What is eating into Indian food basket?
Every Indian government, past or present, needs to take the blame for the current food impasse, writes a reader. Go nutty for good health
Themost powerful person on this planet seems to have got it wrong once again. Byassigning the cause of global food price crisis to India, George Bush has againmissed the point. The problem, though, is real.
Averagefood prices have risen 45 percent in the past nine months. And just as risingrice prices fueled rice riots and toppled the Japanese government in 1918,today's price hikes now threaten political stability in the global south. A fewweeks ago the unrests led to several deaths in Haiti leading to the dismissal ofthe prime minister. The price hikes have also sparked riots in Egypt, Ethiopia,the Philippines, Cameroon, Burkino Faso, Indonesia, Ivory Coast, Mauritania,Mozambique, and Senegal. According to media reports, many governments are nowracing to sign secret bilateral deals with food exporters to secure supplies.
TheWorld Bank, U.N. Food and Agriculture Organization (FAO), and InternationalMonetary Fund warned at meetings recently that rising food prices threatened towipe out a decade of efforts to combat global poverty. Jacques Diouf, the FAOdirector-general, warned that the social unrest could spread to countries where50-60 percent of a family's income is spent on food. Most sub-Saharan Africancountries fall into that category.
Andthe causes are a plenty. Droughts, the Western push to use biofuels made fromcorn to reduce dependence on fossil fuels, increased demand for meat and dairyproducts from the richer Asian countries etc.
Theseexplanations, however, highlight external causes and ignore causes - rooted inthe policy choices of developing world governments - that have led to thestagnation of agricultural sectors.
Accordingto Robert Paarlberg, professor of political science at Wellesley College, mostof the world's hungry people do not use international food markets, and most ofthose who use these markets are not hungry. Fact is, international food markets,like international markets for everything else, are used primarily by rich, notthe poor. In world corn markets, the biggest importer by far is Japan followedby the European Union. Next come South Korea. Surely, citizens in thesecountries are not underfed. In the poor countries of Asia, rice is the mostimportant staple, yet most Asian countries import very little rice. Hunger iscaused in these countries not by high international food prices, but by localconditions, especially rural poverty linked to low productivity infarming.
Thefocus of this article, however, is more local. India and its botched upagricultural policies. While Bush���s comments made our politicians andpolicy makers see red, they took the oft beaten track of blaming this on globalphenomenon while they continued to ignore the local problems. Not surprising,since every Indian government, past or present, needs to take the blame for thecurrent impasse.
Indiaboasts a food grain reserve of over 60 million metric tons but, at the sametime, more than 200 million people remain undernourished. Nor surprisingly, thenoted economist Prof. M S Swaminathan once commented, ���the reason why wehave been food sufficient in the past is not that we have produced enough butbecause a large part of population is undernourished.���
Howprophetic. Indeed, the numbers speak for itself.
First,undernourishment
Notonly are the rest of the BRIC countries far ahead of India in this count, even,most of the countries experiencing food riots recently are better off. Moreimportantly, most of the countries, which are currently better off than Indiahad a far worse record in earlier periods.
Table:Prevalence of undernourishment in total population
(%)
CountryName | 1969-1971 | 1979-1981 | 1990-1992 | 1995-1997 | 2001-2003provisional | 2002-2004preliminary |
Mozambique | 58 | 59 | 66 | 58 | 45 | 44 |
Cameroon | 27 | 23 | 33 | 34 | 25 | 26 |
Thailand | 29 | 23 | 30 | 23 | 21 | 22 |
India | 39 | 38 | 25 | 21 | 20 | 20 |
Senegal | 23 | 23 | 23 | 25 | 23 | 20 |
Philippines | 51 | 27 | 26 | 22 | 19 | 18 |
Viet Nam | 32 | 37 | 31 | 23 | 17 | 16 |
Burkina Faso | 58 | 62 | 21 | 19 | 17 | 15 |
China | 46 | 30 | 16 | 12 | 12 | 12 |
Ghana | 24 | 65 | 37 | 18 | 12 | 11 |
Mauritania | 53 | 40 | 15 | 11 | 10 | 10 |
Brazil | 23 | 15 | 12 | 10 | 8 | 7 |
Malaysia | 5 | 3 | 3 | <2.5 | 3 | 3 |
RussianFederation | 3 | 3 |
Source:FAO
Second,highly unequal distribution of food
This,to a certain extent, explains the undernourishment. India is a country with highinequality in terms of access to food. Although the reference periods vary, thedata has ominous signs.
Infact, other than Sierra Leone and Liberia, all the countries had a better GiniCoefficientas well as Coefficient of Variation ascompared to India.
Table:Inequality in access to food
CountryName | DietaryEnergy Consumption | ||||
Lastsurvey year | Ginicoefficient (percent) | Coefficient of Variation (percent) | |||
Sierra Leone | 1995 | 19 | a | 36 | a |
Liberia | 1995 | 19 | a | 35 | a |
India | 1990 | 18 | 34 | ||
China | 1990 | 17 | 32 | ||
Viet Nam | 1993 | 17 | 32 | ||
Brazil | 1974-1975 | 17 | 31 | ||
Mozambique | 1995 | 17 | a | 31 | a |
Philippines | 1987 | 17 | 31 | ||
Burkina Faso | 1995 | 16 | a | 29 | a |
Mauritania | 1988 | 16 | 29 | ||
Thailand | 1990 | 16 | 28 | ||
Ghana | 1992 | 15 | 27 | ||
Senegal | 1995 | 14 | a | 26 | a |
Cameroon | 1995 | 14 | a | 26 | a |
RussianFederation | 1993 | 12 | 22 | ||
Malaysia | 1989 | 12 | 22 | ||
Source:FAO
Note:a - estimated
Thestagnation
Indeed,the story of Indian agriculture is a story of ill-conceived and, quite often,inappropriate policies. The fact that Indian agriculture has been stagnating forlong is quite clear.
TheCAGR (compound annual growth rate) of food grain production has fallen from 3.1percentduring the 1980s to a mere 1.1 percent inthe 1990s. What is important to note is that this annual growth has been lessthan the population growth during this period. Till 2006-2007, the situation hashardly improved.
Acloser look at the data reveals that the deceleration was much sharper after1996-97. Since then till 2006-07, the CAGR has been less than one percent. Analmost similar trend was visible across major states. Clearly (demand or nodemand) the country started facing severe supply side problems since themid-���90s, which became acute by the turn of the century.
Thedeceleration, since 1996-97, has been mainly due to sharp decline in usage ofcritical inputs like technology usage, irrigation, fertiliser and electricityconsumption. Not surprisingly, agricultural productivity had been a casualty inIndia (refer to my previous article, ���Inflation, who���s toblame���)
Table: Trend growth rate in major agricultural inputs
(%)
Period | 1980-81 to 1990-91 | 1980-91 to 1996-97 | 1996-97 to 2005-06 |
Technologya | 3.3 | 2.8 | 0.0 |
Grossirrigated area | 2.3 | 2.6 | 0.5b |
Electricityconsumed | 14.1 | 9.4 | -0.5c |
NPKuse | 8.2 | 2.5 | 2.3 |
Source:Economic Survey
a- Yieldpotential of new varieties of paddy, rapeseed/mustard, groundnut, wheat,maize
b- Upto 2003-04
c- Upto 2004-05
Despitethis, our policy makers were content in pointing towards our self-sufficiency infood grains ignoring the fact that the problem had a lot more to do with lack ofpurchasing power rather than satiated demand. Fact is, when international pricesgo up, the disposable income of some urban dwellers is squeezed, but most of theactual hunger takes place in the villages and in the countryside, and itpersists even when international prices are low.
Governmentintervention in food grain markets meant primarily for promoting food securityhas reached a stage where consumers are being deprived of basic food, when alarge proportion of the output is diverted from the market to governmentwarehouses. High prices for grains paid to producers, completely ignoringdemand-side factors and costs involved in building and holding grain stocks haveput them outside the reach of consumers. Stocks are being liquidated byreleasing them to private trade for export at a heavy discount. This implies asort of taxation for domestic consumers.
Urbanundernourishment, however, is also a reality. According to theFood Insecurity Atlasof Urban India, brought out by the M.S.Swaminathan Research Foundation (MSSRF) and the World Food Programme (WFP), morethan 38 percent of children under the age of three in India's cities and townsare underweight and more than 35 percent of children in urban areas are stunted(shorter than they should be for their age). The report states that the poor inIndia's burgeoning urban areas do not get the requisite amount of calories ornutrients specified by accepted Indian Council of Medical Research (ICMR) normsand also suggests that absorption and assimilation of food by the urban poor isfurther impaired by non-food factors such as inadequate sanitation facilities,insufficient housing and woeful access to clean drinking water.
Agriculturalinvestment takes a backseat
Paradoxically,our response has been falling investment in agriculture.
Table:Gross Capital Formation in agriculture (@ 1999-2000 prices
(Rs.Crore)
Period | GCF(total) | GCF(agriculture) | Share ofagriculture in total GCF (%) |
1999-00 | 506244 | 43473 | 8.6 |
2000-01 | 488658 | 39027 | 8.0 |
2001-02 | 474448 | 48215 | 10.2 |
2002-03 | 555287 | 46823 | 8.4 |
2003-04 | 665625 | 44833 | 6.7 |
2004-05 | 795642 | 49108 | 6.2 |
2005-06 | 950102 | 54905 | 5.8 |
2006-07 | 1053323 | 60762 | 5.8 |
Source:Economic Survey
Fora country, nearly 70 percent of whose population depends on agriculture andnearly 20 percent of the country���s GDP comes from agriculture, a 5.8percent share of agriculture in gross capital formation (lowest ever sharerecorded).is nothing less than criminal.
Onthe other hand, unable to tackle the problems, our subsidies are growing. So wehave a situation wherein measures that can have only short-term impact (readsubsidies) have become a regular feature, while investments that can have along-term impact are losing importance.
Timeindeed it is to get our priorities right.
(KunalKumar Kundu is the Head of Economic Research at Infosys BPO. The views expressedare his own)
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