 1995-98 ............................... 81 2.43 Income and Expenditure of Uttar Pradesh Agricultural Marketing Board, 1991-92 To 93-94 .................................................. 82 2.44 The License Fee for Various Market Functionaries in Different Category of Mandis in U.P .................................................. 83 Chapter 2. Annexi Figures ..85 2.1 FCI Paddy Procurement Cost/Mt, 1990 Rupees ............................................... 85 2.2 FCI Rice Procurement Cost/Mt, 1990 Rupees ................................................ 85 2.3 FCI Wheat Procurement Cost/Mt, 1990 Rupees ................................................ 86 2.4 FCI Foodgrain Distribution Cost, 1990 Rupees ................................................ 86 2.5 Wheat Minimum Support and Central Issue Price, Current Rupees .................. 87 2.6 Wheat Minimum Support and Central Issue Price, Constant 1990/91 Rupees .................................................. 87 2.7. FCI Wheat Marketing Margin (Issue Less Procurement Price) and Cost of Procurement and Distribution, Constant 1990/9 1 Rupees ......... ..... 88 2.8 Rice Minimum Support and Central Issue Price, Current Rupees/Mt ............... 88 2.9 Rice Minimum Support and Central Issue Price, Constant 1990/91 Rupees ................................................... 89 2.10 FCI Owned and Hired Storage Facilities, 1983-96 ............................................ 89 2.11 Principal Inter-State Flow of Grains ...................... ............................ 90 2.12 Distribution of Mill Capacity of 204 Member Mills of the India Roller Flour Millers Federation, 1997 .................................................. 91 Chapter 3. Annex Figures .93 3.1 Long Run Trends for Grain Markets ......................... 93 Annex A Evolution of Foodgrain Policy in India The Bengal Famine of 1943 was a major impetus for the formulation of a comprehensive food policy in India. Policy intervention in the foodgrain market was virtually absent till 1943. Free market forces were allowed to determine the prices of foodgrains. However, both internal and external forces often placed the economy in crisis. The consequences of the crises were severe since the nutrition intake levels of the poor were low even in normal periods. Weak integration of sub- markets stifled market adjustments causing local foodgrain shortages even though there was no shortage at the global level. Disruption of imports and the internal transport system during W.W.II resulted in a near collapse of the free market system and led to the Bengal famine in 1943, in which more than a million people died of starvation. The situation was further worsened by the restrictions imposed by the surplus provincial governments on the movements of foodgrains outside their jurisdictions. The Food Policy Committee set up after the famine emphasized the need for the active involvement of the Central Government in the management of the food economy in the country. The Foodgrains Policy Committee favored government intervention in the foodgrain market and suggested a system in which a central agency would participate in the procurement and distribution of foodgrains parallel to the private trade. It assigned a major role to the central government in food management as it perceived potential conflicts of interest between surplus and deficit provinces in the procurement and distribution of foodgrains. The Committee also suggested a number of controls on private trade and the creation of a central reserve of foodgrains. The above suggestions were made on the premise that private trade would function efficiently in a normal period but in periods of drought and crop failure, the profit motive would lead them to hoard supplies and earn abnormal profits. The government introduced administrative controls, monopoly procurement and public distribution during 1943-1947. In the initial years, government activities were confined mainly to iimporting grains and distributing them through ration shops rather than procuring them from the domestic supply. Grain Imports of 2 million tons (mt) per annum contributed a major share to the rationing requirements. Over the subsequent two decades, policies frequently shifted between loose and tight controls on the domestic grain market. The only durable policy was the control on grain imports which did not permit external trade on private account. During the early years after independence, the Foodgrain Policy Committee of 1947, influenced partly by the prevailing political preferences for liberal policies and partly by the favorable grain position, recommended complete decontrol. The above recommendation was implemented in 1947 and was reversed a year later in the face of rising prices caused by grain shortages. There was a shift in the policy preference for tightening controls. In fact, the Foodgrains Procurement Committee of 1950 recommended government monopoly over the trade in grains. The cycle of decontrol and recontrol was again repeated in the mid-1950s. Two years of good harvest and low grain prices in the world market in the early 1950s had an impact on Indian policy: trade was liberalized from 1952 to 1955. Grain supply bottlenecks started showing up from [955. Foodgrain production which stood at 72 million tons in 1954 declined to 69 million tons in 1956 and further to 67 million tons in 1958. The grain economy showed destabilizing tendencies and foodgrain prices rose by 11 percent per annum during 1956-1958. Responding to the destabilizing situation, the government on one hand gave up the liberal policy on the domestic front by imposing tight controls on private trade and by increasing its involvement in the grain trade. On the other hand it allowed imports to increase. The above policy changes had no significant effect on the share of government supplies in total foodgrain availability: the ratio of government supplies to - 2 - total grain availability was 8 percent in 1951-1955, 5.8 percent in 1956-1960, and 8.3 percent in 1960-1965. Similarly, policy efforts on procurement were also minimal: foodgrain procurement per annum averaged 2.2 million tons in 1951-1955, 0.8 million tons in 1956-1960, and 1 4 million tons in 1961-1965. However, the policy shift from the goal of foodgrain self-sufficiency in favor of subsidized PL-480 whleat imports from the United States had an effect on imports. Foodgrain imports, which recorded a declining trend during 1951-1955, started rising from 1956. Total foodgrain imports per annum, which averaged 2.4 million tons per annum in 1950-1955 and 3.4 million tons in 1956-1960, rose to 5.1 million tons in 1960-1965. Wheat accounted for a major portion of grain imports and its share showed a rising trend. The share of wheat in foodgrain imports increased from 66 percent in 1950-1955 to 85 percent in 1956-1960 and 89 percent in 1960- 1965. Imported wheat and rise procured from the domestic supply were utilized for distribution in the cities. Heavy imports and good harvests in 1960-1962 stabilized grain prices. Policies were extended to include support prices for stabilizing farm incomes. However, the price stability was short-lived; grain prices rose again at an annual rate of 17 percent during 1963-67. In fact, grain prices increased by 27 percent in 1964. The phenomenal increase in grain prices hurt the poorer sections. This called for a long term foodgrain policy. It was realized that if controls are to be successful, adequate preparations before enforcement are necessary and the state must build up sizable stocks of grain. It was also accepted that no government cannot afford to ignore the food requirements issue. Foodgrain policy mainly comprised short term measures recommended by ad-hoc committees prior to 1965. Because of frequent policy changes like loose and tight controls on the foodgrain market, no permanent administrative structures could be built for implementing the policies. By 1965, strong political preferences existed for price stabilization, elimination of hunger, and strong government involvement in grain markets to curb the speculative activities of traders. The year 1965 can be taken as the point of departure for foodgrain policy. Single state zones were introduced for rice and restrictions were placed on grain movements out of surplus rates. Restrictions were imposed even on movements out of surplus districts within a state. Policy makers felt that the zone policy would depress market prices in surplus states and hence would facilitate procurement operations. The central government started the practice of assigning procurement targets to each surplus state on the basis of an assessment of nationwide needs. The states choose their own procurement methods. The central government would sell foodgrains to state governments for their public distribution system (PDS) atconcessional rates. The zone policy allowed the play of supply-demand factors in determining the open market price within each state given the policy parameters of the central and state governments. Perhaps the observed increase in interstate price dispersion could be partly attributed to this policy. The Food Corporation of India (FCI) was established in 1965 to secure a strategic and commanding position for the public sector in the foodgrain trade. The Corporation was expected to act as a countervailing force to the speculative activities of the private traders. The Government of India had also transferred the functions of procurement, storage, and distribution to the Corporation heretofore performed by its department of food in several states. Since then, the Corporation has been undertaking the purchase, storage, movement, and distribution of food at the national level. It has also be handling all imported grain and its distribution. The Foodgrain Policy Committee of 1967 suggested the contents of an integrated food policy to ensure equitable distribution at reasonable prices. The committee expressed concern about PL-480 wheat imports acting as a disincentive to producers and favored self-reliance. It was - 3 - suggested that an internal buffer stock of at least 4 million tons be built initially from imports in order to stabilize foodgrain availability and prices. The above suggestions influenced subsequent policy formulation. Source: Radhakrishna, R. and S. Indrakant, 1988, "Effects of Rice Market Intervention Policies in India: The Case of Andhra Pradesh," in Evaluating Rice Market Intervention Policies, Some Asian Examples, Manila: Asian Development Bank, pp. 237-321 - 5 - Annex B FCI's Food Distribution Operations FCI distributes foodgrains to meet the needs of several government programs. These include: the Targeted Public Distribution System Table I Percentage Allocation by Volume Across Programs (TPDS), the Jawahar Rozgar Yojana (JRY, a food for Rice and Wheat and Remittance Costs to States for work program), nutrition/feeding programs, Prograrn 1997 Foodgrain 96/97 % Remitted at Allocation of schedule castes and scheduled tribes and R erains backward class hostels, below poverty line food TPDS (APL/BPL) Central Issue Price/ 917% processing units, Modern Food Industries Ltd and less than Central Issue Price its franchise units, mid-day meals programs, the JRY Economic costs 05% World Food Program Projects and the Indian Nutrition Programs Economic costs 0 6% military and defense units (Table 1). SC/ST Hostels Less than Central 0.6% Targeted Public Distribution System. ~~~~~Issue Price Targeted Public Distribution System. BPL Food Mfq Less than Central 0.0% The Targeted Public Distribution System Issue Price dominates FCI foodgrain operations. The TPDS, Modem Food Industries Less than Cenbtal 0.3% launched in July 1997 and intended to improve FranchiseUnitsMFIL IuPrice 01% upon the operations of the old PDS (see Annex G Mid-Day Meals Economic costs 4 9% for detailed discussion). It segregates Below- World Food Program Open Market Sale 02% Poverty Line (BPL) and Above Poverty Line Economic cost < x (APL) households. The Government of India Defense 1.2% commits to supply States 10 kgs of foodgrains per Total (000 mt) 21,383 month to BPL households highly subsidized Note CIP-Central Issue Price Source. FCI, 1997 "Function of Food Corporation of India, prices (Table 2). The number of BPL households On Overview" & Ministry of Food, Annual Report 1996/97 are determined by the Expert Group Methodology. The State allocation for APL households would amount to the difference between the State's 10 year average lifting of foodgrains and the BPL allocation (Table 3). While access by TPDS for APL households is universal, the rice and wheat issue price will remain close to open market prices. GOI APL allocations as noted in the TPDS guidelines are intended to be transitory. FCI "sells" available stocks of foodgrains to the States against the monthly allocations and at the prices fixed by the GOI. In most states, stocks are lifted by the State Government or their nominees such as State Civil Supplies Corporations, Table 2 Central Issue Price. 1997/98 Wholesale Cooperative Marketing Federations and others I Revised Price, Rs/kg for further issue to Fair Price Shops (retail outlets which Commodity ABL BPL Common rice 5.5 3 5 operate on commission basis). The volume of the rations Fine Rice 7.0 3 5 and the end consumer prices (which includes provisions wheat 4 5 1_25' for administrative charges and local taxes) are determined Source: Food Corporation of India. by the States. Jawahar Rozgar Yojana (JRY) JRY is a food for work program managed by the Ministry of Rural Development. It is intended to provide gainful employment for poor households as well as expand infrastructure and other social capital in backward areas. At present the GOI bears 80 percent of the cost, while states contribute the remainder. Under the program foodgrains are released on pre-payment basis to states at economic costs. Mid-day meals schemes. The mid-day meals scheme under the National Program Support to Primary Education covers primary schools in about 2400 blocks. Under the scheme, each child is entitled to 3 kg of wheat/rice per month at 100 gram per day. The FCI charges each State for the economic costs of foodgrains supplied. Nutrition programs. Table 3 Below Poverty Line and Above Poverty Line TPDS Allocation, 1997/98 The Integrated Child State/UT Ave Annual Lifting BPL APL of Foodgrains, 10 yrs Allocation Allocation Development Services Program, 000 mt 000 mt 000 mt an nutrition and general Andhra Pradesh 2396 40 391 78 2004 62 development scheme . argeted at Arunachal Pradesh 85 98 8 92 77 06 development scheme targeted at Assam 663 57 228 69 434 88 children 0 to 6 years in age is Bihar 527.32 1030 83 managed by the Department of Goa 67 71 4 51 63 20 Gujarat 801 14 23942 561.72 Child and Women Delvelopment. Hai~yana 96 59 87 96 8 63 The key feature of the scheme is Himachal Pradesh 15229 3556 11673 supplementary feeding (wheat- amm & Kashmir 312.52 45 58 266 94 Karnataka 900 28 3450 555 28 based) for children up to 6 years Kerala 1776.47 184 23 159224 of age and expectaznt/nursing Madhya Pradesh 480 59 640 05 Maharashtra 1489 20 725 40 763 80 mothers in various states. Under Manipur 7044 1293 5751 the scheme, wheat is released on Meghalaya 143 47 15 96 127 51 pre-payment basis at the Mizoram 100 18 4 00 96 18 Nagaland 133 58 10 60 122 98 economic costs to State Orissa 426 45 381.80 44 65 governments. Punjab 24.36 51 65 Rajasthan 661 66 259 98 401 68 Schedule Sikkim 40.95 4 08 36 87 Castes/Scheduled Tribes and Tamil Nadu 1010 73 549 49 461.24 Tripura 152 51 26 50 126.01 Backward Class Hostels. The Uttar Pradesh 661 41 1145 77 program, managed by the West Bengal 1453 68 559 12 894 56 Delhi 639 45 35 52 603 93 Department of Consumer Affairs A & N Islands 12612 2 5 947 and Public Distribution, supplies Chandigarh 15 81 2 15 13 66 rice and wheat to SC/ST and D&NHaveli 1 35 1 71 Lakshadweep 4 79 0.27 4 52 Backward Hostels. Pondicherry _ 5 82 7 85 __ _ M Total 15308 82 7039 96 9445 87 Modern Food Source- GOI. Ministry of Civil Supplies, Consumer Affairs and Public Distribution, Industries, Ltd and its 1997, " Focus on the Poor, Guidelines for the Implementation of the Targeted Public franchise units. Introduced in Distribution System, New Delhi 1994 under the Ministry of Food Processing Industries, the scheme issues earmarks wheat at prices Rs 3500/mt lower than the Central Issue Price to Modern Food Industries India (Ltd) for making bread and energy foods. The breads produced are sold at discounted prices (50 paise for 800 gm loaf and 25 paise for 400 gram loaf). The franchise units are subject to the same terms and restrictions. Below the poverty-line food manufacturing units. This scheme, managed by the Ministry of Rural Areas and Employment, provides rice and wheat to small food processing units run by families below the poverty line at RslOOO/mt lower than the Central Issue Price Food Bank of the World Food Program. FCI operates as the "Food Bank" for the World Food Program (WFP) for its projects in India and supplying foodgrain for WFP projects in India and neighboring countries at open sale prices applicable from time to time. Defense and para-military forces. FCI supplies foodgrains to Defense/Para-Military Forces as per the allocation made by the Ministry of Food from time to time. Source: Ministry of Food and Consumer Affairs, 1997, Annual Report 1996/97, New Delhi: Department of Food and Clvil Supplies. - 7 - Annex C Selected Government Orders Covering Grain Trading Government of India Government of India Foodgrains (Procurement and Licensing) Order, 1952 The stated objective of this Order was to exercise control over foodgrains availability. Therefore, it restricts storage and dealing conditions. This Order extends to the whole of India, except the state of Jammu and Kashmir. It prohibits dealing in foodgrains except under a license from the State Government or the Central Government. Dealing includes purchase, sale or storage for sale. For this purpose, any person who stores any foodgrains in quantities exceeding 20 qt is deemed to store for the purposes of sale. The license specifies the foodgrains for which it has been issued and the places where the license is valid. The Government may at any time direct the dealer to sell foodgrains of specified quantity and variety to any specified person, at a price not exceeding the procurement price fixed by the Government. The Order empowers the State Government and its authorized officers to enter, search and seize foodgrains from the dealers in cases of default or suspicion. State Control Orders Various States also issue Orders/Notifications under the E C Act. The Orders concerning foodgrains in the States of Uttar Pradesh, Punjab, Andhra Pradesh and West Bengal are described below. UTTAR PRADESH UJ.P. Scheduled Commodities Dealers (Licensing and Restriction on Hoarding) Order, 1989 This Order applies to the whole of Uttar Pradesh but does not apply to the Food Corporation of India, U.P. State Food and Essential Commodities Corporation and such other central and state government bodies. The term "Dealer" has been defined in the Order as a person who carries on the business of purchase or sale or storage for sale on any day of scheduled commodities in quantities specified below: Commodities Storage limits Foodgrains of one kind 10 qtls or more All foodgrains together 50 qtls or more All pulses together 10 qtls or more All oilseeds together 30 qtls or more All edible oils 5 qtls or more Gur 10 qtls or more Sugar 10 qtls or more Note: A quintal (qtl) is equal to 100 kg Any person wanting to carry on the business as a dealer has to obtain license under the Order, which is valid for a period of 5 years. This Order has the following clause, which restricts the forward trading in commodities: "The licensee shall not enter into any transaction involving purchase, sale for storage of scheduled commodities in a speculative manner prejudicial to the maintenance and easy availability of supplies of scheduled commodities" - 8 - U.P. Rabi Foodgrains (Procurement Regulation of Trade and Control Movement) Order, 1977 This order extends to the whole of U.P. and is applicable to the rabi foodgrains (namely wheat, barley and grain). As per the Order, if a producer offers to sell any rabi foodgrain at the specified price to the pujrchasing agent at the purchasing center, the purchasing agent shall be bound to accept such foodgrains in quantities and on such conditions as the State Government may from time to time specify by order. The stock limits of wheat prescribed for retailer, wholesaler and commission agent are as follows: Retailer 100 quintals Wholesaler 750 quintals Commission Ageni 750 quintals The power of entry, search and seizure have been given to the Enforcement Officers as in the other Orders. Grading of the products of wheat, barley and grain has also been done in the Order. U.P. Flour Mills Licensing Order, 1966 This Order also extends to the whole of Uttar Pradesh. As per the Order, no owner or person-in-charge of flour mill shall grind in the flour mill any foodgrains, except in accordance with the terms and conditions of a license obtained from the District Magistrate under this Order. Flour Mill has been defined as a flour mill, other than a roller flour mill, driven by means of electricity or mineral oil. The power of entry, search and seizure has been given to the Food Officers. The requirement of licensirg restricts setting up of flour mills in the state though the notifications indicate that there has not been many changes in the eighties in this control order. U.P. Rice and Paddy (Levy and Regulation or Trade) Order, 1985 This Order applies to the whole of U.P. As per this Order, every licensed miller shall sell and deliver to the Government, at the notified price, sixty per cent of each variety of rice, conforming to the laid specifications. For the Gorakhpur and Varanasi Mandals, the levy has been relaxed to forty percent. Rice required to be sold to the State Government shall conform to the specification of rice of fair average quality, notified by the State Government. The levy has to be delivered to the State Government at the place and time specified by the Controller. The ratio of length and breadth of each variety of rice has also been specified in the Order. This is one clause which is not only closely monitored but is also fully implemented. The movement of rice or sale of rice can be done only after obtaining a release certificate from the Center In-charge/Senior Marketing Inspector/Marketing Inspector (after having sold to the State Government as per the levy). The movement of rice and paddy in the border area is restricted by the Order. The power of entry, search and seizure of the mill has been given to the Enforcement Officer. The miller has to maintain such accounts as specified by the Controller. The State Government may reduce the levy on the millers, or exempt the levy in the public interest. U.P. Regulation of Rice Hullers Order, 1975 This Order applies to the whole of U.P. A permit or license has to be obtained under the Rice-Milling Industry (Regulation) Act, 1958, for running a rice milling operation. Additionally, the miller has to comply with the provisions of Uttar Pradesh Rice and Paddy (Levy) Order, 1985. The authorized officer is empowered with the power of entry, search and seizure. -9- PUNJAB Punjab Trade Articles (Licensing and Control) Order, 1992 It extends to the whole of Punjab. A license has to be obtained by the dealers before carrying on business in the commodities specified in Schedule III of the Order. The quantity stored by the dealer should not exceed the limits as prescribed by the Government from time to time. The Government, the Director Food and Civil Supplies, or the Licensing Authority may issue directions to the dealers for the sale, purchase, storage or exhibition of price, names of partners of trade articles. When a license issued under this Order is canceled or suspended, the stocks of trade articles available with the licensee at the time of such cancellation or suspension shall be disposed off by him within the specified time to such person and in such manner and at such prices as the District Magistrate may specify. A stock register and other accounts, as mentioned in the Order, have to be maintained. Price and stock positions have to be displayed by the dealer in Punjabi as per the Order. All transactions of the dealer have to be on cash memos or a bill. The power to call for information and entry, search and seizure have been given to the enforcing officials of the Order. This Order repeals the following Orders which were passed earlier. * The Punjab Foodgrains Dealers Licensing and Price Control Order, 1978. o The Punjab Sugar Khandsari and Gur Dealers Licensing Order, 1978. * The Punjab Pulses Dealers Licensing Order, 1977. * The Punjab Edible Oilseeds and Edible Oils Dealers Licensing Order, 1977. Quantities below which no license is required for sale or storage for sale of trade articles are as given below, Commodity Limits Wheat 25 qtls Rice 25 qtls Pulses (for all pulses taken together) 25 qtls Edible Oils (including hydrogeniated vegetable oils) 25 qtls Edible Oilseeds (including ground nut in shell) 25 qtls Sugar 25 qtls Khandsari or Gur or Both 25 qtls Maize 25 qtls Punjab Trade Articles (Licensing and Control) (First Amendment) Order (Notification of 1992): It mentions that a separate license is required for each place of business, but a separate license is not required when the place of business is located in the same district, and if the following conditions are fulfilled. - all the business places are endorsed on the license. - a copy of the license, indicating the endorsement, is available at all business places. - in each separate place of business, separate registers and accounts are maintained. ANDHRA PRADESH A.P. Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982 This State Order was issued on 15 May, 1982 under the Essential Commodities Act. It rescinds the following orders: - AP Sugar Dealers Licensing Order, 1963 - AP Foodgrains Dealers Licensing Order, 1964 - 10- - AP Edible Oilseeds and Oils (Regulation of Trade), 1978 If the stocks exceed specified limits, license is required. The limits are: S.No. Commodity Limit I Sugar 5 Qtls 2. Foodgrains - anyone 20 Qtls 3. Foodgrains - all together 50 Qtls 4 Pulses (Total) 10 Qtls 5. Edible Oils 5 Qtls 6. Edible Oilseeds 30 Qtls The license fee depends upon the number of commodities stocked, and the license is valid up to next 31 March. Maximum Stock limits have been specified for certain commodities, based on the population of the city. These limits are: S.No Commodity City Category Wholesaler Retailer (in Qtls) (in Qtls) I Sugar Pop > I lakh 500 Pop < 1 lakh 250 2. Khandsari All Areas - 500 3. Pulses Pop. > 10 lakh 2000 50 10 >Pop > 3 lakh 1000 40 Pop <3lakh 1000 40 4. Ed. Oilseeds Pop > 10 lakh 3000 200 10 > Pop. > 3 lakh 2000 150 Pop. < 3 lakh 1000 100 5 Ed. oils Pop. > 10 lakh 1200 40 10 >Pop > 3 lakh 800 24 Pop < 3 lakh 500 16 6 Wheat Roller Mills 2 mon. cap. All areas 1000 20 Note I lakh = 100,000, qtl = 100 kg This order also gives the State the power to force dealers to convert their stocks of oilseeds into oils A.P. Essential Commodities Distribution and Movement (Requisition of Vehicles at Fixed Freight), 1983 This State Order was issued on 24 January 1984 under the Essential Commodities Act. Under the order the State Government has the power to requisition Public Carriers for the transport of Scheduled Commodities. A.P. Storage of Essential Commodities (Requisition of Godowns), 1986 This State Order was issued on 24 October, 1986 under the Essential Commodities Act. Under the order the State Government has the power to requisition godowns for storage of Scheduled Commodities. The rates are to be fixed by the Collector/Department of Roads and Buildings. A.P. Foodgrain Procurement Or,der, 1967 This State Order was issued on 23 October 1967 under the Essential Commodities Act. It applies to procurement of paddy, pulses and coarse cereals from regulated markets. Under the order the State Government can procure, on priority, the specified commodities from the markets The prices, however, are to be fixed by the normal process or by bidding A.P. Rice Procurement Levy Order, 1984 Under this Order the licensed millers and dealers are required to supply 50% levy to the FCI. The rice that is being given as levy cannot be purchased at prices lower than procurement prices. The government can order the mill[ers to mill state paddy at specified rates. The quality standards are given. The procurement rates for 1997-98 season were: Procurement Prices of Paddy and Rice, 1997-98 in A P Variety Paddy Prices (per Qtl) Rice Prices (per Qtl) Common Boiled Common Rs 415 Rs 735 10 Rs 738.70 Grade A Rs 455 Rs.784.40 Rs.787 20 A.P. Paddy (Restriction on Movement) Order, 1987 Under this order all imports and exports of paddy are restricted. Permits are required for exports. The order, like most control orders, gives the implementing authority the power to enter, search and seize. A.P. Rice and Paddy (Storage Control) Order, 1981 Under this order maximum stock limits for rice millers, dealers and retailers have been specified. The limits are as follows: Category of Stockist City Category Stock Limit (Qtls) Rice Mill with Capacity Hyd/Sec/Vizag/Vijayvada 2000 exceeding 1 Ton/Hr District HQ 1000 Other Areas 500 Other Rice Mill and Hyd/Sec/Vizag/Vijayvada 1000 Dealers District HQ 500 Other Areas 100 Retailers Urban Areas 100 Rural Areas 50 For paddy the maximum storage limits are 750 qtls for wholesalers and 150 qtls for retailers in all areas. Government Companies and Corporations are exempt from this order A.P. Boiled and Parboiled Rice (Restriction on Manufacture) Order, 1971 The State order was passed on 27th October, 1971 under the ECA. Under this order, permits from the District Collector are required prior to manufacture of Boiled and Parboiled Rice. WEST BENGAL West Bengal Rice and Paddy Control Order 1997 Regulation of Purchase, Sale or Storage. The State Order came into force on December 19, 1997 under the ECA. Under this Order, no person shall carry on business in rice or paddy a without - 12 - a license, a bulk consumer requires a registration certificate, and a producer cannot sell paddy except to a dealer. A dealer is only allowed to store rice or paddy up to the limit stated in the license. No person other than a dealer or a producer can store more than 2.5 mt of rice, paddy or both. No bulk consumer, except in accordance with the storage permit, can sell rice to a consumer in any form other than rice or to store rice exceeding the limit permitted under the registration certificate. No consumer shall purchase paddy exceeding 100 kg without written authority granted by licensing authority. No rice miller can purchase rice or sell or store paddy paddy for sale except in accordance with the storage permit granted with the license. Regulation of Transport of Rice and Paddy. No person is allowed to transport rice or paddy across the international border without a permit. to any place, except under Government account, for FCI, in accordance with military credit note, or not exceeding 50 kg by a bonafide foreign resident for his consumption. . The Order authorizes the Controller or his representative to inspect, search, and seize the entire stock if found to have violated the Order Cooperatives are exempted from this Order. West Bengal Wheat (Storage by Wholesalers and Retailers) Control Order The State Order came into force on January 15, 1997 and extends to the whole of West Bengal except in areas subject to the West Bengal Rationing Order 1964. This Order sets a storage limit for wheat at 25 mt for wholesalers and 5 mt for retailers. The Order authorizes the Controller or his representative to inspect, search, and seize the entire stock if found to have violated the Order. West Bengal Rationing Order, 1964 This State Order delineates "rationed areas" --an area where the rationed article is sold-- where storage and trading in wheat, a rationed article, is restricted to those appointed by the State government. Those eligible only include departments of the Central or State governments, wholesale dealers or retailers. In the Ration Area, no person other than the appointed business proprietor, wholesaler or retailer shall on or after the rationing date be allowed to supply to or receive supply of wheat except from those authorized by the Order. - 13 - Annex D World Bank Supported Foodgrain Marketing Projects in India: Scope and Performance In support the Government of India's foodgrain policy, the World Bank provided financial assistance for the expansion of FCI storage facilities and the development of wholesale markets in some states. These projects include the India Wheat Project (1971), the follow-up Second Foodgrain Storage Project (1977), the Bihar Agricultural Markets Project in 1972 and the Karnataka Agricultural Wholesale Markets Project (1973). This Annex describes the scope and performance of these projects and highlights lessons from the project implementation experience. Wheat Storage Project.' The objective of the Wheat Storage Project was to help reduce waste and spoilage of foodgrains and relieve the strain on transportation in India's Wheat belt in the Northwest. Sweden and IDA together provided $10 million on concessionary terms to the Food Corporation of India (FCI) to assist in the construction of modern wheat storage and handling facilities. The total project was expected to cost $16 million and include the construction of ten 20,000 mt silos and 10,000 mt godowns. The project also included funds for training personnel in the operation of modern silos and for a study of India's foodgrain storage and distribution system. Completion of the project took twice a long as planned at appraisal, despite the fact than only half of the planned number of silos were completed and there were cost overruns of 15 percent. The cost overruns resulted from construction delays and high inflation. At the time of the project's performance audit in 1981, the godowns (reduced from 10 to 9 due to land acquisition problems) were completed and in full operation. The five silos completed were operating below capacity due to land acquisition problems holding up completion of railroad spurs and a production shortfall. The reestimated economic rate of return (ERR) of the project at the time of the audit was 15 percent compared with the 25 percent at appraisal. The major lessons learned highlighted in the project audit focused on issues relating to land acquisition and greater up-front agreement on implementation procedures. Due to the complexity of the land acquisition process in India, acquisition of suitable sites prior to credit approval would prevent costly implementation delays. Upfront agreement with the government counterpart agency (FCI) on procedures, such as selection of consultants, rules on international competitive bidding, etc would prevent delays. Second Foodgrain Storage Project.2 This project followed the India Wheat Storage Project and was intended to finance a four-year public sector (FCI) grain storage investment project to expand storage capacity and thus reduce storage losses. Since about half of FCI storage was rented and often under poor conditions of CAP storage, the need for improved facilities were considerable. Total project cost estimated at $215.5 million was to be supported by IDA credit of $107 million to be used for the construction of conventional and modern storage facilities-- 2.5 million mt bag storage, I million mt bulk storage, 75,000 mt port silos, ancillary handling and transport facilities and technical assistance. The project took 8 instead of 4 years to implement and suffered from cost overruns of 51 percent. Only the godown component (3.5 million mt) was executed, while the bulk warehouses, World Bank, 1981, "Project Performance Audit Report, India Wheat Storage Project,' Report No. 3752, Operations Evaluation Department, World Bank 2 World Bank, 1988, "Project Completion Report, India Second Foodgrain Storage Project," Report No 7579, Country Department IV, World Bank - 14- port silos and the mechanized grain procurement centers were not completed. Factors contributing to delays included difficulties in land acquisition, delays in constructing railway sidings, inability of contractors to deliver on contracts. The recalculated ERR for the godown component was 19.9 percent against the appraisal estimate of 19.7 percent. Despite the increased storage capacity, FCI's dependence on rented storage did not improve in relative terms: it was half at the beginning of the project and remained the same at completion Hence the private sector invested at the same pace despite the lack of government assistance. The project achieved it planned capacity expansion, but without the modernization component it was intended for. The project completion report also raises the question of why "private sector storage support was never considered as an alternative to FCI-owned storage facilities. In IDA's view, an important lesson is that the private sector would have been more efficient for the establishment of storage facilities and it would have been less costly for Government as far as administrative costs are concerned." (Project Completion Report, p. vii) Bihar Agricullural Markets Project.3 The objective of the project was to assist the Government of Bihar (GOB) to improve efficiency of the regulated markets by reducing handling and storage losses, improve quality, and reduce municipal expenditures and time lost due to market congestion The project provided for the development of 50 market centers in towns and cities throughout the state. These centers would include fencing, administrative buildings, auction platforms, wholesaler's shops, storage godowns, and standard marketing equipment such as cleaners, graders, and scales. At appraisal, total project cost was estimated at $23.3 million of which IDA credit would finance $14 million. The completion of the project was delayed tow years mainly due to difficulties encountered in acquiring land for niarket sites, frequent turnover of staff at the State Marketing Board, and shortages of required building material Only 47 of the 50 planned market yards were completed, despite cost overruns of about 40 percent. At the time of the project performance audit in 1981, the project's primary objectives had note been achieved due 1o the reluctance of traders to move to the new markets. In 1980, traders had fully relocated in only half of the 47 markets. Their reluctance stemmed from the expectation of reduced margins and hxgher taxes when operating in the new markets. In contrast to the ERR estimated at appraisal of 29 percent, the reestimated ERR of the project was 11 percent. India Karnataka Agricultural Wholesale Markets Project.4 This project was the second World Bank project (following on the Bihar Agricultural Wholesale Markets Project) to develop the regulated marketing system in India. The project would help finance about 30 new markets or improvements in existing markets over a five year period as part of the ongoing program of the Government of Karnatalca (GOK) to develop wholesale markets in areas where traditional markets are congested and offer inadequate room for expansion. The total project cost was estimated at $11.9 million, of which $8 million was IDA credit. The project was successful in expanding the physical capacity of the regulated markets. A total of 47 markets and 18 sub-markets and 990 shops and godowns were constructed, well-above the appraisal estimates. Due to difficulties in designing and appraising sub-projects as well as delays in construction, a three year time overrun occurred. The expansion of the project was the main World Bank, 1981, "Project Performance Audit Report, India Bihar- Agricultural Markets Project," Report No 3490. Operations Evaluation Project, World Bank World Bank, 1984, "Project Performance Audilt Report, India Karnataka Agricultural Wholesale Markets Project," Report No 5081, Operations Evaluation Departmert, World Bank - 15 - contributor to the 42 percent cost overrun. The project contributed to relieving traffic congestion in the narrow streets of traditional facilities and provided farmers with attractive and fair marketing. 'The ERR estimated at appraisal at 15 percent, however, was re-estimated at about 7 percent. The Audit Report notes that wholesale markets are only one link in the marketing chain and maximization of the benefits of a marketing project can only be achieved if all links in the marketing chain receive equal attention. - 16 - - 17- Annex E Impact of the Rice Levy and Other Regulations on Rice Mill Profitability Some of the potential impacts on rice mill profitability of the rice levy system can be demonstrated with the aid of Figure 1 It depicts short-run cost and revenue functions for a rice mill. Average variable costs are represented by AVC, marginal costs by MC and the mill is assumed to be a price taker in the sense of facing a perfectly elastic demand for its output at the going market price of Pf (= marginal revenue, MR). In the absence of the levy system, output is at Qt and the mill is making short-run profits over and above total variable costs. Assume now that a levy is introduced whereby the mill is required to deliver Ql units of its output (Ql might represent, say, 50 percent of Qt) to the government. One possible scenario is that the government sets the price it pays for levy rice at Pf, the going market price level. This has no impact on optimal output and profits are unaffected. (One possible line of argument is that, for some mills, the assurance of having a market outlet for some of its production could conceivable shift its supply or MC function, which reflects attitudes towards risk, to the right resulting in a higher output provided the price received is the going market price.) An alternative scenario is that levy rice is paid a lower price than the going market price. If the levy price was at P1, the relevant MR function is now the stepped locus PIbaMR but the mill would continue to Figure 1: Impacts of the Rice Levy on Mill Profits operate at Qt, with short-run profits being reduced by the area PtabPI. The MC VC same would be true if the levy price A was set at P2, which corresponds to the average variable cost per unit of \ / producing the levy quantity of rice, and e/ profits would be reduced by the area PfacP2. According to one source, the P3 price received for levy rice is generally less than the costs of production (U.P. Rice Miller's Association, 1997, p.1). This is reflected in Figure 1 by a price equal to, say, P3. At this price level the mill covers its variable costs only on I 0 Quantaty that part of production sold on the open market and makes a loss of cd per unit on levy output In principle, total variable costs couAd exceed total revenue with the end result of mill closure. Figure 1 makes no allowance for the fact that the imposition of the levy can increase operating costs because of, for example, mill shut-down due to the slow clearance of rice by the FCI. Clearly, any upward shift in the cost functions makes the loss in profits greater and the probability of mill closure in the long run is increased. The effect on firm cost of uncertainty of output levels could be illustrated using the Figure 2 below. CI and C2 represent costs of producing a given product with alternative production facilities. The technology and plant organization having the cost indicated by C2 is more flexible than that indicated by Ci [flexible in the sense that fluctuations in the rate of output about Ql cause smaller changes in per unit cost than for the facility represented by C2]. If the firm expects to produce OQI units of output, C1 represents the cost of the least cost plant to produce this level of output. The - 18- above discussion [about adapting to uncertainty] indicates, however, that the entrepreneur may rationally consider the more flexible plant Figure 2 Effect on Firm Cost of Uncertainty of Output Levels represented by the curve C2 if he expects cosp-tr the rate of output to fluctuate considerably c about OQ 1. That is, he may choose plant C2 as an adaptation to uncertainty about the level at which the facilities will be C operated. If the producer so chooses, there is no basis for concluding that such a situation is inefficient even though production costs are higher over some range of output than would exist if he had selected Ci in the absence of uncertainty Q Throughput about the output level." The corollary of So,lrec Pasou-andB.llck(1975,p336) this is that, in a situation of certainty, the throughput level would be Ql and the unit costs of production can be lowered by the vertical difference between C2 and C I at that throughput level. Source: Piggott and Sidhu, 1998; Pasour and Bullock, 1975. - 19 - Annex F On-Farm Activities Prior to Marketing Harvesting of wheat in the northern states begins in April and most of it is delivered to the markets by the end of May. Peak arrivals at the markets take place over a period of only 20 to 25 days starting in mid-April. The paddy harvest in the north begins in September, and most of it is delivered to the markets and to the mills by the end of November. In most other states, there are two to three yearly harvests of paddy, starting in September and in March, with mill/market arrivals mainly in the one or two months following the harvests. Grain harvesting, threshing and handling in other than the northern states, are done manually. In the northern states, where mechanical harvesting is more common (25% of wheat and 50% of paddy in Punjab), mechanically harvested paddy and wheat are loaded into transport vehicles by the combine/harvester in bulk. Grain is delivered to the mandis or state operated wholesale markets mainly in bulk, commonly in tractor drawn trailers with 2.4 tons capacity or bullock drawn carts. Paddy is delivered to the markets or to the mills by the farmers in states such as Andhra and West Bengal almost exclusively in jute bags. There is very little mechanization of harvesting in these states. The transport distances from farm to market are usually short. However in Andhra Pradesh and West Bengal, where the rice millers (or their agents) buy paddy directly from the farmers, paddy is also collected by truckers from as far as 50 kms or more. In the Punjab mandi locations are planned so that farmers only need to travel about 8 kilometers to the nearest mandi Very little drying or cleaning is done on-farm in India. Only sun drying and manual cleaning are performed. In the case of paddy, the situation is complicated by the level of moisture at which paddy is harvested. In most areas the paddy is left standing to sun dry in the field. In other areas paddy is harvested at 20-25% moisture, is stacked until dry before threshing. In some areas paddy is harvested and threshed at relatively high moisture levels. Most of the cleaning required for paddy is done at the rice mills. Source: Field Observations. - 21 - Annex G India's Public Distribution System: A National and International Perspective5 Quantity rationing of essential commodities has been in existence in India since the inter- war period. The Public Distribution System (PDS) in its present form-a (producer) price-support- cum-consumer subsidy program-has evolved in the wake of critical, national-level food shortages of the 1960s. The program has probably contributed to a containment of upward pressures on food prices and ensured access of the food to urban consumers-the two principal objectives of the scheme at that point in its evolution. Although the national agricultural scene has vastly changed for the better, contributing to a fall in the incidence of poverty (from about 50 percent in the 1950s to 30 percent in the 1990s), the design of PDS has remained fimdamentally unaltered, except that its outreach is now being extended to rural areas and tribal blocks and areas of high incidence of poverty. The food subsidy cost has trebled over the past two decades, and accounted for 0.7 percent of GDP in 1993-94. PDS is now "perceived" to be the main safety net to protect the poor from potential short-run, price-induced adverse effects of the economic reforms currently under way, but the perception appears to be far from reality. Notwithstanding the added emphasis given to PDS in the wake of economic reforms, few studies have estimated the welfare gains-in terms of income as well as nutritional impacts. Nor have the cost per unit of income or nutritional gains been estimated. This paper fills this gap. It estimates the gains and costs of PDS, and compares it with other similar programs. The impact of PDS on the incidence and severity of poverty is also estimated. Based on the country's own experience and the experience of other countries, the paper considers various policy options for reform. Main Findings Though it has been in operation for four decades, the access of the poor to PDS is still very limited. The access is particularly weak-almost nil-in the states with the highest incidence and severity of poverty. The access of the poor is much better in a few states, particularly Andhra Pradesh and Kerala. Yet, even in these states, the monthly cereal purchases tended to be regressive. The per capita income gain to the poor in 1986-87 from all (food and nonfood) consumer subsidies was no more than Rs 2.01 per month, or 2.7 percent of their per capita expenditure, in rural areas; in urban areas it was slightly higher at Rs 3.4 per month (or 3.2 percent of per capita expenditure). There were differences in the magnitude of income transfers between commodities and across the states, but the overall transfer gains were very meager indeed. Only in four states (Andhra Pradesh, Karnataka, Kerala and Gujarat), the income gains to the poor were substantially higher than the national average, but some of these states have expended additional resources of their own on the program. Not surprisingly, the impact of PDS on poverty and nutritional status was minimal. For the country as a whole, without PDS poverty would have increased by 2 percentage points; the adverse impact would have been extremely small at 0.3 percentage points in rural areas of the states with the highest incidence of poverty. With the exception of Andhra Pradesh and Kerala, the nutritional impact of PDS has been minimal. 5Drawn from R. Radhakrishna and K Subbarao, 1997, "India's Public Distribution System, A National and International Perspective," World Bank Discussion Paper No. 380, Washington, D C.: World Bank. - 22 - Even the meager transfer benefits were realized at an exorbitant cost. When only the Central government costs are considered, an amount of Rs 4.27 was incurred to transfer one rupee of income to the poor. Typically, in addition to Central expenditures, state governments also incur costs of their own. When the combined state and Central level costs were estimated, one rupee of income was transferred at a cost of Rs 6.35 in Andhra Pradesh; the costs could be even higher in administratively weaker states which also account for a large share of the poor. Given this high level of costs, the program is unlikely to become cost-effective, unless drastic changes are introduced in its design. In comparison with other anti-poverty programs, PDS turns out to be the costliest. PDS delivered 100 kcal of nutrients at three times the cost incurred under the direct nutrition program of Integrated Child Development Services (ICDS). In terms of cost per rupee of income transferred, both the national PDS and the AP rice subsidy scheme are much less cost efficient than employment and nutrition programs. The main reason- while the two food transfer programs adopt income-based means tests, self selectiion occurs to a great extent in nutrition programs and to a lesser extent in employment programs. PDS and Changing Agricultural Scenario PDS in its present form had evolved in the 1960s when the agricultural scene in the country was completely different from today. The Indian agricultural situation has vastly changed for the better. Not only has foodgrains growth rate exceeded the effective demand for foodgrains, but more importantly, the regional location of accelerated growth-the eastern states-has been highly conducive for poverty reduction. There has been a substantial reduction in the incidence and severity of poverty. An untargeted, open-ended price-cum-consumer subsidy program hardly fits in with the realities of these recent developments. Relentless pursuit of a program basically at odds with economic realities and the changing profile of poverty has its inevitable costs. In order to pass the effect of the devaluation and economy-wide reforms, procurement prices and issue prices have had to increase. Without accompanying reforms in external trade and better targeting of PDS, the welfare implications of higher procurement and issue prices are likely to be adverse. For example, in response to highly favorable procurement prices (in relation to market prices), farmers unloaded huge stocks on to the Food Corporation of India (FCI). Large stocks, much in excess of those needed for strategic purposes, were accumulated. The carrying cost of buffer stocks now accounts for nearly one-third of the total food subsicly cost. At the same time, the poor did not benefit from the whole operation. PDS allotments have not been lifted in the states with the highest concentration of poverty because the (enhanced) issue price was close to the market price thereby rendering PDS virtually dysfunctional. In other states such as Andhra Pradesh, stocks were lifted, but only when a further subsidy was borne by the state governments, diverting resources from other priority sectors. Lessons from International Experience The cross-country experience reviewed in the paper suggests that practically every country that adopted open-ended programs has found the policy not only fiscally unsustainable but also, more importantly, significantly distortionary in its effects on the agricultural sector. Most countries have begun to restructLre their systems of food transfer. While no particular targeting method was found to be perfect, even imperfectly targeted programs have proven better in reaching the poor and keeping the costs down than completely open- ended programs. Restricting the subsidy to commodities disproportionately consumed by the poor - 23 - led to considerable self-targeting of the program in some countries; the costs were contained and the benefits reached poor consumers. In general, income-based means tests have proven difficult to administer. Leakages appear to be lowest in programs that selected beneficiaries contingent upon the beneficiary's (or their children's) participation in another activity, such as a child's attendance in a primary school, or registration at primary health clinics. Tying beneficiary participation (or time contribution) to food transfers llowers not only leakages but may also lower the economic costs associated with work disincentives. However, care needs to be taken that the poor's participation does not lead to excessive transaction costs to them. Elements of a Reformed PDS Any proposals for a revamped and restructured food transfer program for India needs to be made against the backdrop of the changing agricultural and institutional scenario in India. In particular, three aspects of change are stressed in the paper. First, the overall national-level shortages have abated; the country's cereal production is growing faster than the effective demand. The relatively poor eastern regions-West Bengal in particular-have seen a significant improvement in grain production. The incidence of poverty has steadily fallen since the 1950s. Second, except in tribal and a few dry land areas, the agricultural marketing infrastructure is well- developed and integrated. Third, following democratic decentralization, the Panchayat Raj Institutions (PRI) can now be entrusted with the responsibility of implementing all major poverty alleviation programs. The Government of India has recently made drastic changes in the Public Distribution System. The new Targeted Public Distribution System (TPDS) would most definitely correct the regional misallocation of FCI grain supplies, to the extent the incidence of poverty will be given a substantial weight in grain allocations between the states. However, TPDS expects the retail dealers at PDS outlets to supply the same variety of grain at half the price to the poor, and at the regular price to the nonpoor. The poor will be identified and given ration cards. The scope for abuse and diversion of supplies from the poor to the nonpoor in this system is likely to be high, given past experience with similar arrangements for kerosene and cooking oil. The GOI wants to enforce strict monitoring, but this is likely to be administratively costly. Except for better regional allocation of supplies, new TPDS virtually retains all other earlier characteristics of the system, albeit with increased scope for abuse at the retail outlet level. It is unlikely that the costs of operation of FCI will fall under the new TPDS. Given the changes in India's agricultural economy, and bearing in mind the weaknesses and constraints under which the FCI currently operates, the study recommends a reduced role for FCI, by phasing out government controls over grain markets as well as procurement operations. FCI could be allowed to compete in the market, free from controls, but with the added advantage of scale economies. FCI may, over time, become an effective player in the market. Its new role may be to stabilize the price of foodgrains within a band, and to maintain strategic buffer stocks or equivalent foreign exchange reserves; it could intervene in the market by off-loading stocks. The study recommends that the subsidy cost saved (as FCI goes out of procurement operations) could be distributed to PRIs in the form of food stamps or vouchers or as a conditional cash grant. The poor-identified by PRIs-may be given these vouchers, to be exchanged for food either at PDS outlets or at regular private grain stores. To begin with, vouchers could be given to participants of JRY (and other employment programs) since the poor may be expected to self-select themselves into such programs. Careful planning would be needed before extending vouchers to other categories. - 24 - Where such a xoucher program is difficult to administer, PDS retail outlets may still supply grain, but introduce PRI-admmistered identification of the poor. One sub-option is to link the food voucher program with other programs depending upon availability-such as employment programs (JRY/EAS), or nutrition programs (ICDS). These measures are most likely to ensure targeting without incurring additional costs. At the same time, the poor may be given some choice in the type of grains as well as retail outlets. The existing PDS shops could still continue to function, but only as normal grain retail outlets (like any other private dealer) rather than as outlets supplying "subsidized" commodities as in the past. The above structural changes would ensure that the income transfer would go to the intended beneficiary without incurring a huge cost on administration as is the case at present. It would also minimize incentive costs to the extent it strengthens work-fare or nutrition programs that confer benefits to the poor in high measure such as JRY and ICDS, as well as democratic institutions such as the Panchayat Raj. - 25 - Annex H BULOG and Rice Price Stabilization in Indonesia Although there remains considerable controversy about the role of the Indonesian Food Logistics Agency (BULOG) in the Indonesian economy, it offers some potentially useful lessons for cutting the cost of a price stabilization program. BULOG sought to stabilize prices around a long- run trend, using a buffer stock mechanism while operating as the buyer and seller of last resort. A paddy floor-price, translated into an equivalent milled-rice price, was "defended" through open- imarket rice purchases -- amounting to less than 10% of production and 20% of marketed rice -- and exports. Floor prices were determined based on cost of production, input prices, prices of competing crops and border prices. BULOG implemented pan-territorial regional rice floor prices, setting floor prices 5-10 percent higher in the outer islands--to encourage private-sector trade. The floor price is pan-seasonal, at it is intended only to protect farmers from steep drops in prices at harvests. The rice ceiling price, to shield consumers from drastic upward price shocks, was defended through BULOG's programmed rice distribution to civil servants (about 1.5 million mt), additional open market sales at market prices when needed and imports (3-6% of net supply). The ceiling price was determined based on income levels of poor consumers, urban wages, procurement prices, cost of distribution, storage and marketing. Because the single national ceiling price discouraged trade between regions, it was reformulated after 1973 so that ceiling prices in deficit areas were set higher than in surplus areas. The width of the "price band" was determined primarily by private-sector storage and distribution costs. This criterion was critical as it determined both the amount of subsidy BULOG would incur and private trader's decisions to hold stocks to supplement BULOG stocks. In stabilizing prices, BULOG followed the long-standing policy of maintaining a price band following the long-run trend in world rice prices, with sufficient flexibility to ensure that large differences between domestic and international prices do not persist for many years. While BULOG regulated rice imports and exports, the actual transactions were publicly tendered to the private sector. Notably, the private sector does most of the "work" in rice markets, because marketing margins (i.e. the difference between the floor and ceiling prices) are set wide enough (25 to 50%) to make private operations profitable. Unfettered domestic private grain trading in terms of flows of information and rice contributed to the high degree integration of rice markets and enabled BULOG's modest local interventions to have economy-wide impact. The clear understanding and transparency of the marketing rules under which BULOG operates increase confidence for private-sector participation in the market. Supporting its performance, a highly qualified team in the Bureau of Price Analysis closely monitors local production and domestic and international price movements, bi-annually re-estimating the appropriate price band, and most importantly providing the basis for the appropriate programming of BULOG rice intervention activities. "Real time" computerized information systems on procurement, stock levels and distribution permit close monitoring of operational activities (grain movements, stockholding status, distribution, prices). Sources: C.P. Timmer, 1998. personal communication; C.P. Timmer, 1997, "Building Efficiency in Agricultural Marketing: The Long Run Role of BULOG in the Indonesian Food Economy,"Journal of International Development, Vol 9, No. 1, pp 133-145; C. P. Timmer, 1996, "Does BULOG Stabilize Rice Prices in Indonesia: Should it Try?, " Bulletin of Indonesian Economic Studies, Vol 32, No 2: pp.45-74. - 27 - Annex I Food Stamp Programs in Jamaica, Honduras and Sri Lanka: An Assessment In 1984, Jamaica switched from an expensive general food subsidy to a food stamp program. The program targeted four categories of vulnerable groups; pregnant and lactating women, children under six years of age, individuals who already qualify for poverty relief and public social assistance (mostly the elderly and the handicapped), and low-income single-parent or poor households. Food stamps are legal tender, and can be used to purchase cornmeal, rice, powdered skim milk, dark sugar, flour and meat. The value of the stamps is JS45 for pregnant and lactating women, J$60 for persons receiving poverty relief and public assistance and single-person households, and J$105 for multiple-headed households Registration of recipients at a primary health clinic is necessary; stamps are issued every two months and can be collected in public areas (e.g., police stations, churches, etc.). Overall, the program is relatively well-targeted. Linking benefits to other requirements such as registration at clinics has considerably reduced inclusion errors, though some benefits certainly reach the upper quintiles. Thus, as of 1991-92, while there is a severe shortfall in the registration of pregnant and lactating women, single-person households and poor households have exceeded registration targets, implying substantial inclusion errors. Presumable the relatively higher value of benefits to households may have encouraged the nonpoor to enter the program. Although the rolls have been "cleaned" since the introduction of the scheme(once in 1987 and again in 1989), and recipients means-tested repeatedly, the system does not yet have exit mechanisms that are better defined and implemented. Although the poor were favored, the share of benefits across quintiles did not become progressive over time. According to the survey of Living conditions Report of 1991, the poorest 40 percent of the population comprised 58.2 percent of the beneficiaries-about the same as previous years. The main problem is the undercoverage of pregnant and lactating women-the most vulnerable group. The reason: the procedures for registration at health clinics is complicated and far from automatic: implementation programs persisted at all stages from application to registration to disbursement. Weak coordination between the staff of the Ministry of Labor and the Ministry of Health, and shortage of staff in the latter, have been cited as the main reasons for the observed deficiencies. Honduras provides another example of a delivery system that promoted self-targeting. In 1993, Honduras implemented a food stamp program that distributed stamps through schools and health centers. Under the Women Head of Household Coupon Program, food stamps are distributed through schools to poor mothers and their children attending grades one through three and who are shown to be at risk of malnutrition. In addition, at schools where the results of the annual nutrition survey shows a high incidence of malnutrition equal to or higher than 60 percent, all first graders are eligible for the program. Food stamps are distributed three times a year, and are estimated to cover 20 percent of household food expenditures. Food stamps are also delivered though health centers in the maternal Child coupon Program. The target group are low-income children under five and pregnant and lactating mothers. The intervention is concentrated on the earliest stages of infancy and childhood, and includes assistance to pregnant mothers to improve the changes of reaching children before malnutrition causes permanent damage. Beneficiaries must meet health surveillance requirements in order to maintain eligibility. The program also provides nutrition education and involves the private sector. - 28 - Successful dissemination of information has resulted in 100 percent of merchants accepting the coupons. Local commercial banks are also willing to redeem coupons directly; this leaves no room for merchants to demand "servicing fees" in redeeming coupons against goods. Beneficiaries can redeem coupons form commercial banks within four months of their issue (with redemption not contingent on purchasing of food). The program has been relatively more cost-effective than other nutrition programs in reducing poverty, and it has been widely accepted by participating retailers, and banks. In 1979, Sri Lanka replaced a four-decade old quantity rationing system by a food stamp scheme. Prior to this ch,ange, food subsidies accounted for about 5 percent of GDP or 15 percent of total government expendilture. After the switch to food stamps, the share of food subsidies in GDP and as a percent of total government spending fell to 1.3 percent and 3 percent, respectively. Two features of this food stamps program have considerably reduced its effectiveness in helping the most vulnerable households. First, the value of food stamps was not indexed to inflation. The immediate consequence is an erosion in the real value of transfer as staple food prices (rice in particular) escalated soon after the switch to a food stamp program. Second, the principal method for identifying eligible households was self-reported household income. The value of stamps was adjusted for household composition: each member older than 12 would receive stamps worth Rs. 15; each child between ages 8 and 12 would receive stamps worth Rs. 20, and each child less than 8 years would receive stamnps worth Rs. 25. The informaticin requirements for administering and monitoring the program were formidable. To ensure proper targeting of the program, it was necessary to continuously monitor incomes as well as household composition. Not surprisingly, household incomes were under- reported. Whereas the poverty ratio in the country was less than 30 percent, over 50 percent of the households were covered under the food stamp program-inclusion error was significant. A large share of food stamp outlay "leaked" to the upper-income households which reduced the cost- effectiveness of the program. Assuming that the responsibility of the government was to ensure adequate nutrition only to the lowest quintile, the cost to the government of providing a given amount of calories to the households in the lowest income quintile was 250 percent of the cost the households themselves would have incurred. Evidence suggests that the generous coverage may have enhanced the "real economic cost" of the program, as it may have reduced labor supply at margin. The impact of ihe food stamps program on the nutritional status of children would depend on the pattern of intra-household food allocation. A special survey of 480 children revealed that, controlling for all other factors, an increase in income due to food stamps increased the calories- consumption of childreni by 5.4 percent, whereas the calorie consumption of all other members of the households increased by 10 percent. The implication is: if the objective is to protect the nutritional status of children in very poor households, a nutrition program directly targeted to such children would have perhaps proved a more effective intervention than the food stamp program Thus, the switch from quantity ratios to food stamps did result in a reduced fiscal burden to the government, and enhanced the viability of the private sector in the foodgrain retail system. Yet the switch did not guariantee better targeting, nor did it protect the welfare of the most vulnerable. The lessons: (a) It is riot enough to switch form one program to another; it is important to get the design of the program right to avoid inclusion and exclusion errors; and (b) Before a change is initiated, it is useful to first decide on which objective is to be realized from a program, consider all potential alternatives, and then select the most cost-effective option - 29 - Source. R. Radhakrishna and K. Subbarao, 1997, "India's Public Distribution System, A National and International Perspective," World Bank Discussion Paper No. 380, Washington, D.C.: World Bank, Edirisinghe, N. (1987) The Food Stamp Scheme in Sri Lanka: Costs, Benefits and Options for Modifzcation. (Washington D.C. ][nternational Food Policy Research Institute.); H. Alderman (1991) "Food Subsidies and the Poor" in G. Psacharopoulos ed. Essays on Poverty and Equity and Growth. Oxford, Pergamon Press; D. Sahn and H. alderman (1995) "The Effect of Food Subsidies on Labor Supply in Sri Lanka", in D. van de Walle and K. Nead (eds) Public Spending and the Poor, Baltimore and London, the Johns Hopkins University Press. - 31 - Annex J Recent Developments in the Infrastructure Sector Improving basic infrastructure services--telecommunications, electricity and transport--would make a major contribution to growth and fostering private sector participation in these services has been a major focus of Indian economic policy since 1991. However, although many contracts have been awarded, relatively few deals have reached financial closure. As a result the private sector has not thus far made a substantial contribution to expanding service coverage and quality. Improved sectoral regulatory frameworks and independent and empowered regulatory authorities would stimulate efficient private sector participation. In the power sector, fundamental sector reform is required, which will include establishing an independent regulator and privatizing distribution. Orissa is on schedule to achieve privatization of its distribution sector by March 1999, and other states such as Haryana are following the same path. The incoming Government has announced plans to streamline the concession approvals procedure, delegating more authority to the States to clear projects. However, decisions on fuel and transmission linkages, which are also serious obstacles, will clearly still be made at the central level. A 1998 bill provides some impetus to the reform efforts by (i) providing for the formation of a quasi-judicial Central Electricity Regulation Commission; (ii) encouraging states to establish State Electricity Regulation Commissions, which would be the nodal agencies for all tariff-related matters; and (iii) requiring states to explicitly provide for the losses incurred by State Electricity Boards as a result of subsidized tariffs, but not limiting subsidies as originally proposed. In the roads sector, private finance is being sought for the development of bridges, bypasses, and widening of state and national highways. The Government has announced a package of financial incentives and taken some major policy decisions to encourage private sector participation. These are i) modification of the National Highway Act of 1956 to charge public and private entities to allow tolls on national highways; ii) amendment of the procedures for land acquisition for national highways; and iii) developing a Model Concession agreement for highway projects. So far, the Government has awarded contracts for the development of private investment worthRs. 6 billion, mainly for bypasses and bridges on a BOT basis. The Government has recently introduced tolls on a section of National Highway 8 after widening it to four lanes. It is considering concessioning four- laning to the private sector, with cost recovery either from tolls or on a design-build-finance-operate (DBFO) option with annuity payment, financed by National Highway Authority of India (NHAI) funds. State governments are developing road investments on a BOT basis, including two projects for widening to four lanes in Gujarat and an expressway and several flyovers in Maharashtra. Even so, limited traffic volumes mean that the bulk of the road network will require public funding. This could be financed partly by an ad valorem levy on petrol and diesel dedicated to an independent Road Fund along with other user charges. The Government in June 1998 announced a rupee 1/liter levy on petrol, with the estimated revenue of Rs. 8 billion per year to be deposited directly with NHAI for the development of national highways. In ports, the Government has also announced policy initiatives to attract private finance (in October 1996) and airports (in December 1997). Several sections of the Indian Port Act of 1908 and Major Port Trust Act of 1963 already permit private sector intervention in port operations. However, the Government is revising these acts to increase private interest. A tariff authority for major ports has been established to regulate port tariffs independently from the port trust. Because of its limited area of authority, however, it cannot be regarded as a totally independent regulator. One US$200 - 32 - million project at a major port (container berth at JNPT) was awarded to an Australian-Malaysian consortium in 1997, and two at minor ports in Gujarat (Pipavav, commissioned in 1997, and Mundra) were contracted to the private sector (Ahluwalia, p. 114). In addition, several ports and jetties are under construction or operation by major users for their own use. Telecommunications has seen the most private sector participation. Private cellular operators in the four major urban centers now have around 500,000 consumers. In addition, one basic service operator has commenced operations in Madhya Pradesh, in competition with the Department of Telecommunications (]DoT). Financial closure has been harder to achieve for the other basic service license holders, partly because of slow progress on issues such as the assignability of licenses so that lenders have more security in the event of a default by borrowers, and in some cases, can shift back and forth, before and after boxes, the high level of license payments that these operators bid to win the license auction. A more fundamental problem is the delay in transforming DoT into a policy maker rather than a service provider and a regulator. The service provision function of DoT itself needs to be corporatized to remove DoT' s conflict of interest. Source: World Bank, 1998, India 1998 Macro Economic Update, Reformingfor Growth and Poverty Reduction, Report No. 1 8089-IN, Washington, D.C.: World Bank. Annex K: Options for Foodgrain Policy Reform-Stakeholder Analysis Reform Option Ministry of FCI State Regulated Private Grain Labor Groups Farmers Consumers/Poor Finance/Food Market Boards Traders/Processors 1. Improving the Efficiency of the Foodgrain Marketing Stystem A Promoting Private Sector Efficiency and lnvestments I FCI open marketsalesof Gain reduce Gain improve Gain improved mkt Gain improve No impact Gain lower Gain lower marketing rice and wheat at fiscal subsidy financial performance reduce profitability & marketing margins margins with improved prevailing market prices performance congestion and pressure competitiveness with improved mkt mkt performance reduce on mkt infrastructure performance inc prices paid in open farm prices paid in market open market 2 Gradually phase out rice Increase fiscal Increase financial Gain improved mkt Gain reduced No impact on FCI Gain lower Gain lower marketing levy and procure grains in subsidy in ST, cost in ST. lower in performance reduce marketing costs and labor, marketing margins margins with improved open market lowered in MT to MT to LT with inc congestion and pressure uncertainty, improve modernization with improved mkt mkt performance reduce LT inc efficiency of FCI & on mkt infrastructure profitability and incentives in private performance inc consumer prices paid in efficiency of FCI private sector, incentives for sector could reduce farm prices paid in open market & private sector, improved buffer efficiency increasing labor demand open market improved buffer stock mgt, phase modernization stock mgt, phase out of APL TPDS out of APL TPDS 3 Improved buffer stock Gain reduce Gain improve Gain improved mkt Gain reduce risk& Lose reduce FCI Gain lower Gain lower marketing management and price fiscal subsidy, financial performance reduce uncertainty, increase labor needs, and marketing margins margins reduce prices stabilization fosters greater performance congestion and pressure profitability & private sector may with improved mkt paid in open market, macro-economic on mkt infrastructure incentives for not absorb all labor performance inc width of price band det and political efficiency increasing made redundant farn prices paid in price volatility faced by stability modermization open market APL households 4 Develop competition Gain improved Gain. competitive Gain improved mkt Gain ensures fair& No impact Gain lower Gain lower marketing policy, strengthen market competitiveness private sector would performance reduce competitive practices marketing margins margins with improved information systems and resource reduce procurement congestion and pressure with improved mkt mkt performance reduce allocation in cost in open market on mkt infrastructure performance inc consumer prices paid in economy farm prices paid in open market open market 5 Remove foodgrains from Reduce FCI Gain FCI functions Gain improved mkt Gain By permitting Lose reduce labor Reduced income for Gain lower marketing Jute Packaging Materials fiscal subsidy, modemized, performance reduce modermization, needs Jute farmers, margins with improved Act but face political improve financial congestion and pressure improve profitability, improved prices for mkt performance reduce opposition from performance on mkt infrastructure reduce marketing rice farmers thru consumer prices paid in Jute Industry costs lower marketing open market margins Options for Policy Reform: Stakeholder Analysis, Cont'd Reform Option Ministry of FCI State Regulated Private Grain Labor Groups Farmers Consumers/Poor Finance/Food Market Boards Traders/Processors I B Complementary Regulatory and Institutional Reform I Fostering Development of Negotiable Warehouse Receipt Industry (i) Establish regulatory Gain. improved Gain improved Gain. improved mkt Gain. Inc access to Inc private sector Gain increase Gain lower marketing framework for using private sector private sector performance reduce lower cost credit, storage and labor access to alternative margins with improved niegotLidie warehouse elficieocy would efficiency would congestion and prcssurc innprovc profi--Ly rqt, although lower cost source of kt performance reduce receipts help reduce fiscal help reduce on mkt infrastructure & incentives for cost modernization credit, increase consumer prices paid in costs financial costs of reducing storage incentives may capacity to arbitrage open market procurement modernization limit labor demand over time (n) Lift State storage Gain improved Improved private Gain improved mkt Gain Inc access to Inc private sector Gain increase Gain lower marketing ceilings linked to grain private sector sector efficiency performance reduce lower cost credit, storage and labor access to alternative margins with improved trading license efficiency would would help reduce congestion and pressure improve profitability rqt, although lower cost source of mkt performance reduce help reduce fiscal financial costs of on mkt infrastructure & incentives for cost modernization credit, increase consumer prices paid in costs procurement but reducing storage incentives may capacity to arbitrage open market lose instrument for modernization limit labor demand over time control 2 Improve regulated market performance (t) Increase Gain improved Gain reduce Opposition by state Gain reduced No impact Gain reduced Gain lower marketing decentralization of infrastructure procurement cost officials and members marketing costs losses and margins reduce price financial and management development at through more of State Marketing through more marketing costs paid in open market - authority of market state level, efficient operations Boards due to loss of efficient operations through more committees reduce central of regulated power, favored by of regulated markets efficient operations transfers markets members of market of regulated committees markets (n) Develop alternative Gain improved Gain reduce Gain increased Improved collection No impact No impact Improved collection mechanism to collect infrastructure procurement cost revenues increase marketing increase marketing costs market cess and taxes development at through more costs, improved and prices, improved state level, efficient operations market infrastructure market infrastructure reduce central of regulated reduce costs reduce costs and prices transfers markets 3 Strengthen market and industry information flows Strengthen market Gain. improved Gain reduce Gain improved Gain Improves No Impact Gain improves Gain improves decision information and early policy financial costs of decision making leads decision making and decision making making regarding warning systems through formulation & operations through to improved mkt resource allocation, and resource home/food budgetary selective GOI and State operatio of price improved decision performance, reduce increases efficiency allocation, lower allocation, lower investments stabilization, making congestion and pressure and lowers marketing marketing margins marketing margins reduce fiscal on mkt infrastructure margins increase prices reduce prices in open subsidies received by farmers market Options for Policy Reform: Stakeholder Analysis, Cont'd Reform Option | Ministry of | FCI State Regulated Private Grain Labor Groups Farmers Consumers/Poor Finance/Food Market Boards Traders/Processors 4 Improving Grading System _ Private Sector with support Gain improved Gain facilitate Gain improve services Gain reduce No impact Gain improves Gain reduces from GOI and States to competitveness procurement provided to farmers markeating costs by decision making transacton costs establish nantonally of exports operations, reducmvg facilitating exchange and resource grain purchases recognized grading system opcrating costs allocation, ensure remuneration for quality C ImprovingCost Effectiveness of the Food Corporation of India 1 Unbundle foodgrain Gain reduce Reduce financial Gain improved mkt Gain increase Lose Gain lower Gain improved TPDS markev ng actlivctpi ad fiscal subsadues cost of operabtons performance reduce pnvate sector moderaizatdon m prketm mkt marketing margins Iower devetnp ptiblic-private and substdfes. but congestron and preuc e partcipateon and would hkely lead to wtth omproved mkt marketing margics wlth arrangements for opposed by FCI on mkt infrastructure market share labor shedding performance inc improved mkt modernization investments management due to farm prices paid in performance reduce reduced power open market prices in open market 2 Implement Require fiscal Increase financial No Impact Gain increase supply Lose job security, No impact No impact compensatory measures for subsidy in ST, cost in ST, lower of labor but gain redundancy displaced labor fiscal savings in costs in MT to LT compensation, MT to LT training for alternative __________________ ~~~~~~~~~~employment 3 Establish regulatory Gain reduce Reduce financial Gain improved mkt Gain increase Lose Gain lower Gain improved TPDS framework and y agency to fiscal subsidies cost of operations performance reduce private sector modernization marketing margins services to poor, lower ensure competition in and subsidies, but congestion and pressure participation and would likely lead to with improved mkt marketing margins with privatc market and oversee opposed by FCI on mkt infrastructure market share labor shedding performance inc improved mkt FCI-private sector dealings management due to farm prices paid in performance reduce reduced power open market prices in open market 4 GOI to impose hard Gain reduce Require behavioral No impact No impact May lose as a result No impact No impact budget constraints fiscal subsidies and operational for management changes that may be changes taken opposed 5 Adopt measures to Gain reduce Require behavioral No impact No impact May lose as a result No impact Gain improved delivery improve management fiscal subsidies and operational for management of services efficiency changes that may be changes taken I_opposed 11. Moving Forward with TPDS Implementation I Phase out of APL TPDS Reduce fiscal Gainm improve Gain improved mkt Gain increase Lose reduce FCI Gain lower Gain lower marketing allocation in volume terms subsidy, may financial performance reduce market share, labor needs, and marketing margins margins with improved and shift to properly timed face political pcrformance & congestion and pressure Improve profitability private sector may with improved mkt mkt performance reduce open market sales opposition reduce subsidy rqt on mkt infrastructure & incentives for cost not absorb all labor performance inc consumer prices paid in reducing made redundant farm prices paid in open market modemization open market Options for Policy Reform: Stakeholder Analysis, Cont'd Reform Option Ministry of FCI State Regulated Private Grain Labor Groups Farmers Consumers/Poor Finance/Food Market Boards Traders/Processors 2 Pilot altemative food Gain reduce Improve financial Gain improved mkt Gain increase Lose reduce FCI Gain lower Gain lower marketing safety net schemes for BPL fiscal subsidy performance & performance reduce market share, labor needs, and marketing margins margins with improved households (e g vouchers) reduce subsidy rqt, congestion and pressure improve profitability private sector may with improved mkt mkt performance reduce in areas, start with well- but reduced role on mkt infrastructure & incentives for cost not absorb all labor performance inc consumer prices paid in developed private opposed by current reducing made redundant farm prices paid in open market marketing systems FCI management _modernization open market Note ST - short term, MT - medium term, LT -long term w~~ Chapter 1 Annex Tables Annex Table I I Rice Sources of Production Growth Period Yield Effect Area Effect Interaction of Production Area & Yield Increase Pre-Green Revolution TE 51/52-66167 57% 33% 10% 53% Post Green Revolution TE 67/68-80/81 69% 23% 8% 78% TE 81/82-90/91 84% 11% 4% 106% TE 91/92-97/98 97% 3% 02% 31% Note: TE - Triennium Ending Source Computed. Annex Table 1 2 Wheat Sources of Production Growth Period Yield Effect Area Effect Interaction of Production Area & Yield Increase Pre-Green Revolution TE 51/52-66/67 42% 43% 14% 79% Post Green Revolution TE 67/68-80/81 37% 38% 25% 343% TE 81/82-90/91 78% 15% 6% 281% ITE91/92-97/98 1 59% r 36% 1 5% | 191% Note: TE - Triennium Ending Source Computed - 38 - Annex Table 1 3 Rice and Wheat Production, Area, Yield, and Percentage Area Irrigated 1949/50 to 1997/98 Rice Wheat Year Prodn Area Yield % Area Prodn Area Yield % Area million mt million ha kg/ha Irrigated million mt million ha kg/ha Irrigated 49/50 23 5 30 5 771 32 3 6 4 9 8 655 31 5 50/51 20 6 30 8 668 31 7 6 5 9 8 663 34 0 51/52 21 3 29 8 714 31 7 6 2 9 5 653 35 8 52/53 22 9 30 0 764 32 3 7 5 9 8 763 37 0 53/54 28 2 31 3 902 33 6 8 0 10 7 750 36 2 54/55 25 2 30 8 820 34 4 9 0 11 3 803 35 0 55/56 27 6 31 5 874 34 9 8 8 12 4 708 32 7 56/57 29 0 32 3 900 35 4 94 135 695 29 4 57/58 25.5 32 3 790 36 4 8 0 11 7 682 33 3 58/59 30 9 33 2 930 36 3 10 0 12 6 789 31 8 59/60 31 7 33 8 937 35 8 10 3 13 4 772 31 8 60/61 346 34 1 1013 368 110 129 851 327 61/62 35 7 34 7 1028 37 5 12 1 13 6 890 319 62/63 33 2 35 7 931 37 4 10 8 13 6 793 33 8 63/64 37 0 35 8 1033 37 1 9 9 13 5 730 34 9 64/65 39.3 36 5 1078 37 3 12 3 13 4 913 36 8 65/66 30 6 35 5 862 36 5 10 4 12 6 827 43 1 66/67 30 4 35 3 864 37 9 11 4 12 8 887 48 0 67/68 37.6 36 4 1032 38 6 16 5 15 0 1103 43 4 68/69 39 8 37 0 1076 38 4 18 7 16 0 1169 49 8 69/70 404 377 1073 382 201 166 1209 51 1 70/71 42 2 37 6 1123 38.4 23 8 18 2 1307 54 3 71/72 43 1 37 8 1141 37 2 26 4 19 1 1380 54 5 72/73 39 2 36 7 1070 39.1 24 7 19 5 1271 57 6 73/74 44 1 383 1150 384 218 186 1172 577 74/75 39 6 37 9 1045 38 8 24 1 18 0 1338 61 8 75/76 48 7 39 5 1235 38 7 28 8 20 5 1410 61.8 76/77 419 38 5 1089 38 4 29 0 20 9 1387 65 1 77/78 52 7 40 3 1308 40 2 31 8 21 5 1450 64 6 78/79 53 8 40 5 1328 416 35 5 22 6 1568 66 0 79/80 42 3 39 4 1074 42 8 31 8 22 2 1436 68 3 80/81 53 6 40 2 1336 40 7 36 3 22 3 1630 76 5 81/82 53 3 40 7 1308 415 37 5 22 1 1691 70 7 82/83 47 1 38 3 1232 42 0 42 8 23 6 1816 72.5 83/84 60 1 412 1457 42 7 45 5 24 7 1843 73 0 84/85 58 3 41 2 1417 43 7 44 1 23 6 1870 74 5 85/86 63 8 41 1 1552 42 9 47 1 23 0 2046 74 6 86/87 60 6 41 2 1471 44.1 44 3 23 1 1916 76 3 87/88 56 9 38 8 1465 43 6 46 2 23 1 2002 76 8 88/89 70 5 41 7 1689 45 8 54 1 24 1 2244 79 2 89/90 73 6 42 2 1745 46 1 49 9 23 5 2121 80 3 90/91 74 3 42 7 1740 45 5 55 1 24 2 2281 81 1 91/92 74 7 42 7 1751 47 3 55 7 23.3 2394 83 7 92/93 72 9 41 8 1744 48 0 57 2 24 6 2327 84 2 93/94 80 3 42 5 1888 48 6 59 8 25 2 2380 85 1 94/95 818 42 8 1911 65 8 25 7 2559 95/96 796 42 9 1856 65 5 25 6 2557 96/97 81 2 42 7 1902 62 6 25 1 2493 97/98 82 0 42 2 1943 69 0 26 0 2654 Source Directorate of Economics and Statistics, Agricultural Statistics at a Glance, various issues 1996/97 and 1997/98 estimates are from USDA - 39 - Annex Table 1.4a Percentage Annual (Compounded) Growth in Foodgrains Period Rice Wheat Pulses All Foodgrains 67/68 - 95/96 2 9 4 72 0 93 2 67 80/81 - 95/96 3.35 3 62 1.21 2 86 90/91 - 96/97 1 52 3 62 1 07 1 70 Note Based on the index numbers, base triennium ending 1981/82=100 Source Government of India, Economic Survey 1996/97 Table 1 4b Coefficient of Variation of Rice and Wheat Production Period Rice Wheat 68169-85186 2 08 5 26 86187-97198 0 84 1 84 Source Computed Annex Table 1.5: Quantity and Value of Monthly Average Consumption of Different Cereals Per Person for States and All-India in Rural and Urban Sectors, 1993/94. RURAL Quantity (kg) Value in Rs State Rice Wheat Other Cereals Total Cereals Rice Wheat Other Cereals Total Cereals Andhra Pradesh 11 5 0 2 1 6 13 3 64.5 1 3 5 70.8 Assam 12 5 0 7 0 13 2 87 5 3.1 0 90.6 Bihar 79 56 08 143 516 262 2.7 805 Gujarat 2 4 47 107 142 184 18 1 507 Haryana 0 7 119 0 3 12 9 5 3 42 8 0.9 49 Karnataka 5 4 0.9 6 9 13 2 35 3 4 5 21.7 61 5 Kerala 9 3 0 8 0 10.1 63 8 4 9 0 68 5 Madhya Pradesh 8 5 8 0 4 14 2 36.4 24 1 5.7 66 2 Maharashtra 3 22 62 11 4 19 7 11 2 17 8 48.7 Orissa 152 04 03 15.9 823 22 1.2 857 Punjab 0 7 9 9 0 2 10 8 5 5 39 2 0,9 45.6 Rajasthan 0 2 9 4 5 3 14.9 1.8 37 9 18 4 58.1 Tamil Nadu 103 03 ii 11.7 66.6 1 9 4 1 72 6 Uttar Pradesh 4 9 1 0 8 13 9 22 4 34 7 2 2 59 3 WestBengal 137 12 0 15 88 62 02 944 ALL-INDIA 7 44 4 154 43.5 183 63 68.1 URBAN | Quantity (kg) _ Value in Rs State Rice Wheat Other Cereals Total Cereals Rice Wheat Other Cereals Total Cereals AndhraPradesh 10 08 04 113 66.9 48 1 5 73.2 Assamn 10 8 1 3 0 121 63 9 3 20 92.3 Bihar 6 8 59 01 12.8 49 5 3 1 0 3 80 8 Gujarat 2 1 5 6 1 3 9 17 2 28.8 55 51 5 Haryana 1 5 8 9 0 1 10.5 113 37 5 0 2 49 Karnataka 8 4 1 6 0 9 10.9 48.4 10 1 10 7 69 2 Kerala 8 5 1 0 95 58 6 1 0 64 1 MadhyaPradesh 36 73 0.4 113 249 33.9 1 1 599 Maharashtra 3 2 44 8 9.4 25 8 27 7 6 5 60 Orissa 113 2 0 1 13 4 68 117 03 80 Punjab 0.9 8 01 9 8 373 06 459 Rajasthan 06 104 05 115 55 462 23 54 TamilNadu 91 0 9 0 1 10 1 66.3 5 0 3 71 6 Uttar Pradesh 2 6 8 4 0 1 11.1 17.6 37 1 0.3 55 WestBengal 87 29 0 116 649 16 0 809 ALL-INDIA 53 47 06 10 6 35 2 23 7 5.4 64 3 Source NSSO, 1996, Level and Pattern of Consumer Expenditure, NSS 50th Round 1993/94 - 40 - Annex Table 1.6 Per Capita Monthly Cereal Expenditure by Income Group, 1993/94 RURAL Expenditure Cereals Total Food Total Cons Cereals Expenditure Over Fractile Group Rs/cap/mo Rs/cap/mo Rs/cap/mo Total Food (%) Total Cons (%) 0-5 4C 85 73 88 101 3 55% 40% 5-10 51 96 96 11 131 18 54% 40% 10-20 57.89 11253 15402 51% 38% 20-30 62 51 128 78 178 17 49% 35% 30-40 67 12 143 82 200 75 47% 33% 40-50 68 42 157 64 224 27 43% 31% 50-60 712 173 87 250 84 41% 28% 60-70 73 36 190 44 282 8 39% 26% 70-80 75 82 212 77 324 58 36% 23% 80-90 76 13 245 395 56 31% 19% 90-95 7S, 07 284 53 499 02 28% 16% 95-100 85.83 371 07 875 34 23% 10% All Classes 68 13 177 77 281 4 38% 24% URBAN Expenditure Cei eals Total Food Total Cons Cereals Expenditure Over Fractile Group Rs/cap/mo Rs/cap/mo Rs/cap/mo Total Food (%) Total Cons (%/.) 0-5 42 6 94 52 133 01 45% 32% 5-10 52 32 123 51 175 85 42% 30% 10-20 57 63 147 75 212 36 39% 27% 20-30 6C 31 170 34 252 12 35% 24% 3040 62.77 192 1 291 8 33% 22% 40-50 64.49 214 3 334 89 30% 19% 50-60 65 92 238 28 383 9 28% 17% 60-70 68 15 26646 448 7 26% 15% 70-80 68.46 302 09 541 45 23% 13% 80-90 71 86 361 98 691 6 20% 10% 90-95 72 9 44032 911 17 17% 8% 95-100 78 37 560 88 1625 76 14% 5% All Classes 64.27 250 32 458 04 26% 14% Source NSSO, 1996, Level and Pattern of Consumer Expenditure, NSS 50th Round 1993/94 Annex Table 1.7: FAPRI India Rice Supply And Utilization Projections 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 Area harvested, 1000 ha - 42300 42500 42535 42703 42880 42743 42632 42509 42489 42523 42588 Yield, MT /Aa 1 88 191 1 93 1 96 1 98 2 01 2 03 2 06 2.08 2 11 2 13 Production, 1000 MT 79460 81000 82129 83522 84939 85737 86580 87394 88415 89549 90750 Beginning Stocks, 1000 MT 14083 12083 11333 11443 12190 12947 13480 13802 13913 13888 13911 TotalSupply, 1000MT 93543 93083 93462 94965 97130 98683 100060 IE+05 102328 103437 IE+05 Feed Use, 1000 MT 78210 79500 80080 80998 82193 83199 84286 85396 86628 87646 89061 Food Use, 1000 MT 3250 2250 1939 1777 1990 2004 1973 1887 1812 1879 1791 Domestic Use, 1000 MT 81460 81750 82019 82775 84183 85203 86258 87283 88440 89526 90852 Ending Stocks, 1000 MT 12083 11333 11443 12190 12947 13480 13802 13913 13888 13911 13809 Note. The FAPRI baseline projections are based on a series of assumptions about the general economy, agricultural policies, weather and technological change The projections represent one possible scenario, consistent with the set of selected assumptions Macroeconomic assumptions are based on forecasts by the WEFA Group and Project Link Average weather conditions and historical rates of technical change are assumed to prevail during the projection period Source: FAPRI, World Ag-icultural Outlook, Staff Report #2-97, January 1997, Iowa State University and Universtiy of Missouri- Columbia - 41 - Annex Table 1.8: FAPRI, India Wheat Supply And Utilization Projections 95/96 96/97 97/98 98/99 99/00 00101 01/02 02/03 03/04 04i05 105/06 Area harvested, Ha (million) 25 6 25 1 24 98 24 68 24 68 24.74 24 93 25 07 25 17 25.26 25 39 Yield, MT /Ha 2.56 2 49 2 55 2.58 2 61 2 64 2 67 2 7 2 73 2.76 2 79 Production, 1000 MT 65.47 62 62 63 69 63 66 64 41 65.32 66 56 67.69 68 71 69 72 70.85 Net Imports, MT (million) 10 9 12 5 9 4 9.57 9 57 9 69 9 83 10.03 10.21 10 37 10 53 Beginning Stocks, MT (million) -0 57 -1 17 1 39 1 47 1 63 1.79 1 6 1 67 1 94 2 28 2 55 Total Supply, MT (million) 76 37 _75 12 73 09 73 23 73.98 75 01 76 4 77 72 78.91 80 09 81 38 Feed Use, MT (million) 0 3 0 35 0 35 0.35 0 35 0.35 0.35 Q35 0.35 0 35 0 35 Food Use, MT (million) 63 64.21 64 56 64 79 65 58 66 61 67 61 68.83 70 13 71 48 72 86 Domestic Use, MT (million) 63 3 64.56 64 91 65 14 65 93 66 69 67 96 69 18 70 48 71 83 73 21 Ending Stocks, MT (million) 12 5 9 4 9 57 9 57 9 69 9 83 10 03 10 21 10.37 10 53 10.71 Note- The FAPRI baseline projections are based on a series of assumptions about the general economy, agricultural policies, weather and technological change. The projections represent one possible scenario, consistent with the set of selected assumptions Macroeconomic assumptions are based on forecasts by the WEFA Group and Project Link Average weather conditions and historical rates of technical change are assumed to prevail during the projection period Source: FAPRI, World Agricultural Outlook, Staff Report #2-97, January 1997, Iowa State University and Universtiy of Missouri- Columbia Annex Table 1.9 Wheat. Production, Market Arrivals, Govt And Private Sector Market Shares, (Million Tonnes) ITEM 1991-92 1992-93 1993-94 1994-95 1995-96 AVERAGE I Total Production of Rice 55 69 57 21 59 84 65 77 60 00 59 70 2 Estimated Quantity arriving in market 15 04 15 45 16 16 17 76 16 20 16 11 (- 27%)_ _ _ 3 Procured for Central Pool by FCI and 7 75 6.28 1283 11 87 1233 1021 State Agencies, Actuals 4 Estimated Central Pool Procurement 51.5% 41 3% 79 4% 66 8% 76 1% 63 3% as % of Market Arrivals 5 Estimated Private Sector Market Share 7 29 9 17 3 33 5 89 3 87 5 90 As % of Market Arrivals 48.5% 58 7% 20 6% 33 2% 23 9% 36 7% NOTES (1) P rojection Year is from July to June (3) Marketing Year for Wheat is from April to March. Sources Govt of India - Ministry of Food - Basic Plan, Govt. of India - Ministry of Agriculture - Food Statistics Annex Table 1.10 Rice Production, Market Arrivals, Govt And Private Sector Market Shares ( million mts ) ITEM 1991-92 1992-93 1993-94 1994-95 1995-96 AVERAGE 1 Total Production of Rice 74 68 72 86 80.30 81 89 80.00 77 95 2 Estimated Quantity arriving in market 22 04 21 86 24 09 23 57 24 00 23 11 (- 30%) _ 3 Procured for Central Pool by FCI and 09 24 11 79 13.65 13 40 09 95 11 60 State Agencies, Actuals 4 Estimated Central Pool Procurement 42 2% 53 9% 56 7% 56 9% 41 5% 50.2% % of Market Arrivals 5 Procured by States not contributing to 1 01 1 25 0 61 0 30 0 10 0 66 Central Pool, for their own programmes 6 Estimated Central and States 10 25 13 05 14 26 13 70 10 05 12.26 procurement, As % of Market Arrivals 46 5% 597% 592% 58 1% 41 9% 53 1% 7 Estimated Private Sector Market Share 11 79 8 81 9 83 9 87 13 95 10 85 As % of Market Arrivals 53 5% 403% 40.8% 41 9% 58 1% 469% NOTES: (1) Projection Year is from July to June (2) Marketing Year for Rice is from October - September (3) Govt Rice Procurement consists of both Paddy and Levy Rice Sources Govt of India - Ministry of Food - Basic Plan, Govt of India - Ministry of Agriculture - Food Statistics - 42 - Annex Table I 11 State Procurement of Paddy, Rice and Wheat, 1994/95, 000 mt State Paddy / Rice Total % share Wheat % Share 000 mt 000 mt 000 mt Andhra Pradesh 14 4 3747 8 3762 2 32 6% 382 Assam 2 1 2 1 0 0% Bihar I 0 7 1 7 0 0% Haryana 216 1157 9 1373 9 11 9% 2933 17 25 4% Jammu&Kashmir 0 1 0 1 0 0% Himachal Pradesh 049 Karnataka 45 5 45 5 0 4% Madhya Pradesh 731 4 731 4 6 3% 55 42 0 5% Maharashtra _ 65 1 65.1 0 6% Orissa _ 3719 3719 3 2% Punjab 1835 2587.4 4422.4 38 3% 5766 84 50% Rajasthan 4 20 8 24 8 0 2% 64 60 0.6% Tamil Nadu 0 4 0 4 0 0% UP 0.1 567 3 567 4 4 9% 1403 9 12 2% West Bengal _ 159 7 159 7 1 4% All India 2070 3 9462 11532 3 100% 10224.43 100% Note I - paddy in terms of rice, * -negligible Source: FCIAnnual Reporj', 1994-95 Annex Table 1 12 Estimatcd Volume and Value of Physical Marketing Losses for Rice and Wheat in India, 1996/97 Est Volume of Marketed Est % Marketing | Est Public Sector Est Private Sector Total Marketing |___________ |Surplus -landled, million mt Losses Losses Losses Losses Foodgrain Public Private Total Public Private million mt $mllhon million mt $million million mt $milhon Wheat 14 10 24 1 25-2 0 4 0-50 | 0 18-0.29 25-41 0 39-0 48 54-68 0 6-0 8 79-108 Rice 14 14 28 1 25-2 0 4 0-5 0 0 18-0 28 32-51 0 57-0 71 102-128 0 7-1 0 134-179 Total 29 24 0 36-0 57 57-92 0 96-1 39 156-195 1 3-1 8 213-287 Assumptions (i) Marketed surplus assumed to be 35% of production (ii) Public sector handles 60% of wheat and 50% of rice marketed (ii) Market price of rice and wheat assumed at $180/mt and $140/mt, respectively (iv) Farm to market losses not included Source Adapted from K K S Chauhan, 1997, " A Study of Postharvest Losses in India", Report prepared for the Canadian Intemational Development Agency, New Delhi. India Annex Table 1 13 Rough Estimates of Costs of Foodgrain Policies, 1996-97 Item Monetary Value Rs million $ millionl/ Est Private Physical Losses 5,544 - 6, 929 156-195 Govemment Fiscal Cost FCI implicit interest rate subsidy 2/ 4,300 121 FCI Food subsidy 3/ 60,660 1,709 Notes 1/ Assumes Rs 35 5 to $1 2/ Estimate is for latest year available, 1994 3/ Includes sugar and other grains and subsidy to cover physical losses of FCI Source- K K S Chauhan, 1997, " A Study of Postharvest Losses in India", Report prepared for the Canadian Intemational Development Agency, New Delhi, India, World Bank, 1998c, "India 1998 Macro-Economic Update, Reforming for Growth and Poverty Reduction," ReportNo 18389-IN, Washington, D C - 43 - Annex Table 1.14 Central Government Food and Total Subsidy Expenditures, GDP at Factor Costs and Central Fiscal Deficit Rs Billion, 1980/81 to 1998/99 Year Food Subsidy GDP Food Subsidy Total Subsidiesl/ Food Subsidy over Fiscal Deficit Food Subsidy over over GDP Total Subsidies Fiscal Deficit Rs Billion Rs Billion % Rs Billion % Rs Billion % 80/81 6 5 1224 0 5% 20 32 1% 96 6 7% 81/82 7 0 1432 0 5% 19 36 1% 92 7 6% 82/83 7 1 1594 0 4% 23 31.4% 130 5 5% 83/84 8 4 1867 0 4% 27 30 4% 144 5 8% 84/85 11 0 2085 0 5% 40 27 3% 190 5.8% 85/86 16 5 2338 0 7% 48 34 4% 219 7.5% 86/87 20 0 2600 0 8% 55 36 7% 263 7 6% 87/88 20 0 2949 07% 60 33 4% 270 7 4% 88/89 22 0 3527 0 6% 77 28 5% 309 71% 89/90 24 8 4087 0 6% 105 23 6% 379 6 5% 90/91 24 5 4778 0 5% 122 20 2% 446 5 5% 91/92 28 5 5528 0 5% 123 23 3% 363 7 8% 92/93 28 0 6308 04% 120 23 3% 402 7 0% 93/94 55 4 7329 0 8% 127 43 7% 603 92% 94/95 51 0 8680 0 6% 129 39 4% 582 8 8% 95/96 53 8 10063 0 5% 134 40 2% 613 8 8% 96/97 607 11492 05% 161 376% 667 91% 97/982/ 75 0 12863 0 6% 196 38 2% 863 8.7% 98/992/ 90 0 14587 0 6% 220 40 9% 910 9.9% Average 90/91to 0 6% 34 1% 8 3% 98/99 I/Total Explicit subsidies include food, fertilizer, export promotion and market development debt relief to farmers, railways, mill- made cloth, handloom cloth, export/import of sugar interest, other subsidies 2/ estimates Source Union Budget Documents Annex Table 1.15. Andhra Pradesh Food Subsidy, Rs Billion, 1990/91 to 1995/96. Food Total Percent Share Subsidy Subsidy Food over Food Subsidy Total Subsidy Year [Rs Billion Rs Billion Total Subsidy Over GSDP Over GSDP 90/91 35 14 3 24% 10% 41% 91/92 4.2 17 5 24% 1 0% 4 2% 92/93 26 16 3 16% 0 6% 3 7% 93/94 3.9 18 9 21% 0 7% 3 6% 94/95 7.6 29 9 25% 1 3% 5.3% 95/96 12 4 39 8 31% 1.9% 6 0% Source World Bank, 1997, "Andhra Pradesh Agenda for Economic Reforms", Report no. 15901-IN, Washington, DC World Bank - 45 - Chapter 1 Annex Figures Annex Figure I I Regional Shares of Wheat Production, 1967/68 to 1995196 100% 2L 80%'_____ 60% 40% 20% cm0% 67/68 70/71 80/81 90/91 95/96 E North , East 0 Center E West g South Note North-Haryana,Punjab, UP, East-Assam, Bihar, Orissa, and WB, Center-MP, Rajasthan, West-Gujarat, Maharashtra, South-AP, Kamataka Source Directorate of Economics and Statistics, Agricultural Statistics at a Glance, various issues Annex Figure 1 2 Regional Shares of Rice Production, 1967/68 to 1995/96 g 100% en80%}1 t40%/ W u West a South Note North-Haryana,Punjab, UP, East-Assam, Bihar, Orissa, and WB, Center-MP, Rajasthan, West-Gujarat. Maharaslhtra, South-AP, Karnataka, Kerala, and TN Source Directorate of Economics and Statistics, Agricultural Statistics crt a Glance, various issues - 46 - Annex Figure 1 3 Rice Marketing Channel in India Farmers 82 million mt (rice) | Home custom [ rs Consumption 60-70% of prodn millng I mports 1 6 i | @ 5~~~~~~~~Exprt I -Public Agencies _ | 1 111 I EFo% if ~~~~~~~marketed rice) 9 m ll l l E ~~~~~~~Mkt |Wholesalers| l --Public~~~~~~~~~~~~~ ~ Exports - 47 - Annex Figure 1 4 Wheat Marketing Channel in India Farmers 69 million mt (wheat] Home custom Chakkis Consumption 4 65-70% of prodn milling -blc Setor50% te ; Ft'l t ~~~~~~~~~~~Wheat Flour Stt Foo d Sutpplics Dept 2= --1 Millers l er TPDS 1 Buffi r k Sales Wbolesalers||| Programs Xi- 4-X 3 ntmt m ll --Publhc Sector Chapter 2 Annex Tables Annex Table 2.1 Levy rates for procurement of rice in India (Percent) State Category 1983-84 1991-92 1992-93 1997-98 Andhra Pradesh Millers/Dealers 50 50 50 50 Assam Millers/Dealers 50 50 50 50 Bihar Millers 20-40 Nil Nil Nli Chandigarh/ Millers/Dealers 75-90 75 75 75 Delhi Gujarat Millers 33 3 _ 2 7 7 Haryana Millers/Dealers 75-90 75 75 75 Jammu & Millers Nil Nil Nil Nil Kashmir Karnataka Millers/Dealers 50 33 3 33 3 33 3 Kerala Millers x Nil Nil Nil Madhya Pradesh Millers 50% 25% (special mills)2' Orissa Millers 50 50 50 50 Pondicherry Millers/Dealers 50 20-30 20-30 20-30 Punjab Millers/Dealers 75-90 75 75 75 Rajasthan Millers/Dealers 50 50-75 50-75 50-75 Tamil Nadu Millers/Dealers 50 50 50 5 0b' Tripura Millers Nil Nil Nil Nil I Uttar Pradesh Millers/Dealers 60 40 60 40 (East UP) 60 (West UP) West Bengal Millers 40 50 30 30% Note x Graded levy on producers a! 25% levy applies to 12 rice mills under the "Registered Small Industries and Revival Scheme" of the Khadi Gramodyog Board b/Tamil Nadu promulgated monopoly purchase order of paddy in Kaveri Delta in 1996/97 Source- I GOT, Ministry of Agriculture, Directorate of Economics & Statistics, Bulletin on Food Statistics (Various issues) 2. Personal discussions with the Departnents of Food and Supplies of theGovernments of Punjab, Andhra Pradesh, Uttar Pradesh and West Bengal Annex Table 2 2a- Common Variety -Mimmum Support Price for Paddy and State Levy Rice Prices in Selected States, 1990/91 to 1997/98 _GOI PADDY MSP |State Levy Prices-Common Rice |MSP Rice Andhra Madya Uttar West Paddy MSP | EquivalentlI Pradesh Haryana Pradesh Orissa Raj asthan Punj ab Pradesh Bengal Year Rs/mt Rs/t Rsm Rs Rs/mt Rslmt Rs/mt Rsjmt Rs/mt 3 Rs/mt 90/91 2,050 3,060 3,360 3,480 3,350 3,450 3,410 3,470 3,310 3,230 91/92 2,300 3,433 3,880 3,970 3,830 3,950 3,890 3,960 3,780 3,700 92/93 2,700 4,030 4,540 4,630 4,490 4,630 4,550 4,630 4,410 4,440 93/94 3,100 4,627 5,210 5,370 5,150 5,310 5,230 5,350 5,030 4,900 94/95 3,400 5,075 5,670 5,820 5,480 5,780 5,680 5,850 5,580 5,340 95/96 3,600 5,373 5,990 6,230 5,780 6,050 6 120 6,290 6,040 5,760 96/97 3,800 5,672 6,770 6,720 6,250 6,540 6,630 6,780 6,510 6,230 97/98 4,150 6,194 7,350 7,290 6,790 7,100 7,200 7,370 7,070 6,760 1/ MSP Rice equivalent price = (Paddy MSP/milling recovery rate of 67%) Source CACP - 50 - Annex Table 2.2b: Common Variety -Official Milling Margin" as Percent of State Levy Price in Selected States, 1990/91 to 1997/98 Year Andhra PradehsP Punjab Uttar Pradesh West Bengal Haryana Orissa 90/91 8 9% 11 8% 7 6% 5 3% 12 1% 11 3% 91/92 11 5% 13 3% 9 2% 7 2% 13 5% 13 1% 92/93 11.2% 13 0% 86% 9 2% 13 0% 13 0% 93/94 11 2% 13 5% 8 0% 5 6% 13 8% 12 9% 94/95 10.5% 13.3% 91% 5 0% 12 8% 12 2% 95/96 10 3% 14.6% 11 0% 6.7% 13 8% 11 2% 96/97 16 2% 16.3% 12 9% 9.0% 15 6% 13 3% 97/98 15 7% 16.0% 12 4% 8 4% 15 0% 12 8% 1/ Milling margin = (State Levy Rice Price -Rice Equivalent of Paddy MSP); Rice equivalent price = (Paddy MSP/milling recovery rate of 67%) Source Computed Annex Table 2 2c: Fine Variety -Mimmum Support Price for Paddy and State Levy Rice Prices in Selected States, 1990/91 to 1997/98 GOI PADDY MSP State Levy Prices-Fine Rice MSP Rice Andhra Madya Uttar West Paddy MSP Equivalentl/ Pradesh Haryana Pradesh Orissa Rajasthan Punjab Pradesh Bengal Year Rs/mt Rs/mt Rs/mt Rs/mt Rs/mt Rs/int Rs/mt Rs/mt Rs/mt Rs/mt 91/92 2,400 3,582 4,030 4,250 3,990 4,110 4,150 4,250 3,930 3,890 92/93 2,800 4,179 4,700 4,940 4,640 4,790 4,820 4,940 4,570 4,530 93/94 3,300 4,925 5,520 5,800 5,460 5,630 5,670 5,840 5,340 5,330 94/95 3,600 5,37:1 5,990 6,320 5,780 6,100 6,130 6,350 5,890 5,780 95/96 3,750 5,597 6,230 6,460 6,010 6,280 6,360 6,530 6,280 5,980 96/97 3,950 5,896 6,750 97/98 4,450 6,642 7,840 7,780 7,250 7,580 7,680 7,860 7,550 7,210 Source- CACP Annex Table 2 2d- Fine Variety -Official Milling Margin" as Percent of State Levy Price in Selected States, 1990/91 to 1997/98 Year AP Punjab UP WB Haryana Orissa 91/92 11 1% 15.7% 89% 79% 157% 128% 92/93 11.1% 154% 8.6% 77% 154% 12.8% 93/94 10.8% 15 7% 7 8% 7 6% 15 1% 12 5% 94/95 10.3% 15 4% 8.8% 7 0% 15 0% 11 9% 95/96 10.2% 14.3% 10 9% 6 4% 13 4% 10 9% 96/97 97198 153% 15.5% 12.0% 7.9% 14 6% 12 4% 1/ Milling margin = (State Levy Rice Price -Rice Equivalent of Paddy MSP); Rice equivalent price = (Paddy MSP/milling recovery rate of 67%) Source Computed. - 51 - Annex Table 2 2e Fair Price Shop Level Prices Of Foodgrains In Various States / Union Territories (Position As On 1/2/94), Rs/kg Public Distribution System Revamped P.D.S. No. State/UT Wheat Rice Wheat Rice Common fine superfine Common fine super fine I Andhra Pradesh 4 45a _ 6.5 6 8 3.9 5 12 5.92 6 23 (White Cards) 2 2 00d ,(Pink Cards) =__ 6 5 6 8 5 12 5 92 6 23 2 Arunachal Pradesh 3 77 5 12 5 92 6 23 3 77 512 5.92 6 23 3 Assam 5 06 5 95 6.83 7 17 5 1 4 Bihar (< 5km) 4 57 6 07 6.89 7 25 3 77 512 5.92 6 23 (6-16km) 458 608 69 726 5 Delhi 4 27 5 73 6.57 6 9 6Goa 43 57 655 685 377 512 592 6.23 7 Gujrat 4.9 6 6 7.6 8 3.77 5 12 5.92 6.23 S Haryana 4 22 6 92 3 77 6 22 9 Himachal Pradesh 4 32 7 35 3 77 512 6 23 I0 Jammu and Kashmir 4.37 6 05 7 25b 3 77 5 12 6.23 (Atta) 4 67 3 88 I I Kamataka (Urban) 4 45 5 95 6 75 7 05 _ =____ (Saffron Cards) 4 45 5 95 6.75 7 05 3 95 5 35 6.15 6 45 (Tricolor Cards) 3 45 5 1 5.35 5 45 3 45 5 1 5.35 5.45 12 Kerala 4 38 5 75 6.56 6 87 3 85 5 2 6 6 31 13 Madhya Pradesh 4 6 6 6 8 7 15 3 77 5 12 5.92 6 23 14 Maharashtra 5 6.6 7 5 7 9 3 4 4 5 2 5 5 _ ___ ________ ________ 4 6 7 7 25 15 Manipur 4 21 6 6 86 7.2 5 12 5.92 6 23 16 Meghalya 4 1 5 4 6 2 6 5 6 38e 6 18 6 49 17 Mizoram 3 52 5 12 5.92 6.23 3 52 5 12 5 92 6 23 18 Nagaland 19SOrissa 4 7 6 22 7 09 7 43 3 77 5 12 5 9 6 23 20 Punjab 4 05 6 79 (Atta Loose) 4 59 (Ata Packed) 4 89 21 Rajasthan 4 45 5 9 6 7 7 3 85 5 25 6 1 6 4 22 Sikkim 4 35 5 7 6 53 6 85 41 5 33 6 13 6 45 23 Tamil Nadu 4 5 2 5 3.75 3.75 3 8 2 25 3 75 3 75 24 Tripura 4 55 5 9 6 7 7 4 05 5 4 6 2 6 5 25 Uttar Pradesh 4 5 6 69 7 21 3 77 5 12 5 92 6 23 26 West Bengal 4 55 5.9 6 8 7 15 3 77 5 12 5 92 6 23 27 A &N Islands 4 7 6.2 71 7 4 3 77 5 12 5 92 6.23 28 Chandigrah 4 51 6 85c (Atta Packed) 4 82 295D & N Haveli 4 51 6 23 3 77 6 23 30 Daman and Diu 4 15 6.63 4 15 6.23 31 Laskdeep 32 Pondicherry 4 27 5 55 6 35 6 65 Mahi 4 37 5 66 6 47 6 79 Yanam 4 35 5 85 6 7 7 05 I Central Issue Price 4 02 5 37 6.17 6 48 3 52 4 37 5 67 5 98 Note- a - for all card holders b - variety not mentioned c - With effect from 1/4/1995 d - all varieties e- wholly tribal states Source National Institute of Agricultural Marketing, 1997, 4gricultural Marketing StatisticalAlbstract 1997, Jaipur, Rajasthan NIAM - 52 - Annex Table 2.2f PDS and Open Market Prices of Rice and Wheat 1986/87 RICE State Rural Ratio Ulrban Ratio of PDS OMP PDS/OMS PDS OMP PDS/OMS AndhraPradesh 2.03 3.15 0.64 2.15 3.51 0.61 Assam 2.35 3.54 0.66 3.83 Bihar 2.97 3.58 0.83 2.9 3.85 0.75 Gujrat 2.45 4.05 0.60 2.62 4.64 0.56 Haryana 3.14 4.2 0.75 3.28 4.19 0.78 Jamnmu and Kashmir 2.61 3.41 0.77 2.5 3.63 0.69 Karnataka 2.21 3.67 0.60 2.67 4.14 0.64 Kerala 2.74 4.16 0.66 2.77 4.13 0.67 Madhya Pradesh 2.4 3.12 0.77 2.95 3.64 0.81 Maharashtra 2.99 3.38 0.88 3.02 4.24 0.71 Orissa 2.74 3.07 0.89 3.26 3.27 1.00 Punjab 3.61 2.95 4.18 0.71 Rajasthan 2.87 4.34 0.66 2.88 4.81 0.60 Tamil Nadu 2.35 3.83 0.61 2.39 4.11 0.58 Uttar Pradesh 2.95 3.04 0.97 2.78 3.69 0.75 West Bengal 2.71 3.57 0.76 2.92 4.04 0.72 Central Issue Prices 2.39 2.39 WHEAT State Rural Ratio of Urban Ratio of PDS OMP PDS/OMS PDS OMP PDS/OMS AndhraPradesh 2.27 2.97 0.76 2.19 3.16 0.69 Assam 0.73 2.93 0.25 2 97 4.57 0.65 Bihar 1.85 2.38 0.78 2.()9 2.51 0.83 Gujrat 1.79 2.53 0.71 1.98 2.62 0.76 Haryana 2.04 2.02 Jammu and Kashmir 2.09 2.21 0.95 2.0)5 2.55 0.80 Karnataka 1.79 2.81 0.64 2 01 3.17 0.63 Kerala 2.2 3 (.73 2.18 3.18 0.69 Madhya Pradesh 2.18 2.24 0.97 2.21 2.37 0.93 Maharashtra 2.2 2.8 0.79 2.2 3.07 0.72 Orissa 2.25 2.32 0.97 2.25 2.61 0.86 Punjab 2 1.92 1.04 2.03 Rajasthan 1.77 2.2 0.8( 2 11 2.28 0.93 Tamil Nadu 2.15 2.84 0.76 2.08 3.24 0.64 Uttar Pradesh 2.14 2 1.07 2.06 West Bengal 2.08 2.52 0.83 2.23 2.5 0.89 Central Issue Prices 1.9-1.95 1.9-1.95 Source: R. Radhakrishna and K. Subbarao, 1997, "India's Public Distribution System, A National and International Perspective" World Bank Discussion Paper 380, Washington, D.C. World Hank. - 53 - Annex Table 2.3: Agricultural Produce Markets Acts in force in various States of India Name of the State The Act in lorce Remarks Andhra Pradesh The Andhra Pradesh (Agricultural As amended in 1971, 1977, Produce and Livestock) Markets 1979 and 1980 Act, 1966 (A.P. Act 16 of' 1966) Assam The Assam Agricultural Produce Received the President's Market Act. 1972 (Assanm Act assent in Sept. 1974 XXIII of 1974) Bihar The Bihar AgricuIltural Pioduce As amended in June 1983 Markets Act. 1963 (Bihar Act XX of 1964) Himachal Pradesh The Himachal Pradesh Agriculttiral Produce Markets Act, 1969 (H.P Act X 9 of 1970) Gujarat The Gujarat Agricultural Produce As amended in June 1965 Markcts Act, t9h3 (Gujaiat Act XVI of 1960) Karnataka The Karnataka Agricultural Prnduce As amended in 1969, 1970, Marketing (Regulations) Act. 1966 and 1980 (Karnataka Act No. 27 of 1966) Madhya Pradesh The Madhya Pradesh Krishi tlpaj As amended in 1974. 1979 Mandi Adhinivamn, 1972 (M.P. Act No. 24 of 1974) Maharashtra The Maharashtra Agril. Prodttce As amended in 1974, 1975, Marketing (Regulation Act, 1963) 1976, 1977. Further amend- (Maharashtra Act XX of 1964) ment is in progress Orissa The Orissa Agricultural Produce As amended in 1962, 1963, Markets Act, 1956 (Orissa Act 3 1966, 1969, 1970, 1971 and of 1957) 1974 Punjab (Extends Punjab Agricultural Produce Markets As amended in 1961, 1962, to Punjab and Act, 1961 1966, 1969, 1970, 1971 and Haryana 1974. Adopted in 1974. Rajasthan The Rajasthan Agricultural Produce Market Act, 1961 Tamil Nadu The Tamil Nadu Agricultural Produce Markets Act, 1956 (Tamil Nadu Act 23 of 1959) Uttar Pradesh The Uttar Pradesh Krishi Utpadan As amended in 1973, 1977 Mandi Adhiniyam, 1964 (U.P. Act and 1978 No. XXV of 1964) West Bengal The West Bengal Agricultural Produce Marketing (Regulation Act, 1972) Kerala Thle State has not enacted Agril. Produce Marketing Regulation Act as yet Hlowever. Market Regulation is in force for markets oftthe State under the Madras Commercial Crops Act, 1933. l'hese four markets are located in Malabar reeion of this State whicih was formerly part of the erstwhile Madras State - 54 - Annex Table 2 4 Market fee and Commission charges for foodgrains in market yards in India State Rate of market Fee Market Fee Whether Single or Commission charges (Percentage or ad levied from Buyer/ Multi point levy Commission Person valorem) Purchaser or or non- Rate (% of charged specified sales value) Andhra Pradesh 1 00 Ag produce Buyer single 2 00 seller Assam 1 00 Buyer Multi N A N A Bihar 100 NA NA NA NA Chandigarh U T I 00 Grain Buyer Single N A N A Delhi 1 00 Ag produce Buyer - N A N A Goa 1 00 Buyer/seller Single N A Purchaser Gujarat I 00 Ag produce Buyer -do- N A Haryana 2 00 Non specified -do- 2.00-5 00 Buyer Himachal Pradesh 1 00 Buyer -do- N A N A Karnataka 1 00 Ag produce Buyer Single 2 00 Agril Buyer Madhya Pradesh 1 00 Buyer -do- N A N A Maharashtra 1 00 Buyer -do- N A N A Orissa 1 00 ag produce Buyer Single N A N A Pondicherry 0 70 Buyer -do- N A N.A Punjab 2.00 Buyer -do- 2 50 Ag Purchaser produce Rajasthan 1 60 Buyer Single 175 Agril V Purchaser Tamilnadu 1 00 Buyer Single N A N A Uttar Pradesh 2 00 Seller Multi N A N A West Bengal 0 50 Buyer Single N A N A N A = Not available Source I State/U T Agricultural marketing Boards/Directorates/Departments of Agriculture as given in GOI, NIAM, Agricultural Marketing - Statistical Abstract, Jaipur 1997 2 State Agricultural Marketing Boards of the States of Punjab, U.P and Andhra Pradesh Annex 2 Sa Import Tariffs and Quantitative Restrictions on Foodgrain Trade Tariffs, June 1998 GATT Tariff Quantative Restrictions ttem _ Binding Imports Exports Wheat Durum (hard) wheat 0% 100% Canalized-FCI, Restricted ________________ lsporadically lifted sporadically Other Wheats 0% 100% Canalized-FCI, Restricted sporadically lifted Wheat Flour 24 2% 100% Restricted as consumer goods Rice (excl Basmati) Paddy 0% Canalized-FCI, Restricted sporadically lifted Brown rice 0% Canalized-FCI, Restricted sporadically lifted Semi-milled & milled rice 0% 0% Canalized-FCI, Restricted sporadically lifted Broken rice 0% Canalized-FCI, Restricted sporadically lifted Rice flour 45 8% Restricted as consumer Restricted _________________________ _ goods Agric Silos 55 55% Free Source: Academy of Business Studies, 1998, Easy Reference, Customs Tariffs 1998-99, 14th Budget Edition, New Delhi Academy of Business Studies - 55 - Annex Table 2 5b Rice and Wheat Exports 1991/92 to 1996/97 Year Basmati Non-Basmati Wheat 000 mt Rs million 000 mt Rs million 000 mt Rs million 91/92 na 4 99 na 2 56 na 1.27 92/93 na 8 00 na 1 75 na 0.10 93/94 527 10 61 240 2 25 0 35 94/95 442 8 65 448 3 40 86 6 0 42 95/96 373 8 51 4540 37 17 632 5 3 67 96/97 na 1198 2000 1953 0 6.80 Note na - not available, * - negligible Source CMIE, 1997, Foreign Trade, National Institute of Agricultural Marketing, 1997, Agricultural Marketing Statistical A bstract Annex Table 2.6: Schedule of specifications for paddy Grain Quality Criteria Max Limit Foreign matter a) Inorganic 1% b) Organic 1% Damaged, discoloured, sprouted and weevilled grains 3%Oo Immature, shrunken and shrivelled grains 3% Admixture of lower classes 10% Moisture 18% Note: 1. The definitions of the above constituents and method of analysis are to be followed as per BIS method of analysis in Food Grains IS 4333 (Part-I), IS 4333 (Part-1I)-1967 and Tenninology for Foodgrains IS 2813-1970, as amended from time to time 2 The method of sampling is to be followed as per Bureau of Indian Standards method for sampling of Cereals and Pulses IS 28-14-1964 as amended from time to time 3 Within the overall limit of 1 0% for organic foreign matter, poisonous seeds shall not exceed 0 5% of which Dhatura and Akra seeds (vicia species) not to exceed 0.025% and 0 2% respectively Source Food Corporation of India - 56 - Annex Table 2 7 Schedule of specifications for Rice, 1997-98 Grain Quality Characteristics Maximum limits (/) Grade A' Common Brokens Raw 240 300 Parboiled 15 0 17 0 Foreign matter Raw/Parboiled 0 5 0 5 Damaged/Slightly damaged Raw 3 5 3 5 Parboiled 4 0 4 0 Discoloured grains Raw 3 5 35 Parboiled 8 0 8 0 Chalky grains Raw 6 0 6 0 Red grains Raw 3 0 3 0 Parboiled 4 0 4 0 Admixture of lower classes Raw/Parboiled 14 0 Dehusked grains Raw/Parboilec. 10 0 10 0 Moisture content Raw/Parboiled 14 0 14 0 Note I The Method of sampling to be followed is as given in Bureau of Indian Standard "Method of Sampling of Cereals and Pulses" No IS 2814-1964 as amended from time to time 2 Brokens less than 1/8th of the size of full kernels will be treated as organic foreign matter With the overall limit for brokens. the small brokens of the size of 1/8th to 1/4th shall not ex ceed 1 0% For determination of the size of the brokens average length of the pi incipal class of rice should be taken into accounts 3 Inorganic foreign matter shall not exceed 0 5% in any lot, if it is more, the stocks should be cleaned and brought within the limit Kernels or pieces of kernels having mud sticking on the surface of rice, shall be treated as inorganic foreign matter 4 In case of rice prepared bv pressure parboiling technique, it will be ensured that correct process of parboiling is adoptcd i e pressure applied. the time for which pressure is applied, propel- gelatinisation, aeration and drying before milling are adequate so that the colour and cooking time of parbolled rice are good and free from encrustration of the grains Source Food Corporation of India - 57 - Annex Table 2.8 :Schedule showing the maximum permissible limits of different constituents in FAQ wheat Foreign Other food Damaged grains include Kanal Slightly Shrivelled & broken Matter (%) Grains (%/o) Bunt and affected grains (%) Damaged grains (%) 075 5 3 8 10 Note: 1. Moisture in excess of 12% up to 14% will be discounted at full value. Stocks containing moisture content in excess of 14% are to be rejected 2. Within the overall limit specified for foreign matter the poisonous weed seed shall not exceed 0 4% of which Dhatura and Akra (Vicia species) shall not be more than 0.025% and 0 2% respectively. 3. Kernels with glumes will not be treated as unsound grains during physical analysis the glumes will be removed and treated as organic foreign matter 4. Within the overall limit specified for damaged grains, ergot affected grams shall not exceed 0 05%. 5 In case of stocks having living infestation a cut at the rate of Rupee one per quintal may be charged as fumigation charges 6 For weeviled grains determined by count, following price cuts will be imposed i. From the beginning of the season till end of August, the rate of cut will be Re.l 00 per qtl, for every 1% or part thereof ii From lst September till end of October, no cut will be imposed up to 1% while for any excess, the cut will be @ Rs.1/- per qtl., for every 1% or part thereof iii From Ist November till end of the season no cut will be imposed up to 2% while for any excess the cut will be @ Re 1 00 peqtl., for every 1% or part thereof iv Stocks containing weavilled grains in excess of 3% will be rejected Method of analysis to be followed is as given in Bureau of Indian Standard No 15 4333 (Part I and 11) 1967 and as amended from time to time except for weevilled grains which are to be determined by count method Foreign matter includes organic and inorganic matters. The inorganic matter will include sand, gravel, dirt, pebbles, stones, animal filth, lumps of earth, clay and mud, glass and metallic pieces etc. The organic matter will include chaff, weed seeds, straw and other inedible grains Shrivelled grains are kamals or pieces of kemels that are not fully developed Brokens constitute pieces of kemels that are less than three fourth of the size of full kemel.Weevilled grains denote kemels that are partially or wholly bored Slightly damaged grains will be those kernels or pieces of kernels that are sprouted or internally damaged as a result of heat, microbes, moisture or weather Other foodgrains mean any foodgrains other than wheat Source Food Corporation of India Annex Table 2.9: Transport of Foodgrains, 1992-93 to 1994-95, ('000 mt) Movement from Year 1992-93 1993-94 1994-95 1995/96a (b) By Rail Punjab 8,940 8,710 7,160 Haryana, Uttar Pradesh and Rajasthan 4,020 5,060 4,510 Andhra Pradesh and Madhya Pradesh 2,070 2,610 3,040 Other States 710 650 970 Ports (Imports) 1,380 430 - Total Rail 17,120 17,460 15,680 15,895 (b) By Roadb Punjab, Haryyana, Uttar Pradesh & Madhya Pradesh 1,750 1,670 1,090 817 (c) Riverine movement 30 30 20 Grand Total 18,900 19,160 16,790 16,712 Inter-State 14,726 Intra-State 1,986 Note: a - April to December 1996 B-To J&K, H P, Delhi, Assam, N E.F and ports for export Source FCI, Annual Report, 1993-94 and 1994-95; MOF, 1997, Annual Report 1996-97 - 58 - Annex Table 2 10 FCI Foodgrain Stocks and Minimum Buffer Stock Norms,1993-1998. million mt Beginning of Wheat Rice Total Wheat and Rice the month jMin Norm Act Stock |% Act/Mm Mm. Norm lActual Stock |%Act/Mm Mm Norm Actual Stock |%Act/Mmn January--1993 77 33 43% 77 8.5 110% 154 11 8 77% April 3 7 2 7 73% 10 8 9 9 92% 14 5 12 6 87% July 13 1 149 114% 92 93 101% 223 242 109% October 10 6 13 7 129% 6.0 7 2 120% 16 6 20 9 126% January--1994 77 108 140% 77 112 145% 154 220 143% April 3 7 70 189% 108 135 125% 145 205 141% July 13 1 17 5 134% 9 2 13 3 145% 22 3 30 8 138% October 10 6 15 6 147% 6 0 10 9 182% 16 6 26 5 160% January --1995 7 7 12.9 168% 7 7 17 4 226% 15 4 30 3 197% April 3 7 8 7 235% 10 8 18 1 168% 14 5 26 8 185% July 13 1 192 147% 92 164 178% 223 35 6 160% October 106 169 159% 60 130 217% 166 299 180% January--1996 7 7 13 1 170% 7 7 15 4 200% 15 4 28 5 185% April 3 7 7 8 211% 10 8 13 1 210% 14 5 20 9 144% July 13 1 14 1 108% 9 2 12 9 140% 22 3 27 0 121% October 106 105 99% 60 93 155% 166 198 119% January--1997 77 71 92% 77 129 168% 154 200 130% April 3 7 3 2 86% 10 8 13 2 122% 14 5 16 4 113% July 131 114 87% 92 110 120% 223 224 100% October 106 83 78% 60 70 t17% 166 153 92% January --1998 (P) 7 7 6 7 87% 7 7 115 149% 15 4 18 2 118% April 3 7 5 1 138% 10 8 13 0 120% 14 5 18 1 125% Note P - provisional Source GOI, 1998, Economic Survey1997-98 - 59 - Annex Table 2 11 FCI Rice and Wheat Procurement, Stocks as of July 1, and PDS Distribution, 1971 to 1997 Procurement, OOOmt Stocks, 000 mt Distribution 000 mt Year Rice Wheat Total Rice Wheat Total Rice Wheat Total 71 3197 5101 8298 1,986 5,826 7,812 2050 4283 6333 72 3116 5024 8140 2,408 6,152 8,560 2403 7026 9429 73 2706 4531 7237 1,218 3,087 4,305 1715 7048 8763 74 3887 1955 5842 1,626 2,145 3,771 1828 5725 7553 75 3795 4098 7893 1,593 4,210 5,803 1510 7411 8921 76 6322 6618 12940 5,120 11,659 16,779 2096 4525 6621 77 4432 5171 9603 5,592 14,642 20,234 2968 5887 8855 78 4853 5470 10323 6,577 12,229 18,806 2087 6635 8722 79 6334 8000 14334 9,627 11,728 21,355 2854 7185 10039 80 3851 5866 9717 7,090 9,003 16,093 5194 8655 13849 81 5609 6590 12199 5,839 7,733 13,572 5443 6382 11825 82 7334 7725 15059 5,119 10,181 15,300 6051 6997 13048 83 7047 8272 15319 3,781 13,013 16,794 6772 7878 14650 84 7731 9311 17042 4,621 17,813 22,434 5885 6282 12167 85 9863 10355 20218 7,758 20,739 28,497 6095 9084 15179 86 9876 10536 20412 9,262 18,890 28,152 7675 10957 18632 87 9157 7880 17037 8,349 14,860 23,209 8747 12522 21269 88 6902 6535 13437 4,159 7,552 11,711 8880 10104 18984 89 7730 8942 16672 3,911 9,502 13,413 7289 7339 14628 90 11867 11066 22933 7,480 13,201 20,681 7894 6609 14503 91 12676 7752 20428 9,859 12,037 21,896 9846 8947 18793 92 10198 6380 16578 8,310 6,730 15,110 9509 8234 17743 93 12281 12840 25121 10,442 15,220 25,662 9203 5495 14698 94 13421 11870 25291 13,300 17,500 30,800 9489 9147 18636 95 9950 12330 22280 16,400 19,920 36,320 96 12,690 13,820 26,510 97 _ 9,460 10,990 20,450 Source: Rice and wheat procurement-Bulletin on Food Statistics, various issues, Ministry of Food, Stocks - GOI, Agricultural Statistics at a Glance 1997, Distribution-wheat and rice issue from Central Pool 1971 to 1988 Statistical Panorama 1990, FCI, 1989 to 1991 MOA, Bulletin of Food Statistics, various issues, 1992 to 1997 Ministry of Food. Annex Table 2.12Central Government Expenditure on Foodgrain Subsidy and Carrying Cost of Cereals Foodgrain Subsidy Carrying Cost Total Foodgrain GDP at % Subsidy/ Year Rice Wheat Buffer Stocks Subsidy Factor Cost GDP Rs million Rs million Rs million Rs million Rs billion 90/91 10353 10365 4762 25480 4778 0 5% 91/92 13904 15017 4327 33248 5528 0 6% 92/93 14141 18096 4507 36744 6308 0 6% 93/94 15626 16112 12453 44191 7319 0 6% 94/95 8329 15178 18535 42042 8583 0 5% Source: FCI Performance Budget, cited in Radhakrishna and Subbarao 1997 - 60 - Annex Table 2 13 FCI Foodgrain Distribution Cost Per Unit (Constant 1990 Rupees) and Cost Item Percent Shares, 1980/81 to 1994/95 Five Year Average Distribution Unit Average Annual Expense Costs and Cost Item Percent shares Rate of Growth Category 80/81-84/85 185/86-89/90 90/91-95/95 80/81-94/95 Total Cost Rs/mt 778 837 842 0.8% Freight 277 336 295 0 6% Interest 202 191 252 2 1% Handling expenses 61 80 83 3 1% Admn Overheads 50 68 80 4 8% Storage charges 57 89 70 21% Transit shortages 104 58 52 -7 2% Storage shortages 26 14 12 -8 2% Percent Shares Freight 36% 40% 35% Interest 26% 23% 30% Handling expenses 8% 10% 10% Admn Overheads 6% 8% 9% Storage charges 7% 11% 8% Transit shortages 13% 7% 6% Storage shortages 3% 2% 1% Rice & Wheat Issued by Central Pool, million mt 13.1 17.7 16.4 2.3% Source Food Corporation of Indiia. Annual Report, various issues Annex Table 2 14 FCI Wheat Procurement Cost per Metric Ton (Constant 1990 Rupees) and Cost Item Percent Shares, 1980/81 to 1994/95 Five Year Average Distribution Unit Costs and Average Annual Expenditure Cost Item Percent shares Rate of Growth Item 80/81-84/85 85/86-89/90 90/91-95/95 80/81-94/95 Total Cost, Rs/mt 1990 rupees 445.43 458.54 571.74 1.8% Mandi charges 77 34 74 41 97 81 1 9% Costofgunny 12388 13795 12864 01% Sales/Purchase Tax 91 57 85 37 79 39 -1 8% Storage charges 1031 1695 1372 1 1% Interest charges 46 09 48 74 50 12 -0 1% Mandi Labour 20.54 21 47 21 67 -0 3% Forwarding charges 12.94 7 63 5 40 -8 3% Internal Movement 40 07 41 82 54 04 3 3% Est /Admin charges 22.43 23 90 41 10 49% Others 0.26 0 18 3 98 na Arrears of Purchases 0 00 0 11 75 85 na Percent Shares Mandl charges 17% 16% 17% Cost of gunny 28% 30% 23% Sales/Purchase Tax 21% 19% 14% Storage charges 2% 4% 2% Interest charges 10% 11% 9% Mandi Labour 5% 5% 4% Forwarding charges 3% 2% 1% Internal Movement 9% 9% 9% Est /Admin charges 5% 5% 7% Others 0% 0% 1% Arrears of Purchases 0% 0% 13% Note Current values deflated using GDP deflator Source Food Corporation of IndTa, Annual Reports, various issues - 61 - Annex Table 2 15 FCI Rice Procurement Cost Per Metric Ton (Constant 1990 Rupees) and Cost Item Percent Shares. 1980/81 to 1994/95 Five Year Average Distribution Unit Costs and Average Annual Expenditure Cost Item Percent shares Rate of Growth Item 80181-84/85 85/86-89/90 90/91-95/95 80/81-94/95 Total Cost, Rs/mt 1990 rupees 215.25 197.16 244.63 1.5% Cost of gunny 140 55 125 83 122 47 -1 0% Sales/Purchase Tax 24 71 25 97 2426 -1 0% Slorage charges 0 72 0 76 0 03 -0 5% Interest charges 4 65 4 46 2 27 -6 7% Forwarding charges 15 94 19 30 24 82 4 4% Internal Movement 11 72 6 84 10 30 -0 9% Est /Admin charges 18 91 13 85 18 12 15% Others 2 08 0 15 0.20 na Arrears of Purchases 0 00 0 00 42 16 na Percent Shares Cost of gunny 65% 64% 50% Sales/Purchase Tax 11% 13% 10% Storage charges 0% 0% 0% Interest charges 2% 2% 1% FDrwarding charges 7% 10% 10% Internal Movement 5% 3% 4% Est /Admin charges 9% 7% 7% Others 1% 0% 0% Arrears of Purchases 0% 0% 17% Rice Procurement, million mt 6.04 8.71 12.09 6.1% (including paddy) Note Current values deflated using GDP deflator Source Food Corporation of India. Annual Reports, various issues Arnex Table 2 16 FCI Paddy Procurement Cost Per Metric Ton (Constant 1990 Rupees) and Cost Item Percent Shares, 1980/81 to 1994/95 Five Year Average Distribution Unit Costs and Average Annual Expenditure Cost Item Percent shares Rate of Growth Item 80/81-84/85 85/86-89/90 90/91-95/95 80/81-94/95 Total Cost, Rs/mt 1990 rupees 424.04 514.55 466.14 1.6% Mandi charges 80 90 80 93 122 12 4 1% Costofgunny 15532 18850 15730 05% Sales/Purchase Tax 101 54 138 65 9427 0 0% Storage charges 0 04 0.00 0 00 0 0% Interest charges 0 04 0 00 0 00 0 0% Mandi Labour 18 60 16 66 18 24 0 0% Forwarding charges 3 63 4 33 4 90 1 5% Internal Movement 63 98 85 49 67 41 2 1% Est /Admin charges 0 00 0 00 0.00 0 0% Olhers 0 00 0 00 1 90 0 0% Arrears of Purchases 0 00 0 00 0 00 0 0% Percent Shares Mandi charges 19% 16% 26% Cost of gunny 37% 37% 34% Sales/Purchase Tax 24% 27% 20% Storage charges 0% 0% 0% Interest charges 0% 0% 0% Mandi Labour 4% 3% 4% Forwarding charges 1% 1% 1% Internal Movement 15% 17% 14% Est /Admin charges 0% 0% 0% Others 0% 0% 0% Arrears of Purchases 0% 0% 0% Paddy Procured, 2.71 2.90 na -0.1%a/ milllhion mt a' 1980/81 to 1991/92 Note Current values deflated using GDP deflator Source Food Corporation of India. Annual Reports, various issues - 62 - Annex Table 2 17 FCI Buffer Stock Cost Per Metric Ton (Constant 1990 Rupees) and Cost Item Percent Shares, 1980/81 to 1994/95 Five Year Average Distribution Unit Costs and Average Annual Rate Expenditure Cost Item Percent shares of Growth Item 80/81-84/85 85/86-89/90 90/91-95/95 80/81-94/95 Total Cost, Rs/mt 1990 rupees 788 638 768 -0.1% Storage charges 153 271 216 3 5% Interest 397 218 361 -2 5% Admn. Overheads 40 51 60 4 5% Freight 48 55 62 3 0% Handling expenses 55 0 20 Storage shortages 74 42 45 -4 8% Transit shortages 20 0 3 Percent Shares Storage charges 19.4% 42 5% 28 2% Interest 504% 34 1% 47.0% Admn Overheads 5 1% 8 1% 7 8% Freight 7 0% 0 0% 2 7% Handling expenses 6 1% 8 7% 8.1% Storage shortages 9 4% 6 6% 5 8% Transit shortages 2 5% 0.0% 0 4% Ave. Buffer Stocks, July 1st 19.32 19.43 25.96 3.5% Note Current values deflated using GDP deflator. Source Food Corporation of India, Annual Reports, various issues. Annex Table 2 18a Official Estimates of Foodgrain Losses in Transport and Storage, 1989-90 to 1994-95 Year Transport Storage Total Volume, 000 mt Percenta Volume, 000 mt Percentb Volume, 000 mt 1989-90 1 28 0 17 1990-91 1.67 0.29 1991-92 410 1 88 180 0.39 590 1992-93 350 1 65 150 038 500 1993-94 260 1 21 160 037 420 1994-95 220 1 18 160 040 380 1995-96c 260 1 28 140 0 53 400 Note a- Expressed as percentage of quantity moved b- Expressed as percentage of quantity issued C- preliminary Source FCI, Annual Report, 1993-94, p.25 and 1994-95, p 25, MOF, Annual Report 1996-97 - 63 - Annex 2.18b FCI Statewise Percentage Storage Losses, 1993/94 to 1995/96 State/Region Wheat Rice Paddy (in term of Rice) 93/94 94/95 1 95/96 93/94 1 94/95 1 95/96 93/94 1 94/95 1 95/96 Jammu&Kashmir 0.23 0 05* 0 04* 0 50 0 50 0.30 - - - Punjab 0.20* 0.10* 0 10* 1 56 1.84 2.34 2 14 2 02 3 54 Haryana 0.36* 0 15* 0 12* 0 66 1 28 1 10 1 56 1 54 2 19 Uttar Pradesh 0 36* 0 54* 0 68* 1 36 1 83 1 90 6 89 14 32 39 56 Delhi 0 12* 0 03* 0 18 0 68 1.80 2 02 - Rajasthan 0.16* 0 22* 003* 0 95 1 22 1 69 0 87 1 78 3 25 Himachal Pradesh 0 09* 0.10* 0 09* 0 00 0 13 0 17 - Tamil Nadu 0 13* 0 03* 0 05* 0 32 0 41 0 26 2 60 73.91 3.78 AndhraPradesh 015* 003* 008 033 039 031 1.76 102 258 Karnataka 0 04 002* 004 038 036 024 - 119 Kerala 037* 032* 021* 016 0.14 021 PO Madras 009 143* - 044 030 451 PO Vizag 0 58* 028* 003 003 036 0 10 Madhya Pradesh 0.05* 0 17* 0 01* 0.80 0.93 0.91 - - 100 00 Maharashtra 0 10* 0 05* 0 08 0 81 0.77 0 69 - Gujarat 021 020 0.29 1 53 1.06 0 71 P.O. Kandla 0 14* 0 32* 0.16 1 98 0.42 0 12 - - - P.O. Calcutta 0.06 0 37 0 42 0 23 2.39 0 82 - - - Assatn - 0 11 0 04 0.44 0.66 0 50 18 21 10.10 - Bihar 034 055 051 09 220 19 - 202 2.21 Orissa 0.18 0 13 0.12 0 93 1 34 0 60 2.45 - 2.04 NEF 0 02 0 02 0 03 0 14 0.14 0 09 - - - W Bengal 028 028 019 107 064 084 - - 41 18 AlIIndia*** 015* 008 005* 075 085 0.89 210 198 329 Note * - Storage gain due to moisture gain, ** - All India average loss estimated by dividing total foodgrain losses in all states by total quantity stored Source: Food Corporation of India, cited in K K S. Chauhan, 1997, " A Study of Foodgrain Postharvest, Losses in India" India-Canada Cooperation Office, New Delhi, India, Annex 2. - 64 - Annex 2 18c FCI Statewise Percentage Transit Losses, 1993/94 to 1995/96 State/Region Wheat Rice Paddy (in term of Rice) 93194 1 94/95 95/96 93/94 94/95 95/96 93/94 94/95 95/96 Jammu&Kashmir 022 0 42 0 59 0.80 0.65 0 73 - - - Punjab 018* 029 161* 043 000 089 536 1230 644 Haryana 008* - 039001* 015 048 - 068 074 UttarPradesh 1 04 1 23 0 78 1.01 1 18 0 78 Delhi 1 39 1 65 1 64 1 36 1 73 1 44 Rajasthan 0 54 1 63 0 30 1 29 1 10 1 37 0 05 1 46 Himachal Pradesh 0 03* - 0 04* 001* 0 06 0 07 Tamil Nadu 1 15 1 15 1 38 0 52 0 56 1 24 AndhraPradesh 1 08 1 00 1 29 1 49 1 15 073 027 023 0 12* Karnataka 1 05 1 10 1 19 1 33 1 12 1 35 0 76 Kerala 0 67 1 03 1 15 1 07 0 78 0 92 PO Madras 1 52 1 69 1 34 2 38 1 79 0 03* PO Vizag 027 0.12 0.04 0 02 002 060 MadhyaPradesh 082 092 1 19 0.57 042 048 Maharashtra 0 79 1 09 1.15 1 92 1 73 1 63 Gujarat 0 75 1 06 0 93 1.82 1 67 1 30 P.O Kandla 021 0 53 0 89 1 14 1 35 1 15 PO Calcutta 1 37 1 39 1 61 1 74 1 72 2 10 Assarn 2 84 2 54 229 3 62 4 13 3 60 Bihar 2 03 2 00 1 99 1 35 1 25 1 57 Orissa 1 27 1 33 1 44 097 0 89 0 99 NEF 1 45 1 69 1 52 1 85 1 76 1 98 - - - W Bengal 1 28 1 29 1 31 1 36 1 10 I 11 All India*** 1 06 1 15 123 138 121 1 32 1 01 1651 Note * - Storage gain due to moisture gain, ** - All India average loss estimated by dividing total foodgrain losses in all states by total quantity transported Source Food Corporation of India, cited in K K S Chauhan, 1997, " A Study of Foodgrain Postharvest Losses in India" India-Canada Cooperation Office, New Delhi, India, Annex I - 65 - Annex Table 2.19 Indicators of Efficiency of Food Corporation of India, 1976-77 to 1995-96 Rice Procurement and Distribution Cost Per Quintal, Constant 1990 rupees. Year Procurement Cost of Economic cost Average sales Consumer subsidy Wholesale price price procurement and (Col 2 + Col 3) realisation (Col 4 - Col 5) distribution 1 2 3 4 5 6 7 (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) 1980-81 382 49 431 355 76 491 1981-82 386 66 452 366 87 494 1982-83 380 89 469 368 100 542 1983-84 376 102 478 362 116 516 1984-85 369 114 482 361 121 460 1985-86 361 97 458 342 116 452 1986-87 342 107 449 336 113 462 1987-88 324 101 425 320 105 478 1988-89 319 126 444 315 129 463 1989-90 339 125 464 327 138 460 1990-91 342 115 458 330 128 464 1991-92 341 93 433 319 115 416 1992-93 367 103 470 355 115 410 1993-94 367 121 488 367 121 401 1994-95 359 105 464 401 63 391 1995-96 361 l00 461 377 84 387 Average Cost/quintal 80/81-84/85 388 67 454 382 72 507 86/87-89/90 349 105 454 340 114 463 90/91-95/96 346 114 460 336 124 436 Average Annual Rate of Growth 80/81-95/96 -0 5% 3% 0.1% 01% 002% -18% Source: Developed from data in Gulati et al (1996, Table 10) for the years 1968-69 to 1992-93 andRadhakhrisna and Subbarao (1997, Table 3 5) for the years 1993-94 to 1995-96 The latter source did not include wholesale prices. These were estimated for the years 1993-94 to 1995-96 by increasing the previous years price by 7.0 percent which was the average percentage increase over the years 1968-69 to 1992-93. Figures deflated using GDP deflators from World Bank. - 66 - Annex Table 2.20 Indicators of Efficiency of Food Corporation of India, 1976-77 to 1995-96 Wheat Procurement and Distribution Cost per Quintal, Constant 1990 rupees Year Procurement Cost of Economic cost Average sales Consumer subsidy Wholesale price price Procurement and (Col 2 + Col 3) realisation (Col 4 - Col 5) distribution 1 2 3 4 5 6 7 (Rs/Qtl) (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) (Rs./Qtl) 1980-81 261 118 379 289 90 284 1981-82 263 149 411 303 109 292 1982-83 267 147 414 310 104 292 1983-84 262 143 405 320 85 273 1984-85 245 141 386 284 102 242 1985-86 236 134 370 265 104 248 1986-87 228 157 385 265 120 244 1987-88 216 141 357 249 108 250 1988-89 208 148 356 244 112 256 1989-90 203 137 340 221 119 237 1990-91 215 144 359 240 119 249 1991-92 196 145 341 219 121 257 1992-93 221 184 405 224 180 257 1993-94 239 152 390 261 129 252 1994-95 224 144 368 272 96 246 1995-96 217 131 348 257 91 243 Average Cost/quintal 80/81-84/85 260 139 399 301 98 277 86/87-89/90 214 146 359 245 114 247 90/91-95/96 219 150 368 246 123 251 Average Annual Rate of Growth 80/81-95/96 -1% 1% -1% -2% 1% -1% Source: Developed from data in Gulati et al (1996, Table 10) for the years 1968-69 to 1992-93 ancRadhakrishna and Subbaro (1997, Table 3 5) for the years 1993-94 to 1995-96. The latter source did not include wholesale pnces These were estimated for the years 1993-94 to 1995-96 by increasing the previous years price by 7 2 percent which was the average percentage increase over the years 1968-69 to 1992-93. Figures deflated using GDP deflators from World Bank Annex Table 2.21a Wholesale Marketing Costs for Rice and Wheat in Private and Public Channels, Punjab 1997-98 Private Channel Public Channel Ratio of Private/Public Institution Rs/Qtl Institution Rs/Qtl Sector Costs Rice Marketing Procurement + Processing 157 25 FCI-Proc Agency + Processing 178 9 88% Distribution +Wholesaling 20 State Distributing Agency 12 5 160% Total 177.25 Total 191.4 93% Wheat Marketing Wholesaler in Assembly Markel 60 24 FCI-Proc. Agency 119 23 51% Wholesale in Secondary Market 63 09 State Distributing Agency 25.5 247% Total 123.33 Total 144.73 85% Source Sidhu 1998, "Marketing of Rice and Wheat in India, 1998" - 67 - Annex Table 2.21b:Marketing Costs and Margins Per Metric Ton of Wheat Through Different Channels in Hisar, Haryana, 1987-88 Private Channel FCI Item 1 2 3 Channel Rslmt % Rs/mt % Rs/mt % Rs/mt % 1. Producer Purchase Price 1660 00 89 1/ 1660 00 89 1% 1660 00 81 7% 1660 00 78 7% 2. Marketing Costs a)Labor 6 1 03% 6 1 03% 6 1 03% b) Weighing 1 8 01% 1 8 01% 1 8 0 1%0 c) auction 0 8 0 0% 0 8 0 0% 0 8 0 0% d) Brokerage 1 7 01% 1 7 01% 1 7 01% e) Commission 33 2 1 8% 33 2 1 8% 33.2 1.6% f) Taxes 99 6 5 3% 99 6 5.3% 99 6 4.9% g) Other 45 2 4% 45 2.4% 45 2.2% h) Transport 15 5 0 8% 15 5 0 8% 13 0.6% i) Processing Cost - - 170.2 8.4% - Subtotal 2037 109% 2037 109% 3714 183% 450 213% Total Marketing Cost (1+2) 1863 70 100 0% 1863 70 100 0% 2031 40 100 0% 2110 00 100 0% 3. Govt Marketing Subsidy 160 4. Price Paid by Private Buyer/ FCI Issue price 1863 70 1863 70 2031 40 1950 00 Note: Channel I Producer--Commission Agent--Consumer; Channel 2 Producer--Commission Agent-Retailer--Consumer, Channel 3. Producer--Commission Agent--Processor--Consumer, Channel 4 Producer--Commission Agent--FCI--Fair Price Shop Source H S Malik, S Niwas, A C Gangwar, 1988, "Production and Marketing of Wheat inHaryana," Research Bulletin No. 21, Department of Agricultural Economics, Haryana Agricultural University, Hisar Annex Table 2 22 Storage Capacity for Foodgrains, 1995, ('000 mt) Zone Covered storage capacity Covered and Public Private Plinthe Grand FCI State CWC SWC ARDC Gen Hired Total FCI Hired Total total (3 to 7) (2+8) 1 2 3 4 5 6 7 8 9 10 11 12 13 North 5,482 862 919 2,139 2,196 305 6,421 11,902 1,150 2,606 3,755 15,657 (57 2) South 2,534 11 881 501 51 81 1,524 4,058 14 120 134 4,193 (15 3) West 2,494 138 541 340 355 175 1,550 4,044 332 496 828 4,872 (17 8) North- 263 18 21 6 000 84 128 391 00 00 00 391 (I 4) East East 1,523 211 156 130 101 162 960 2283 00 00 00 2,283 (8 3) Grand 12,294 1,239 2,578 3,115 2,703 808 10,388 22,679 1,496 3,227 4,717 27,396 (100) Total ===___ (44.9) (45) (94) (114) _ (9.9) (29) (379) (828) (5.5) (118) (172) (100) Note. Figures in parentheses represent percentage of total across types and regions (i e, percentage of 27,396). Source. FCI, Annual Report, 1994-95, p. 144-147 - 68 - Annex Table 2 23 FCI Wheal Open Sale Prices in Different States (Sept 96 To March '97) Rs/Quirtal Market Centers W.E.F.18.9.96 W.E.F. W.E.F. TO 3.2.1997 4.2.97 11.3.97 Guwahati 553 80 750 00 650 00 Bombay 543 00 740 00 645 00 Nagpur 535 50 740 00 640 00 Indore 527 50 720 00 625.00 Gwalior 510 30 600 00 555 00 Raipur 541.60 740 00 640 00 Ahmedabad 535 70 730 00 635 00 Surat 536 60 730 00 635.00 Cuttack 549 30 740 00 645 00 Bhubneshwar 549 90 740 00 645 00 Patna 53130 650 00 590 00 Ranchi 540 60 700 00 620 00 Madras 553 40 780 00 670 00 Coimbatore 565 30 780 00 675 00 Madurai 568 30 780 00 675 00 Cochin 568 40 790 00 680 00 Trivandrum 571 50 790 00 680 00 Hyderabad 549 20 750 00 650 00 Vishakapatnam 557 30 750 00 655 00 Bangalore 563 00 770 00 670 00 Mysore 564 90 770 00 670 00 Belgaum 554 80 770 00 665 00 Calcutta 54410 74000 64500 Siliguri 546 00 740 00 645 00 Delhi 490 00 500 00 500 00 Chandigarh 490.00 490 00 490 00 Lucknow 515.00 540 00 530 00 Kanpur 516 00 540 00 530 00 Jaipur 511 50 52000 51500 Shimla 503 10 503 10 505.00 Jammu 500 50 520 00 510 00 Srinagar 500 50 530 00 515 00 Varanasi 524 24 600 00 565 00 Bareilly 490 00 500 00 500 00 Source Roller Flour Millers' Federation of India Annual Report 1996-97 - 69 - Annex Table 2 24 Trade Credit in the Foodgrain Sector under Selective Credit Controls FCI Gross As of Bank Credit Advances to Private Mills, Factories, Total Banks' Outstanding for Food & Traders Advances for Private Sector in the Last Procurement Paddy/Rice Wheat % Rice&Wheat Rice & Wheat All Commodities Friday of Rs million Rs million Rs million in FCI Credit as % share of as % share of (A) (B) (C) ([B+C]/A) FCI credit FCI credit Jun-81 22,020 603 133 3% 6% 46% Jun-86 64,110 1,206 382 2% 3% 22% Mar-90 20,060 3585 696 21% 25% 122% Mar-91 45,060 3,192 651 9% 10% 60% Mar-92 46,700 3,485 742 9% 12% 59% Mar-93 67,430 5,100 790 9% 11% 52% Mar-94 109,070 4,651 858 5% 6% 30% Mar-95 Na 4,996 931 Mar-96 Na 5,359 968 Mar-97 Na 8,110 114 na - not available Source RBI, Report on Currency and Finance, Economic Review, various issues Annex Table 225 Seasonal Price Adjustment in Selected Wheat Markets, 1985-90 and 1991-95 Seasonal Adjustmentb Marketa State Crops/year 1985-90 1991-95 (%/0) (%) Ahmedabad Gujarat 1 3 15 Bamala Punjab I 18 10 Bahraich Uttar Pradesh 1 21 17 Bombay Maharashtra 1 2 12 Calcutta West Bengal 1 4 11 Delhi Delhi 1 17 12 Hlapur Uttar Pradesh 1 23 17 Jaipur Raj asthan 1 4 7 Kamal Haryana 1 19 12 Kanpur Uttar Pradesh 1 7 12 Kota Rajasthan I 16 17 Ludhiana Punjab 1 21 11 Moga Punjab 1 18 11 Patna Bihar 1 4 12 Sasaram Bihar 1 29 26 a/The markets were selected based on the availability of a consistent price series b/Percentage point difference between lowest and highest monthly price indices Source: Pun 1996 - 70 - Annex Table 2.26 Seasonal Price Adjustment in Selected Rice Markets, 1985-90 and 1991-95 Seasonal Adjustmentb Market a State Crops/year 1985-90 1991-95 (%/o) (%) Azamgarh Uttar Pradesh 2 8 9 Bangalore Kamataka 2 7 5 Balasore Orissa 2 19 13 Balurghat West Bengal 3 25 12 Conthai West Bengal 3 19 13 Cuttack Orissa 2 1 1 10 Dumka Bihar 2 16 5 Gaya Bihar 2 19 14 Gondia Mabarashtra 1 12 7 Jamshedp Bihar 2 5 9 Jaypore Orissa 2 21 9 Kanpur Uttar Pradesh 2 13 12 Nagpur Maharashtra 1 7 8 Nellore Andhra Pradesh 2 22 35 Nowgarh Uttar Pradesh 2 18 17 Sambalpo Orissa 2 13 6 Sainthiya West Bengal 3 19 16 Shimoga Kamataka 2 11 7 a/The markets were selected based on the availability of a consistent price series b/Percentage point difference between lowest and highest monthly price indices Source: Puri 1996 Annex Table 2.27 Production of Rice by Season, 1970/71 to 1995/96 Kharif Rabi Total Year million mt Percent million mt Percent million mt 70/71 39 5 94% 2 7 6% 42 2 80/81 50 1 93% 3 5 7% 53 6 90/91 663 89% 8 11% 74.3 91/92 66 4 89% 8 3 11% 74.7 92/93 65 3 90% 7 6 10% 72.9 93/94 70 7 88% 9 6 12% 80.3 94/95 726 89% 92 11% 81 8 95/96 70 1 88% 9 5 12% 79 6 Note Kharif- June to September; Rabi- October to March Source GOI, Economic Survey 1996/97 - 71 - Annex Table 2.28. Coefficient of Variation of Selected Rice Markets in India, 1985-95 1/ Coefficient of Variation % Change Market State 1985-90 1991-95 85-90 to 91-95 Azamgarh UP 0 058 0 060 4% Bangalore Karnataka 0 053 0 030 -43% Balasore Orissa 0 079 0 080 1% Balurghat WB 0 077 0 079 2% Conthai WB 0 060 0 051 -16% Cuttack Orissa 0.062 0 052 -16% Dumka Bihar 0 048 0 033 -31% Gaya Bihar 0 093 0.077 -18% Gondia Maharashtra 0.044 0 049 11% Jamshedpur Bihar 0 038 0 047 24% Jaypore Orissa 0 071 0 052 -28% Kanpur UP 0 086 0 075 -13% Nagpur Maharashtra 0 075 0 057 -24% Nellore AP 0 121 0096 -21% Nowgarh UP 0 073 0 077 5% Sambalpore Orissa 0 054 0.031 -42% Sainthiya WB 0 066 0 056 -16% Shimoga Karnataka 0 060 0 068 14% Varanasi UP 0 073 0 065 -11% Vijaywada AP 0 086 0 056 -36% I Markets were selected based on data availability The study used monthly prices. Source: Pun 1996 Annex Table 2.29. Coefficient of Variation of Selected Wheat Markets in India, 1985-95 1/ Coefficient of Variation % Change Market JState 1985-90 1991-95 85-90 to 91-95 Ahmedabad Gujarat 0 023 0.076 228% Barnala Punjab 0 086 0 065 -25% Bahraich UP 0 105 0 084 -20% Bombay Maharashtra 0 022 0 050 129% Calcutta WB 0.030 0.042 37% Delhi Delhi 0 077 0 064 -17% Hapur UP 0 099 0 088 -11% Jaipur Rajasthan 0 052 0 040 -24% Karnal Haryana 0.088 0 080 -10% Kanpur UP 0.067 0 046 -32% Kota Rajasthan 0 094 0.083 -11% Ludhiana Punjab 0 092 0 072 -22% Moga Punjab 0.089 0 074 -17% Patna Bihar 0 031 0.045 49% Sasaram Bihar 0 106 0 100 -5% 1/ Markets were selected based on data availability. The study used monthly prices. Source Puri 1996. - 72 - Annex Table 2.30. Number of Different Types of Milling Technologies in India, 1969-1997 Year Rullers Shellers Huller cum sheller Modern/ Modernized Rice Mills 69 45827 2121 4244 70 51888 2302 4832 71 58141 2397 5328 72 63309 2474 5239 1 73 74670 1884 6990 63 74 74670 1884 6990 63 75 80007 3676 7240 340 76 80007 3676 7240 340 77 66870 1459 3838 1525 78 69188 3257 8203 3207 79 70305 3435 7832 4346 80 73306 4283 8065 5071 81 77501 4285 8339 7204 82 78344 5295 8614 9771 83 79799 5840 9034 13132 84 78414 5575 6186 13445 85 79197 4484 6654 17826 86 79981 4570 8044 23046 87 80902 4587 7774 26593 88 84485 4678 7845 26753 89 86007 4447 7859 29613 90 86007 4447 7859 29614 91 86284 4111 8299 30889 92 86315 4098 8300 32979 93 86315 4098 8300 32979 94 90091 4237 8362 33557 95 90525 4 38 8462 34112 96 91801 4538 9365 34163 97 91287 4538 8385 34688 Average Annual Rate of Growth 70-89 2 8% 3 6% 3 7% 184 6% 80-89 14% -04°- -0 9% 214% 90-97 1 1% 12% 13% 21% Source. Directorate of Economics and Statistics, Bulletin of Food Statistics, various issues and Ministry of Food Processing Industry, Annual Report 1996-97 Annex Table 2 31 Average Costs and Returns of Paddy Milling by Selected Hullers, Ludhiana District, Punjab, 1997-98 Item Rs. per Qtl. A. Expenses (i) Interest 6 00 (ui) Rent 2 00 (iii) Expenses on rollers, seivers and knives 7 75 (iv) Electricity charges 5 60 (v) Labour charges 5 60 (vi) Repair and maintenance 4 15 (vii) Miscellaneous expenses 1 00 Total expenses 32 10 B. Returns (i) Milling chaiges 30 00 (ii) Realisation fiom selling rice bran mixtures 15 00 Gross return 45.00 C. Net return (B-C) 12.90 Source: Singh (1996), updated with assistance from Dr P S Rangi and Dr M. S Sidhu. - 73 - Annex Table 2.32 Economics of Milling Paddy in Selected Rice Mills of Two Tons Per Hour Capacity and Throughput of Forty Tons of Paddy Per Day, Punjab, 1997-98 Particulars Total amount (Rs. per day) A. FIXED COSTS (i) Rent of land 5,000 (it) Depreciation on buildings 208 (iii) Depreciation of machinery and equipment 303 (iv) Permanent labor employed 1,281 (v) Depreciation on fumiture and fixture 129 (vi) Taxes and insurance 117 (vii) Interest on capital investment 387 Total Fixed Costs 7,425 B. VARIABLE EXPENSES (i) Cost of paddy 178,000 (h) Market charges 17,800 (iii) Market labor and transportation to mill 2,800 (iv) Machinery labor for shelling of paddy 1,901 (v) Rubber rolls and rice polish expenses 2,396 (vi) Electricity charges 1,536 (vii) Oil and lubricants 250 (viii) Palledari labor for filling, weighing and stitching of rice bran bags 756 (ix) Transport and stacking at godown, railway station or oil mills 2,800 (x) Depreciation of gunny bags 4,920 (xi) Repair and maintenance 1,173 (xii) Interest on working capital for 45 days 1,435 (xiii) Miscellaneous expenses 1,308 (xiv) Other expenses 3,000 Total Variable Costs 220,075 Total Cost (A+B) 227,500 C. RETURNS (a) Sale of rice (i) Levy rice (75%) 168,032 (1i) Free sale rice (25%) 53,100 (iii) Broken rice (total) 9,600 (b) Sale of rice bran 5,000 (c) Sale of rice husk 3,200 Total Sale (Return) 238,932 D. Profit margin for shelling 400 qtls. of paddy IC - (A + B)] 11,432 E. Profit margin per quintal of paddy milled (11432/400) 28.58 Source: Singh (1996), updated with assistance from Dr P.S. Rangi and Dr M. S. Sidhu - 74 - Annex 2 33. Number, Capacity, and Capacity Utilization of Roller Flour Mills in India, 1987-1997 Yearly Capacity Qty Produced Capacity Year Number million mt 000 mt Utilizaton 68 202 4.53 69 206 5.13 70 211 5 41 2,323 43% 71 218 5 50 2,723 50% 72 221 5 68 2,777 49% 73 232 5 95 3,102 52% 74 232 5 95 1,815 31% 75 232 5 95 1,228 21% 76 232 5 95 1,432 24% 77 232 5.95 1,592 27% 78 232 5 95 2,616 44% 79 232 5.95 2,823 47% 80 234 5 95 3,042 51% 81 306 7 41 3,615 49% 82 310 7 49 3,206 43% 83 365 7 85 3,437 44% 84 426 8 59 3,418 40% 85 454 8 91 4,534 51% 86 464 8 89 5,189 58% 87 496 9 80 , 88 557 15.00 _ 89 580 15 10 _ _l 90 605 15 10 91 800 1600 97 812 16 50 Source: I/Bulletin on Food Statistics, various issues 2/ Federation of Roller Flour mills - 75 - Annex Table 2 34. Costs Of Flour Production In Punjab (based on a miller purchasing wheat at a mandi, and with a mill of 150 mt/day capacity. A) WHEAT VIA MANDIS TO FLOUR MILL Rs./Q or /bags Rs /Tonne I.Procurement Pnce/Q (MSP, 1997) 475 4750 2 Mandi Charges (1 1% of 1 ) 52 25 522 5 3.Cost of Jute Bag (3 uses /bag in private sector) 8 17 86 4 Truck transport, Mandi to Mill: 12 5 131 55 (O 25/bag/km x 50 km average distance) 5 Losses in mandi, truck transport 4 75 47 5 (1% of I ) Subtotals: a)2.-5. Incl: 787.55 b)1.-5. Inc: 5537.55 B.) MILLING COSTS 6 Unloading, stacking bags at mill- 1 10 52 7 Dockage loss after cleaning: 23 63 (3% av. of subtotal b)) 8 Milling costs of wheat 60 600 (includes: power -30% of 8. packing -6% of 8. adm ,o h.,interest -30% of 8 repairs,maintenance -6% of 8. insurance -10% of 8. storage/handling -5% of 8 miscellaneous -13% of) Subtotals: c)6.-8. Incl: 634.15 d)l.-8. Iel: (This is the cost of one tonne of wheat milled) 6171.7 C.) AVERAGE SALES PRICES OF PRODUCTS 9 Flour, mel Semolina (60% of product). 625/90kg bag 6944 10 Atta (18/oof product) 555/90kg bag 6167 11 Bran (22%of product) 460/Q. 4600 D.) AVERAGE REVENUE REALIZED BY MILLER (out of one ton of wheat milled) 12 Flour, incl. Semolina; 60% of 6944 4166 4 13. Atta, 18% of 6167: 1110.06 14. Bran, 22% of 4600 1012 Subtotal: e)l2.-14. Inch 6288.46 - 76 - Annex Table 2 35 Average Cost of Wheat Processing in Hisar, Haryana under Different Scales of Operation, 1988 Item 20 H P Flour Mill 10 H P Flour Mill _____________________________ Rs Rs % A. Fixed Cost Depreciation 2,032 00 8 3% 1,372 00 6.8% Interest on fixed capital @14%/yr 2,623 56 10 7% 1,740 00 8 6% Quantity of wheat processed, mt 144 00 0 6% 10800 0 5% Total Fixed Cost 4,655 56 19 0% 3,112 00 15 3% Fixed cost per mt 32 30 28 80 B. Variable Cost Labor charges 8,400 00 34 3% 8,300 00 40 9% Electricity Charges 5,040 00 20 6% 3,780 00 18 6% Repair & maintenance 1,252 00 5 1% 1,209 60 6 0% Rent of building 2,250 00 9 2% 1,700 00 8 4% Loss in processing (I Okg/mt of wheat) 2 880 00 11 7% 2,160 00 10 6% Interest on working capital @14% per yr for 1 45 52 02% 44 44 0 2% month Total Variable Cost 19,862 28 81.0% 17,183 54 84 7% Variable Cost per mt 137 90 159 10 C. Total Cost (A+B) 24,517 84 100 0% 20,295 54 100 0% D. Cost of Processing per Mt 170 20 187 90 E. Processing Fee of Processoi per mt 200 00 200 00 IF. Net Return per Mt 29 801 12 10 Source H S Malik, S Niwas. and A C Gangwar, 1998, "Production and Marketing of Wheat in Haryana," Research Bulletin No 21, Department of Agricultural Economics, Haryana Agricultural University, Hisar - 77 - Annex Table 2 36 Estimated per hundredweight operating costs for various work weeks for three model wheat flour mills (1975) Model size by work week 4-day week 1f 5-day week 2/ 6-day week 3/ 7-day week 4/ Cost items small medium large small medium large small medium largel small medium large Fixed Depreciation (building and equipment) 0363 0295 0274 0291 0236 0219 0242 0 197 0 182 0212 0 172 0 160 Interest on investment 0316 0252 0.233 0253 0202 0 186 0211 0 168 0 155 0 184 0 147 0 136 Taxes (land, building, and equipment) 0 027 0 022 0.020 0 022 0 018 0 016 0 018 0 015 0 013 0 016 0 013 0 012 Insurance (building and equipment) 0 019 0 016 0 014 0 016 0 012 0 012 0 013 0 010 0 010 0 011 0 009 0 008 Other 0 004 0 003 0 003 0.003 0 002 0 002 0.003 0 002 0 002 0 002 0 002 0 002 Total fixed 5/ 0 731 0 588 0 544 0 585 0 470 0 435 0 487 0 392 0 363 0 426 0 343 0 317 Variable Wages and salaries 0 652 0 453 0 359 0 555 0 382 0 301 0 598 0 407 0 321 0 562 0 380 0 299 Utilities 0 176 0 147 0 133 0.176 0 147 0 133 0 176 0 147 0 133 0 177 0 147 0 133 Interest on working capital 0 127 0.126 0 125 0 126 0 125 0 125 0 127 0 126 0 125 0 129 0 128 0 127 Maintenance and repairs 0 063 0 050 0 046 0 063 0 050 0 046 0 063 0 050 0 046 0 063 0 050 0 046 Other 0 050 0 050 0 050 0 050 0.050 0 050 0 050 0 050 0 050 0 050 0 050 0 050 Total variable 5/ 1 068 0 825 0 713 0971 0.754 0 655 1 014 0 779 0 675 0 980 0 755 0 656 Total fixed andvariable 5/ 1 799 1 413 1 257 1 555 1 225 1 090 1 501 1 171 1 038 1 406 1 098 0 973 1/ Estimated annual capacity 600,000 cwt for small, 1,000,000 cwt for medium, 1,400,000 cwt for large I cwt or hundredweight 100 lbs 2/ Estimated annual capacity- 750,000 cwt for small, 1,250,000 cwt for medium; 1,750,000 cwt for large 3/ Estimated annual capacity 900,000 cwt for small, 1,500,000 cwt for medium, 2,100,000 cwt for large. 4,/ Estimated annual capacity 1,029,000 cwt for small, 1,715,000 cwt for medium; 2,401,000 cwt for large 5/ Sum may not total because of rounding - 78 - Annex Table 2 37. Regulatory Agencies Overseeing Grain Trading in Andhra Pradesh Agency Inspection Timetable 1. Grain Marketing Operations Civil Supplies District Supply Officer-surprise inspection, Inspector of Vigilance- surprise inspection Electricity Department Electricity Inspector-yearly inspection Agricultural Market Committee Yearly inspection and assessment Fire Service Department Yearly inspection Weights and Measure Yearly inspection and stamping of weights Prevention of Food Adulteration Surprise inspection Pollution Control Board Yearly Inspection II. Sales Tax CTO Yearly and surprise inspections ACTO Yearly and surprise inspections S T Vigilance Surprise inspections S T Enforcement Yearly and surprise inspections Deputy Commissioner Yearly and surprise inspections III. Income Tax T D S inspection IV. Personnel Management ES I Inspection by Inspector, Audit Inspection, Surveyor Inspection, Enforcement Officer inspection Provident Fund Inspection by Inspector, Audit Inspection, Surveyor Inspection, Enforcement Officer inspection A P Labor Welfare Fund Board Yearly inspection Asst.Commissioner of Labor Yearly inspection Womens Development and Child Welfare Dept Surprise inspection Inspector of Factories Inspection by Inspector and Deputy Chief Inspector Source Andhra Pradesh Roller Flour Mills Association - 79 - Annex Table 2 38 Number of Regulated markets in India, 1995-96 State/Union Principal Sub-Yards Total Territory Markets Andhra Pradesh 244 579 823 Assamn 16 19 35 Bihar 122 706 828 Goa 1 4 5 Gujarat 156 224 380 Haryana 100 175 275 Himachal Pradesh 7 22 29 Kamataka 124 320 444 Kerala 5 - 5 Madhya Pradesh 292 292 504 Maharashtra 257 570 827 Manipur - - - Meghalaya Nagaland - - - Orissa 46 87 133 Punjab 143 524 667 Rajasthan 134 250 384 Tamil Nadu 270 - 270 Tripura 21 - 21 Uttar Pradesh 262 383 645 West Bengal 41 415 456 Union Territories 11 13 25 Total 2253 4583 6836 Note Agricultural Produce Markets Act has not yet been passed in J&K, Mizoram, Sikkim, A&N Islands, D&N Haveli and Lakshad- Deep Source:I GOI, Ministry of Rural Development, NIAM, Agricultural Marketing Statistical Abstract, Jaipur, 1997 2 Council of State Agricultural Marketing Board-COSAMB, Kisan Ki Sewame, 1993, p 241 Annex Table 2 39 Time and Motion Study of Paddy Marketing in Selected Markets in Punjab Market Ave Time Taken/Tractor Load Total Marketing Opportunity Cost of Operation Working (hrs) Waiting (hrs) Time (hrs) Waiting Time, Rs/mt 1/ Unloading 3.4 2 7 6.1 7 Cleaning 7 6 43 11.9 1 Auction 0 4 2 8 3 2 7 Bagging 1 5 3 1 4 5 8 Weighing 1 0 2.3 3.3 6 Stitching 0.4 2 0 2.4 5 Total 14 3 17 1 31.4 42 I/ Wage Rate/day is Rs 59/day and Working hours is assumed to be 10 hrs/day Source Chahal and Singh, 1997 - 80 - Annex Table 2 40 Status of the State Agricultural Marketing Departments, Agricultural Marketing Boards and contribution by Market Committees to Boards in different States SL Name of the State Contribution % age of Separate directorate of Status of agricultural marketing no annual income of A P M C agricultural marketing committees established Board I Haryana 20-30% No Statutory 2 Punjab 10-30% No Statutory 3 Kamataka upto 5% Yes Statutory 4 Andira-Pradesh upto 30% Yes Statutory 5 Assam upto 30% No Statutory 6 Himanchal Pradesh upto 20% No Statutory 7 Bihar 10-25% No Statutory 8 RajasthaD upto 10% Yes Statutory 9 Uttar Pradesh 10-50% Yes Statutory 10 West Bengal upto 20% Yes Statutory I Maharashtra Yes Statutory 12 Madhya Pradesh 5% Yes Statutory 13 Tamil Nadu 5% Yes Advisory 14 Orissa Not No Statutory 15 Gujarat 1/2% No Statutory 16 Pondichery 1/2% No Not established 17 Goa, Daman, Diu _ No Not established 18 Kerala (only Malabar district under Madras Commercial Act) 19 Manipur No Not established 20 Chandigarh 10-30% No Not established 21 Delhi 10-20% No Not established 22. Tripura No Advisory 23 Meghalaya No Not established Source: U K Srivastava and D.C Gupta, 1995, "Agricultural Regulated Markets Institutional Study," Consultant's report prepared for the UP Diversified Agricultuial Support Project - 81 - Annex Table A 2 41. Major Components of Expenditure of the Agricultural Produce Market Committees in Different States of India, 1996-97 Particulars Khanna Lakhimpur* Nalagonda Miryalguda Samsi Punjab, % Uttar Pradesh % Andhra Pradesh, % Andhra Pradesh, % West Bengal, % Establishment expenses 13 6 40 20 33 Development expenses 28 1 30 30 56 Contribution towards central pool 46 84 10 10 Contingencies 4 2 - 10 8 Misc expenses 9 7 20 - 3 Saving deposits with treasury - - - 30 Total 100 100 100 100 100 *Related to the year 1995-96 Source Office records of the respective market committees Annex Table 2.42 Income and Expenditure of'Punjab Mandi Board, 1995-96 through 1997-98*(Rs in 000) Sr.No. Particulars 1995-96 1996-97 1997-98 1 Opening balance on 1st April 436,601 455,853 137,693 Il Income 723,955 726,500 771,500 III Total (1+11) 1,180,556 1,182,353 909,103 IV Total expenditure 704,703 1,044,750 906,200 V Unspent income 475,853 137,603 2,903 VI Vas%oflII 463 11 6 03 Source of income a) Contribution from market fee 628,514 630,000 700,000 (86 82) (86 72) (90 73) b) Licence fee 1,153 1,500 1,500 (0 16) (0 21) (0 19) c) Recovery of loan 28,247 25,000 20,000 (3 90) (3 44) (2.59) d) Miscellaneous income 7,141 20,000 20,000 (0 99) (2 75) (2.59) e) Interest on bank and others 47,280 45,000 25,000 (6 53) (6 19) (3 24) n) Misc recoveries (Suspense) 11,620 5,000 5,000 (I 60) (0 69) (0 66) Conmonents of Expenditure a) Establishment 114,893 157,000 197,000 (16 30) (15 03) (21 74) b) Contingency - Recurring 22,479 29,200 29,900 (3 18) (2 79) (3 30) c) Contingency -Non-recurring 10,102 8,900 8,400 (I 43) (0 85) (0 92) d) Development of markets 80,802 150,000 100,000 (11 47) (1436) (11 04) e) Board's works 5,054 20,000 20,000 (0 72) (I 91) (2 21) f) Central assistance - 5,000 5,000 (0 48) (0 55) g) Link roads 439,214 460,000 353,000 (62 33) (44 03) (38 95) h) Loans and advances to employees 10,999 12,000 15,000 (I 56) (I 15) (I 66) I) Financial aid 1,692 30,000 30,000 (0 24) (2 87) (3 31) j) Development schemes 13,723 109,950 133,900 (1.95) (10 52) (14 78) k) Other Misc expenditure Not given Not given Not given *Figures iD parentheses are percentages. Source Punjab Mandi Board, 1997, Chandigarh. - 82 - Annex Table 2.43. Income and Expenditure of Uttar Pradesh Agricultural Marketing Board, 1991-92 to 1993-94 Particulars 1991-92 1992-93 1993-94 Amount Percent* Amount Percent* Amount Percent* (Rs in lakhs) (Rs in lakhs) (Rs in lakhs) Income 9,502.83 8,645.84 6,903.77 Expenditure Establishment 333.15 7 22 374 27 6 42 428 11 6.62 Contingencies a) Recurring 110.69 2.40 155.28 2 67 154 89 2 40 b) Non-recurring 3582 0.78 1160 020 1212 019 Grants received from the - 13.95 0 24 38 50 0 60 Central/State Government for Mandi yards and rural godowns Modernization of Mandi Board - 86 94 1 49 41 35 0 64 Construction work 2,805 31 60.82 4,483 12 76 96 4,300 00 66 58 Thrashing floor and fix insurance - - 21 59 0 33 Accidental insurance 41 00 0.89 - 39 51 0 61 Hand-pipe drinking water program - 1 65 0 03 3 00 0 05 Distribution of storage bins - 26.00 0 45 - Scholarship scheme - 1 098 0 02 4 95 0 08 Relief fund - 0 74 0.01 - Purchase of motor vehicle 12 00 0 26 - Maintenance of office of the Board 16 65 0 36 3 70 0 06 3 00 0 05 Housing of officers of Mandi Board 88 71 1 92 3 12 0 05 22 78 0 35 Construction ofKisanBhawan 23901 5 18 20198 3.47 28063 435 Design/standardization 1.87 0.04 0 78 0 01 - Loantomarketcommittees 80450 1744 41100 706 60790 941 Advances to officers/officials for 79.27 1 72 49.97 0 86 90 00 1 39 purchase of house/vehicle Tools and plants 44.84 0 97 - Misc - - 410 00 6 35 Total Expenditure 4,612.82 100.00 5,825 18 10000 6,458 33 10000 * Percentages of total expenditure. I lakh=100,000 Source U P Agricultural Marketing Board, Lucknow - 83 - Annex Table 2. 44 License Fee for Various Market Functionaries in Different Category of Mandis in U P Particulars Market Area Principal Market Yard Sub-Market Yard except Market (in Rs) Yard A B C Class Class Class (in Rs) (in Rs.) (in Rs) Wholesale trader- 100 100 75 50 25 cum-commission agent Wholesale trader 75 75 50 35 20 Commission agent 50 50 35 20 10 Broker 20 20 15 10 5 Weighman or 5 5 5 5 5 measure Warehouseman 30 30 25 20 15 Retain trader 10 10 10 10 10 Palledar 2 2 2 2 2 Village trader 15 15 15 15 15 Atta chakki 5 5 5 5 5 (power driven) Oil Ghani 5 5 5 5 5 (power driven) _ Huller 5 5 5 5 5 (power driven) Sheller 25 25 25 25 25 Expeller 25 25 25 25 25 Ginnery 25 25 25 25 25 Mill/factory 100 100 100 100 100 Truck plyer 10 10 10 10 10 Thela plyer 2 2 2 2 2 Decorticator 25 25 25 25 25 (power driven) _ 'Bell/ 25 25 25 25 25 Centrifugal _ Grinder 5 5 5 5 5 (power dnven) . Source U.K Srivastava and D.C Gupta, 1995, "Agricultural Regulated Markets Institutional Study," Consultant's report prepared for the UP Diversified Agricultural Support Project - 85 - Chapter 2 Annex Figures Annex Figure 2 1 FCI Paddy Procurement Cost/mt, 1990 rupees 900 __ 800 700 600 500 400 3 00 00 9>,D ,9, >, ,9o ¢,< 9' ,9>' 9> a Mandc charges a Cost of gunny 0 Sales/Purchase Tax o- Storage charges * Interest charges E1 Mandi Labour in Forwarding charges E1 Internal Movement m Est /Admn charges m Others 0 Arrears of Purchases Source Food Corporation of India Annex Figure 2 2 FCI Rice Procurement Cost/rnt, 1990 rupees 350 300 250 ioo 0 A3\9' 9 0>' 9>3° 9>'9 t\ 9 9' 9> g1 Mandi charges g Cost of gunny 3 Sales/Purchase Tax o Storage charges a Interest charges El Mandi Labour * Forwardmg charges ij Internal Movement * Estt /Admn charges * Others j Arrears of Purchases Source Food Corporation of India - 86 - Annex Figure 2 3:FCI Wheat Procurement Cost/mt, 1990 rupees 700 600 , 500 400 300 200 100 0 * Mandi charges * Cost of gunny 0 Sales/Purchase Tax Cl Storage charges * Interest charges 0 Mandi Labour a Forwarding charges 3 [nternal Movement a Estt /Admn. charges * Others 0 Arrears of Purchases Source Food Corporation of India Annex Figure 2.4. FCI Foodgrain Distribution Cost, 1990 rupees 2500 00 & 2000.00 1500 00 1 50000 50 00 *M Transit shortages * Storage shortages o Freight o] Handling godow n expenses * Storage charges E1 Interest a Adnmn Overheads Source Food Corporation of India - 87 - Annex Figure 2.5- Wheat Mininum Support and Central Issue Price, Current rupees 4500 _ 3 5 0 0 - - - - - - - - - -- - --- --- --- -- _ 2500 -- - - -- - - --- - - - W 2000 -a M-r--su 150 0 I 0 0 0 -- - - - - - - - - - - - -- - - - - --.- 0 I I 1 1 1 'I ! 1 - - 1 11 1 !i 1 11 s°\181 10\ \o4 -Wheat MSP Rs/mt Issue Price Rs/mt Source Directorate of Economics and Statistics, 1997, Agricultural Statistics at a Glance Annex Figure 2 6 Wheat MBinum Support and Central Issue Price, Constant 1990/91 rupees 4000 P 3000 -- -- - -- - -- e2 5 0 0 -- - - - - - - -- - . - 2000 -------- 1500 _ +Wheat MSP Rs/mt Issue Price Rs/m Source. Directorate of Economics and Statistics, 1997, Agricultural Statistics at a Glance GDP deflators from World Bank - 88 - Annex Figure 2 7 FCI Wheat Marketing Margin (Issue less Procurement Price) and Cost of Procurement and Distribution, Constant 1990/91 rupees 2000~ ~ ~ ___ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ __ 2000 1600 _ E 1400 - 1200 - - o 1000oo _-- - 8800 ------ e 600 -- - - 400 - 0 X 200¢ 9X>\ - Marketing Margim -.u Cost of Proc and Distri Source Food Corporation of India, Directorate of Economics and Statistics, 1997, Agricultural Sratistics at a Glance GDP deflators from World Bank Annex Figure 2 8 Rice Mininum Support and Central Issue Price, Current Rupees/mt 6000 20001 1000 i----- - -- 0 -~~4 Common Paddy MSP Rs/mt Oct-Sept Issue Price Rs/mt Source Directorate of Economics and Statistics. 1997,Agricultural Statistics at a Glance - 89 - Annex Figure 2 9 Rice Minimum Support and Central Issue Price, Constant 1990/91 rupees 4300 413 00 - - --- -- --j - - -- 39s00 --- - -- -- -- -- 3 3700 _ 03100_ 330 2500 I __ --Common Paddy MSP Rs/mt, Rice Equi _ Issue Price Rs/mt Source Directorate of Economics and Statistics, 1997, Agricultural Statistics at a Glance GDP deflators from World Bank Annex Figure 2.10 FCI Owned and Hire Storage Facilities, 1983-96 30 25 20 . 1 15 5 0 L Cov-Owned C1 CAP-Owned Cj CAP-Hured E. Cov-Hired Source 1983-1989 values-Bulletin on Food Statistics 1987-89, 1991 90/91-94/95 from FCI annual reports. 1996-1996197 Annual report of MOF - 90 - Annex Figure 2.11 FIc PR,LTCi(IF"lA'L ll ITEIR- S~TATE FLOW 1)F-\AAI1J;IF K KAS HMIIR 0 3 ((15)6 HIMACHAL > IPRADESt 'DELHI 0 46 -NAGALAND 'AJI.I(A 4U04T- - / I>\' 1 -- (3) / EIA MEDHALY)MANIPUR ~~ ~~I ~(38) (2H9 0386 '/ ' \\M ADOH YA P RA DE SH \ Z GUJ AR AT ~ ~ ~ ~ ~ ~~~~BHR NIU MAHARASHTRA~ F ,\- - 166 | ['(),156, F M'( 6ORAM \ * \ , <0 55 KA..)AA Pf RT T KARNATAKA 1 2 X TAM ILN AO 091>1 (36 ) 1 BASED ON RAIIWAY DATA FOR THE YEARS 1995, 1996 AD 1 997 2 FIGURES IN BRACKETS ARE LIUMBER OF FULL RAKES OF 2000 TONNES AVERAGE PER MONTH ARRIV NG IN EACH STATE OR REGION FROM THE NORTH 3 OTHER FIGURES ARE AVERAGE Al NUAL FLOWSj OF RICE + WHEAT TO EACH STATE OR REGION 2 ~~~~~~~~~~FROM THE NORTH 4 ORIGIN OF FLOWS IS FROM THE FOUR IIORTHREN STATES OF PUIJAB, HARYANA, U P AND M P - 91 - Annex Figure 2.12 Distribution of Mill Capacity of 204 Member Mills of the India Roller Flour Millers Federation, 1997 120 100 80 0 .! 60 10 0 40 E 20 0 <50 5O to lOl to l51 to >201 100 150 200 capacity-mVhr Source Roller Flour Mills Federation Chapter 3 Annex Figures Annex Figure 3.1: Long Run Trends for Grain Markets GRAIN MARKETABLE SURPLUS IL 0 n A RB 1.1 I e Prvt O rw R aS PUhii Stk .i M e Tie gecn hr Not Pmn A nUotBPsl rjcoisi eln nl 0 r y h 0 Private GOI B Frmwk r pbTrade Physical u r Food f pnce stabilizatlonDistn f R e r u Stk n Time Percent Share 0% 50% 100% Note Point A anid Point B-Possible trajectories in decline in public sector physical handling of grains Point C - decline in buffer stock volume with adoption of alternative price stabilization mechanisms