India will harvest 250 million tonnes of foodgrain this year. This will be a record, which nevertheless raises a paradoxical question: will this be enough to feed the 1.2 billion mouths in the country? Or will some of us still go hungry?
One answer is ‘yes’. First, a good part of the produce will rot because of inadequate, improper or even absence of storage. Two, by the end of year the number of mouths that need to be fed will expand by 2 per cent. Three, farm produce will also have to support a rising number of farm animals. Four, the task of providing the amount of food needed to reach the ideal level of nutrition for all Indians is a tall order.
But there is another, worse doomsday scenario — with severe implications for food prices — arising precisely from the food security scheme that the UPA government wants to implement.
There has been talk of raising the calorie intake of every Indian to the western standard of 2,400 kilocalories per head per day. If this were to be attained, India would have to import 70 to 100 million tonnes of food, after exhausting the entire home produce. What this will do to global food prices is anybody’s guess.
Planning commission member Abhijit Sen, who is in-charge of agriculture, said as far as balance sheet of food production is concerned, India had achieved 2,500 kilocalorie requirement of food intake per person in 1980s itself.Sen did not see any problem in meeting the calorie requirement in future as well because food grain production is growing, on an average, at 2-2.5 per cent annually against the population growth of 1.3 per cent in the country.
The food security scheme promises to provide every person in a priority household (read poor) person 7 kg of grain every month; a person in a general category household will get 3 kg — both at heavily subsidised rates. The two categories cover 75 per cent of all rural population and 50 per cent of all urban people. In sum, 67 per cent (or 804 million) of all Indians will be ‘food-secured’. The rest, presumably, will have to fend for themselves and, clearly, pay a high price for the privilege.China with a population of 1.3 billion — some 100 million more than the Indian number — produces 570 tonnes of food a year, more than twice India’s produce. Yet, China is among the world’s biggest food importers, buying 13 million tonnes of cereals from the global market.That could mean only one thing: the Chinese and their homestead animals are better fed and better nourished than Indians, even before our food security plan.
Food security will make India’s challenge more acute. To feed everyone, including those under to be food security, India needs to produce over 300 million tonnes of grain. Plus import some.National Advisory Council member NC Saxena said it was inappropriate to compare food grain production of India and China. In China, even potatoes, being carbohydrate food, are considered as foodgrain apart from animal feed.
Uma Shankari, a Delhi School of Economics PhD and a farmer in Andhra Pradesh’s Chitoor district, says that the current level of production is not enough.Siddharth Shanker, agricultural economist and director of commodity brokerage KASSA, holds that to meet the minimum nutritional needs, we must produce at least 320 million tonnes.Which, of course, Indian cannot. So large imports may become necessary. This has Shankari worried: where will we find that food without raising prices? In her opinion, food security has an in-built stoker of inflation.
MS Swaminathan, father of India’s green revolution, looks at the issue from a different perspective but comes to the same conclusion as follows:In most of the world one tonne of grain can sustain three persons for a year. If meat consumption in the area is high, only two persons can be sustained with a tonne of grain. With a purely vegetarian diet and with a large population of youth, India can support about four persons per tonne of grain. Even by this modest standard, India should have at least 300 million tonnes to feed the 1.2 billion Indians.On the farms, animals and table birds are mostly fed maize and soyabean. What this implies is that if we were to increase the human intake of nutrition through meat, we have to increase the harvests of millets in the overall food production.Swaminathan calls these coarse grains the real ‘nutri-cereals’ as they are very rich in protein and fibre content. India can, if it wants, greatly raise the output of ragi, bajra, maize and other millets, mostly grown in rain-fed areas.The draft food security plan includes millets and holds the promise of giving a fillip to their cultivation. Nothing works better in ensuring higher output than assured offtake at a remunerative price.All this suggests that even a harvest of 250 million tonnes of grain may not be enough.
Not unexpectedly, food minister KV Thomas does not agree. He, in fact, says India now produces more than it needs. His rationale goes: “If we are not producing enough grain, why is it that food inflation is slowing? We are forced to export because the godowns are overflowing.”Allaying fears over food security stoking inflation, he argues that the volumes the scheme will consume have been decided only after taking into consideration the nutritional requirement.Nutrition is a subject that politicians rarely touch upon.
But prime minister Manmohan Singh has made it bold to call the malnourishment among Indians a national shame.Swaminathan has a simple answer to the nutrition question: improve the productivity, profitability and sustainability of family farms, particularly small landholders. This, he is confident, will help improve the nutritional intake of the malnourished.
Ashok Gulati, chairman of the Commission for Agricultural Costs And Prices, does not quite accept the malnourishment point. He calls the requirement of 2,400-2,500 kilocalories per person per day an “old theory” and, therefore, no longer valid. The requirement, he suggests, varies from person to person, depending on the physical work he does.But he does admit that “the bottom 30 per cent of the population no doubt requires more food.” What’s essential is the higher intake of protein to get the required calories. Of China’s annual 570 million tonnes of grain output, as much as 150 million tonnes is maize, most of which is used as animal feed. To produce 1 kg of beef requires 7 kg of grain; and 1 kg of pork requires 5 kg of food grain. Poultry has the much better conversion rate of 2 kg of grain.In a way, says Gulati, India’s predominantly vegetarian eating habits have provided a “safety valve” as far as our grain requirement is concerned. And this is what had led to a surplus. As a result prices are falling, says Gulati, asserting that it isn’t grain that caused food price inflation. The problem, he suggests, came from elsewhere. Enough fruit and vegetables (together, 200 million tonnes) are produced in India but up to 40 per cent of it go waste for poor logistics and infrastructure. Gulati, more or less, blames this for food inflation.To go back to the subject of grain production, there have been suggestions of shifting much of the base from Punjab and Haryana to eastern India. To produce grain both the states use huge volumes of water, fertiliser, power and diesel. The green revolution was possible because of energy intensive farming in the two states. Yet, the average cereal yield in Punjab and Haryana is 4,200 kg and 3,300 kg per hectare, respectively. The average for India as a whole is just 2,500 kg, half of China’s. Productivity in most other agricultural tracts remains low at about 1,500 kg a hectare.
We still haven’t found a way to raise this.Chandrakant, head of agricultural economics of the University of Agricultural Sciences, says dependence on water-intensive methods of cropping is not sustainable. India’s agriculture depends on the bounty of the monsoon, which has a history of playing truant. It can do so again, he says.Efforts are on to improve productivity, according to both Thomas and Gulati. Steps have been taken to bring three million hectares more under paddy in Andhra Pradesh. This should raise productivity. Gulati says the paddy success of Haryana and Punjab can be easily replicated in the eastern states where water is plentiful. Shifting paddy cultivation from just one million hectares in these two states to Bihar, West Bengal and other easternstates can solve two problems at once — one, the rapidly dropping water table in the two northern states and, two, the productivity problem in the east.
One area that needs a closer look is farm economics. Despite a plethora of subsidies (on fertilisers, power and a minimum support price, or MSP) to farmers, an overwhelming majority of them are no better off.The Union agriculture ministry reckons 150 kg of fertiliser is needed per hectare of wheat and paddy. Fertiliser prices (and therefore, the subsidy on them) ultimately depend on prices of feedstock, which can be gas, or a variety of chemicals. And these have been ruling very high globally. Many other nutrients are either directly imported. In all cases, a hardening rupee only adds to prices and to the government’s subsidy bill.Similar is the case of electricity and diesel. Both of which come dirt cheap to farmers. Both the policy-makers and those who supply these key inputs want prices raised. The government wants it to cut the subsidy bill and balance its own budget, but does not have the popular backing to do so.
Power in particular is a Damocles’ sword. States are being forced to raise power tariffs across the board and may ultimately do so jus to protect vote banks. At best, they may absorb some of the increase in the tariff payable by farmers.Still, the dark prospect is that they will some day have to pay more for all the inputs they use. In any case, the power situation is so bad in most states that supply comes only erratically; so irrigation pumps only working fits and starts. There are states where power is supplied when irrigation is not required and switched off in seasons when needed the most. Farmers end up using diesel get sets to run their pumps. In rural areas a lot of the diesel is sold in black market; the farmer has no option but to pay through his nose.In many areas farmers are not even sure of getting MSP as procurement agencies do not reach them.Since the normal law of pricing does not work for them, farmers live in a world artificially rigged from all sides.
Shankari is clear that as farmers “we are not interested in subsidies; we are aware of the fiscal costs of the subsidies.”Swaminathan, who chaired a committee on national policy for farmers in 2007, had set a clear objective to be followed: “Improving the economic viability of farming by ensuring that farmers earn a minimum net income and ensure that agriculture progress is measured by advances made in that income.” The problem was that MSP was lower than the cost of production.Four years down the line, MSP still doesn’t compensate the farmer fully. “It does not reflect the actual cost production, according to Chandrakant.Under the MSP system, farmers are expected to surrender 70 per cent of their produce to the government. MSP for rice is now Rs 1,100 a quintal, or Rs 11 a kg. The price in the ration shops is slightly lower.MSP is decided on the basis of the recommendations made by the Commission for Agricultural Costs and Prices Chandrakant says that in reality there is no subsidy as ration shops sells foodgrain that has been procured much earlier. What is procured now may stay in the godowns or in the supply pipeline for quite a while before it reaches the customer at the ration shop.A Karnataka government official who declined to be identified said, “If there is a food subsidy it is only on inventory carrying costs by the public sector Food Corporation of India.”Often the farmer has to wait for settlement of payment, which is made through “aratiyas” who are basically commission agents. In view of the farmer’s immediate cash needs, any payment for procured grain is made through these agents, who discount the payments by as much as 20 per cent.Banks, including those in the public sector, also do their Shylock act, similarly discounting credit payments to farmers. They give credit only up to 80 per cent. With this money the farmer is expected to meet all costs till payments for his produce come through, all the while bearing a 7 per cent interest on the bank loan. To him, going to the bank is not better than going to the commission agent.
Shanker says that the farmer cannot be encouraged unless “bank financing to his is a 100 per cent basis and on better terms.”With incomes under pressure farmers who produce the food are, ironically, the worst off. Last year food price inflation was in double digits at one point nearly 20 per cent.In such a situation, a farmer’s income should have improved and translated into higher savings. That did not happen because farmers are also consumers. It most hurt those who produced grain or vegetables.This is evident in an NSSO study. For every rupee earned, rural Indians spend as much as 52 paise on food. If other essential expenses, like electricity used at home, education for children and health, are factored in, the impact is even higher.No wonder that farmers want to sell less under the procurement scheme of the government, since they get better prices in the open market. For instance, in the open market rice fetches more than twice the PDS price. Though they have to go through private agencies that now scour the markets, at the end of the day the farmers still get more.They now want the levy component reduced from 70 per cent. This can potentially improve their returns.
But Chandrakant warns against the tendency which he calls “piecemeal and short-term.”The whole economics of farming has to be turned around from the heavily subsidised slant. Shankari calls for a mechanism for a full cost pass-through as in other sectors. “Else, farming is not going be attractive anymore.” The question though is of political courage of the government of the day.As the pressure to raise food production mounts, a section wants a bias towards more protein products, especially meat. The China example shows even that needs ever-larger grain harvests a bigger share of which will go into animal feed for meat.
Vicious cycle, if ever there was one.
