The Hindu Business Line : Farm output concerns

PORTENDS ON THE foodgrains front are ominous. The numbers released by the Ministry of Agriculture last week confirm the fragility of the country's food security. While the marked decline in foodgrains output in 2004-05 must cause concern in the short run, the wide fluctuations in production over the last years should set alarm bells ringing in Krishi Bhavan. Rising incomes and population growth continue to steadily push up demand for food. As production growth trails consumption, supplies tighten and prices harden. Supply uncertainties make the market vulnerable to both internal and external pressures including speculation. Increasing globalisation of the domestic market provides a further challenge. As investment in commodity markets becomes fashionable world over, a large flow of hedge funds is bound to lead to further volatility; India will be no exception.

The Government's inability to contain the high variation in foodgrain output is the result of long years of lopsided pricing and procurement policy that favoured some regions and crops over others. Coarse grain, pulses and oilseeds — vital for a vast majority of malnourished population — seem to get less favourable policy support. Little has happened on crop diversification, especially in regions that follow mono-cropping of grains (rice-wheat-rice cycle) and the well-established virtues of crop rotation are ignored. It is unfortunate that even after five decades of planning, Indian agriculture continues to be a gamble on the monsoon. Inadequate irrigation facilities (60 per cent of the cultivated area is monsoon dependent) and unscientific water management make farming extremely risky.

Though agriculture is the largest private sector enterprise in the country, the farmer is hardly the entrepreneur who invests capital and uses the available factors of production; he is is a risk bearer though. The average farmer's risk-reward profile is decidedly adverse. Perhaps, he is forced to assume all the risks in the absence of other livelihood opportunities. Today, food- and nutrition-security face a challenge. Dependence on essential food commodities such as edible oil, pulses and even sugar is rising. Wheat may soon join the list. In the case of oilseeds, the Government's production figure for 2004-05 may be overstated. Else, how does one explain the fact that edible oil imports during the year are set to rise by nearly 12 per cent to exceed 50 lakh tonnes?

A serious review of agricultural production strategies as also foodgrains management schemes is called for. Nothing could be more damaging than the fallacious belief that with the opening up of futures trading in all major crops and the introduction of risk mitigating products such as crop and weather insurance, the interests of farmers would be protected. Stepping up public investment, strengthening input delivery mechanism, building rural infrastructure and disseminating market and price information to farmers are areas that need attention. The Government will have to find funds for these activities, to ensure food security. Whether shifting agriculture from the 'State' to the 'Concurrent' List would serve any useful purpose needs to be debated.

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