March 1: Kerala's cashew has ceased to be a political commodity lately as even hard-core Left politicians and policymakers have started reconciling themselves to economic reality. Though a bit late in the day, Kerala's political bosses seem to have realised their mistakes, as indicated by the Left-led government's decision a couple of months ago not to resume the controversial monopoly procurement of raw cashew by state agencies.Competitive populism ruined the cashew processing industry. Policies, often aimed only at addressing the interests of workers and growers while ignoring exporters and their enterprises, failed to take an integral and pragmatic approach. But in reality the policies benefited neither the workers nor the growers, not to speak of entrepreneurs.
The scheme was the brainchild of the Left. The late CPI leader TV Thomas, who was then industry minister, introduced the monopoly procurement programme in 1976. The CPI minister's intentions were indeed noble -- to assure fair wages forworkers and fair prices for growers.
But the procurement programme boomeranged. Though it neither ensured fair wages for workers nor fair prices for growers, the scheme continued for about two decades because of the high political stakes in the cashew sector. In the process, the casualty was the state's cashew industry.
The political leadership's traditional allergy towards captains of cashew industry made them turn a blind eye to the harsh realities in the industry. Processing units started migrating to neighbouring states for want of adequate raw nuts, the anti-industry policy of the Kerala government and labour militancy. Workers were thereby denied work and wages. Growers were forced to sell their produce to private processors who smuggled it across the state's borders.
Many a legal battle was fought between the state government and private processors. At one stage in 1989, the then industry minister, KR Gouri, even took over 30-and-odd private processing units and entrusted them to the Kerala StateCashew Development Corporation.
For the state-owned corporation, which has been awash in red, the takeover only helped add fuel to fire. The courts had several times ruled against the procurement scheme, but the state continued to bring in fresh legislation and amendments to the law to circumvent court orders. The centre had expressed its strong reservations against the monopoly procurement programme time and again. But the state refused to oblige.
Needless to say, the much trumpeted procurement operations by state agencies had always been a flop. There were several reasons. Often, entry by state agencies was late. Price offered was less. Smuggling had been in full swing. Takers for the procured nuts were very few. Above all funds were a major constraint.
In fact, the immediate reason for the previous UDF government to suspend monopoly procurement was lack of funds. Banks and other financial institutions refused to fund the procurement programme.
The then government did knock at several doors. But theresponse was negative. The only option before the then industry minister was to close shop in 1995 despite coming under heavy attack by the Left parties who were then in the opposition.
Once back in power, the Left leadership has also realised that its pet scheme will not work. However, it keeps on reiterating its commitment to monopoly procurement. This was significantly a major item in the LDF's election manifesto. The pre-election promise remains on paper even after the front has been in power for the last two years. Says RSP minister for labour Ramakrishna Pillai, who hails from Kerala's cashew belt, "Monopoly procurement does not seem to benefit the worker or the grower in the cashew sector in the changed circumstances".
For the past three years, one year under UDF and two years under LDF, there has been no monopoly procurement of raw cashew by state agencies. But only recently has it come from the horse's mouth that the scheme has failed to yield results. And private processors have had the lastlaugh.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
