The Hindu Business Line : Will India cope with emerging food security challenges?

Concerns over food security can be addressed by either augmenting domestic output through appropriate growth-oriented policies, or arranging for timely imports of foods in short supply and distributing them equitably..

Per capita availability of foodgrains down: A file picture of a farm land where harvesting process is on. - A. M. Faruqui

G. Chandrashekhar

Agriculture and allied activities contribute to about a fifth of India's GDP; and close to two-third of the population (over 600 million) is dependent on farm and related activities for livelihood. Yet, the sector is a laggard, having grown at a very modest annual average of 2.3 per cent an annum last 10 years, sharply contrasting with the robust growth in manufacturing and services.

The lopsided nature of economic growth of recent years continues to put more money in the hands of about 30 per cent of the country's 200 million families; while the majority, still dependent on agriculture and related activities for livelihood, have limited financial capacity to be able to afford even those minimum levels of basic foods that nutritionists recommend.

The widening income disparity is a serious cause for concern. To be sure, despite rising output, per capita availability of foodgrains has actually declined in the last ten years - from 500 gm a day in 1997 to about 400 gm a day currently. Similarly, our edible oil per capita consumption is less than 12 kg, while nutritionists recommend not less than 16 kg.

Food habits

There are claims that food habits are changing - they indeed are. But the change in food habits - consumers diversifying their food basket to include more meat and poultry, dairy products, fruits and vegetables and other non-cereal foods - is restricted to the emerging middle-class, employed essentially in the industrial and services sectors, and living largely in urban and peri-urban areas. Their number, as said earlier, represents just about 30 per cent of the population or about 60 million families.

The rural poor are hard hit as their incomes have not risen sufficiently. Their already low purchasing power is further eroded by inflation. `Food inflation' in 2007 and early 2008 was generally far higher than the overall inflation figure would suggest. In the first half of 2008, together with energy and metals, high food prices contributed significantly to double-digit inflation. The Government's welfare programmes may have brought some relief; but clearly, the challenges of meeting the food needs of the people are daunting.

Food self-sufficiency

The claim of India having reached food self-sufficiency rings hollow as we have failed to meet the food needs of people. To control rising domestic prices and to meet domestic shortfalls, imports are organised, and often at low or zero rate of duty. While imports augment domestic availability, there is absolutely no guarantee that foods actually reach people. There are several millions in the country who live on less than $1 a day (Rs 45 a day). They are forced to depend on the open market for daily needs. With rising open market prices, their purchasing power is considerably eroded. They need a safety net in the form of access to foods at affordable prices. The pubic distribution system (PDS) is supposed to do that; but it seems to be losing steam, if reports of heavy leakages are any indication.

This underscores the urgent need to accelerate the country's agricultural growth. Food expenditure tops the family budget in India. On an average, food accounts for 54 per cent of monthly budget; this sharply contrasts with the US where typically less than 15 per cent is spent on food. This confirms the high cost of food in India.

Nutrition security

One of the biggest challenges this country is likely to face in the coming years is the worsening food and nutrition security. Concerns over food security can be addressed by either augmenting domestic output through appropriate growth-oriented policies, or arranging for timely imports of foods in short supply and distributing them equitably.

The former would be the most logical option. Self-reliance or near self-sufficiency is a laudable national objective. But farm policies of recent years, decline in public investment and failure to address structural issues have resulted in the farm sector turning moribund. The country has all it takes to become a major global farm power. Its natural endowments include varied agro-climatic conditions, 270 days of sunshine, 880 mm of rainfall, 150 million hectares of cultivable land, 6,700 km of coastline and millions of farmhands. Yet, the managerial ability to strategically leverage the factors of production has been absent.

Stagnating output

Currently, India has a large production base for a variety of crops and agricultural products and the country ranks amongst the top three producers in case of milk, rice, wheat, sugar, cotton and so on. Yet, output has stagnated in case of many field crops. On-farm and off-farm losses are huge. Only cotton provides a silver lining in an otherwise gloomy Indian agricultural scenario. Introduction of technology (genetically-modified seeds) has transformed the country from being an importer into an exporter of cotton.

Fragmented landholding, rainfed cultivation (irrigation limited to 40 per cent of cropped area), low level of input usage, antiquated agronomy, poor technology adoption, lack of rural infrastructure and tardy flow of price and market information to farmers all combine to result in stagnating output, low yields and volatile prices. Acreage under major field crops continues to stagnate. On the other hand, food imports have been large and mounting. India is forced to import major food items such as pulses, edible oil, sugar and wheat.

Economy growth

Lopsided growth of the economy - poor farm growth contrasting with robust growth in manufacturing and services sectors - is a disturbing feature. We have growth but this growth is without equity. Per capita availability of food grains has fluctuated sharply.

The combination of sluggish farm growth, unremunerative prices, frequent occurrences of droughts and floods, and generally unrewarding farm activity has adversely affected the rural poor, leading to an agrarian crisis.

Agricultural workers and farmers are forced to migrate to urban areas in search of livelihood.

Farm stagnation is leading to rural unrest in parts of the country.

Inflation

Inflation is another serious issue. Agricultural commodity prices are unlikely to turn benign anytime soon because of demand-side and supply-side factors both. There is nothing to suggest India would be insulated from imminent global price volatility.

The Government's priority has always been inflation control, and therefore, in its scheme of things consumers come first, then the growers and last, the processing industry.

A new dimension to the food security challenge has now been added. Tropical countries such as India are at greater risk of facing the adverse consequences of global warming and climate change. Our research priorities will have to factor in this aspect too.

The main challenge faced by the country's agriculture is linking food market to farm. Food manufacturers constantly endeavour to produce at the lowest possible cost and find shortest possible supply chain for their products. Contract farming could be a way forward, whereby, corporates can establish backward linkages and do away with avoidable intermediaries. Huge investments are required for infrastructure building and private players have an opportunity to invest in warehouses and cold storages.

Unfortunately, public investment in agriculture has been on a declining trend. This has to be reversed.

The Government's demand estimates show food grains output trails demand by 10-15 million tonnes, and the gap is set to widen unless serious attention is paid to production enhancement. The Eleventh Five Year Plan (2007-12) has projected 2.3 per cent annual growth rate for food grains, four per cent for oilseeds and five per cent each for horticulture, livestock and fisheries. There is no guarantee these targets would be realised. Yet they represent immense opportunities for people engaged in agribusiness and food processing.

Finally, India may not turn food insecure soon; but portends are ominous. Food security must be on top of policymakers' agenda. We need to make an honest assessment of financial, technological and human resources required to ensure food security is not compromised.?