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K. P. Prabhakaran Nair

CHINA has been officially admitted to the World Trade Organisation (WTO), more than 15 years since it first sought entry — in the Uruguay Round, that is. With this, a completely new economic scenario will unfold in Asia. Economic analysts often focus on the changing pattern of foreign direct investment (FDI) flows. With the global economy in recession, funds will flow to countries that not only have low production costs but also offer high returns. China, in this context, continues to be the best investment destination, and the consequences of this would be a thriving domestic market as well. This will, inevitably, provide smaller regions a third major export destination in addition to the US and the European Union (EU).

Deng Xiaoping, author of the economic reforms, had, more than two decades back, said that it was "glorious to be rich." And in a recent speech, the President, Mr Jiang Zemin, called for not only more private-sector-style management of the Chinese Communist Party but also the inclusion of entrepreneurs in the party. In terms of economic power, China is set to lead the Asian pack and, perhaps, the world as well. Curiously though, there is little mention of China's farm policy.

China's foodgrain economy will inevitably impact India's. Last year, India produced less than 200 million tonnes of foodgrains, which pales before China's 550-million-plus tonnes. And because of New Delhi's directionless and "stop-gap" grain policy, more than a third of the nations one-billion-plus people remain undernourished even as the godown are brimming with stocks. To make matters worse, the Government has hiked the minimum support price (MSP) for rice by Rs 20 a quintal against the recommended Rs 10 by the Commission for Agricultural Costs and Prices (CACP). This will only add to the food hoard, especially at a time when the international market for rice is on the downswing.

The China factor

Allowing for population differential, India will have to produce close to another 200 million tonnes of foodgrains to catch up with China. The oft-repeated argument that the food `surplus' is a result of the lack of purchasing power is incorrect. A recent RBI report indicates that despite the buffer stocks being three times the stipulated level, the per capita food availability declined from a high of 505.5 gm per day in 1997 to 470.4 gm in 1999 and to a further 458.6 gm in 2000 — a 9.3 per cent drop, that is, more than 3 per cent per annum. If the staples — wheat and rice — alone are considered, the per capita availability works out to 370 gm per day, which is only 70 per cent of the minimum (500 gm) prescribed by the National Institution of Nutrition, Hyderabad. In short, the food `surplus' does not reflect the ground realitySince the 1980s, agricultural growth has been falling. More disturbing is the volatility in agricultural production, especially during the second phase of "economic reform" starting mid-1990s. During comparable time spans (1979-81 and 1995-97), China was able to bring down the number of people under chronic food insecurity by 38 per cent (the FAO report, The State of Food Insecurity in the World Report 1999) — thanks to strong political will and better distributive justice.

The president of the World Watch Institute, Mr Lester Brown, predicts that by 2030 China will need to import up to 215 million tonnes of food to balance its food budget. From where will such large imports come from and how will it impact India's food policy? The direction China's grain economy takes is not only crucial for its own development but also for world agriculture. In the early 1990s, China was the largest producer of cereals. Direct consumption was around 67 per cent of the total supply, or 225 kg per capita per year, which by Asian standards was quite high.

Even at the best of times, India's consumption at 184.5 kg per capita per year has been a mere 82 per cent of China's (the comparison is based on two different time scales — early 1990s for China, and 2000 in the case of India. At current levels of production, China's per capita availability works out 420 kg or 1.15 kg per capita per day against India's 458.6 gm per capita per day. In the early 1990s, meat constituted 20 per cent of the Chinese diet. But with increasing affluence, thanks to President Deng's policies, more and more Chinese are turning to a meat-based diet. It is only in the countryside that cereals and vegetable proteins continue to be staple. The merger with Hong Kong's economy will add a totally new dimension to the agricultural policies of China, albeit indirectly.

Implications for India

With Chinese increasing shifting to a meat-based diet, the pressure to cultivate crops such as sweet sorghum, which serve as animal feed, will mount. This would mean lesser land for cereals of human consumption. In 1999, the Chinese Academy of Sciences had hosted an international conference on sweet sorghum. The Chinese are clearly planning ahead. In much of South Asia, urbanisation has been on the increase. Over the past decade, China's urban population has grown by over 42 per cent and this is bound to impact its food policy.

In China, increased grain production in the reform period (late 1970s to mid-1990s) was a result of crucial public investments in agriculture. A stark contrast to the Indian experience, where both foodgrain and non-foodgrain production fell during the "reform period". According to the RBI, the high volatility in the agriculture sector can be traced to a totally lackadaisical approach to agricultural planning, especially in the rural sector. Agricultural research has been mainly confined to the labs, wherefrom nothing worthwhile has thus far emerged for the rural sector. Almost all reports on agriculture talk of the pathetic state of rural infrastructure, but the findings and recommendations gather dust in research institutions and the ministries concerned. On the other hand, in China, the development of "hybrid rice", pioneered by Chinese Plant Breeders in the 1970s, saw a rice revolution that helped break the yield barrier. Despite a decade of hybrid rice research and huge investments, India has nothing worthwhile to show.

Of late, the agricultural fraternity has been going gung-ho over "gene revolution", without really going into the merits and demerits of the DNA-recombinant technology. If the money is diverted to improving rural infrastructure — roads, grain storage yards, cold storage facilities, and so on — the nation can avoid tragedies, such as the one that hit Kashipur (Orissa), where, because of the lack of rice, many consumed fungus infested mango kernels and perished. The Fifth Pay Commission has doled out Rs 80,000 crore to the organised sector. But the interests of the unorganised farmer, who finds it difficult to have two square meals a day, have been ignored.

Under the emerging global food scenario, it is almost certain that China will import. The only question is: How much? The leadership will, however, introduce measures to protect its image of being "self-sufficient in food" and would keep food imports to a minimum. China's infrastructure is still primitive by western standards. Limited stocking facilities in the ports and transportation bottlenecks would also act as barriers to large-scale imports. If China imports foodgrains, it will obviously tap the cheapest market. India must watch the situation closely.

The way out

The Government must first completely dispense with the current practice of hoarding grain and the "MSP syndrome". China is now attempting to end the policy of paying "protective grain price" to farmers, establish a free-market grain-pricing system and increase the inventory of high-quality grains. To start with, China will implement the new policy in Shanghai City and the Zhejiang, Fujian and Jiangsu provinces.

Back home, there are both high grain-producing areas — Punjab, Haryana and Andhra Pradesh — and grain-scarce regions — Kerala. Free grain trade will, to a large extent, rectify the current distorted price structure.

Second, a massive "grain for work" programme has to be initiated. Policy-makers have thus far suggested "food for work" programmes only for landless labourers. If the organised labour can be pampered with cash incentives over the decades, it is only but fair to put in place at least a "grains for work" alternative for the farmer.

(The author is a senior fellow of the Alexander von Humboldt Foundation.)

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