Nature's bounty this year has helped the country tide over a severe crisis on the food front and build a sizeable buffer stock of wheat and rice to meet the needs of the Public Distribution System and cast a sobering influence on the free market prices. But, considering the inappropriate policies pursued during the past decade and neglect of agricultural research and technology application, the failure to reach adequate quantities of improved seed, fertilizer and pesticides to the farmer at affordable prices has rendered agricultural performance highly unpredictable and almost totally dependent on the vagaries of the monsoon. The widely touted theory that free market operation will provide the needed incentive to farmers to maximize production has failed the ground test. In the past four years, with agricultural growth barely one percent per annum and erratic monsoons, severe shortages in both production and availability have caused widespread distress and disaffection against policy-makers.
Reduced food availability alone has not pushed inflation to unprecedented heights, as it is driven by several external factors which are beyond the Government's control. But the Government has failed to take appropriate advance measures to moderate their impact on the vulnerable sections of the population. Adequate availability of food grains, pulses edible oils, sugar and kerosene is the best insurance against deprivation and hunger and also yield political dividends to those in power. But failure to do so, for whatever reasons, entails political costs. Lack of advance planning, execution, commitment and sensitivity to the needs of the voters has repercussions for those in power.
The global food crises, caused by a variety of factors, some natural and others man-made, has now caught the attention of the industrialized nations and international institutions, such as, the United Nations and its Food and Agricultural Organisation. As UN Secretary-General Ban Ki moon points out, the resources to meet the situation are available land we know what to do. It is a huge chance "to address the root problems of many of the world's poorest people, 70 per cent of whom live as small farmers." No stone will be left unturned to focus political will at next meeting of the G-8 nations in Japan and a high-level FAO conference on food security in Rome in June.
Most affected countries are responding to the situation in panic: by issuing ration cards, restricting purchases by individual households, banning or reducing exports and exploring markets for imports, which are scarce. Some 30 countries have imposed some sort of trade restraint, while 40 have resorted to price controls, consumer subsidies or lower tariffs. Several Arab states have granted hefty pay increases to government and public sector employees to maintain their purchasing power. But, these policies themselves are inflationary and expensive and work havoc with the internal finances of non-oil exporting countries, which are forced to print more currency. In India too the 7.3 million tonnes of wheat imported last year at a high international price, was distributed at a highly subsidized price. The oil companies, forced to buy oil at $ 120 a barrel, and more in the coming months, also have been increasing their subsidies which works havoc with their finances.
With this year's wheat and rice procurement targets having already surpassed the previous year's level, the Government has now sufficient stocks to meet its requirements till April next year and be able to hold the free market price also at reasonable level. But, the Government again is haunted by uncertainty next year due to unpredictable behaviour of the monsoon and may again be forced to resort to panic reaction. There is now no need to import wheat this year, which will lead to substantial saving in foreign exchange and will not strain the government's meager resources. But, there is no long-term solution in sight for a predominantly agricultural country and a net exporter of food grains to meet the growing needs of its expanding population, which has crossed 1.2 billion, and have something to spare to add to the world's food basket to feed food-deficit countries.
The historical blunder committed during the NDA regime of dismantling the public distribution system and exhausting food stocks in order to let private traders have a free play, should now be corrected. The Government should reject the advice of the free-market economists, who abound in its policy-making panels and the Planning Commission, and ensure food security by holding a minimum stock of food grains in its silos and maintain the public distribution chain to meet the needs of the vulnerable and poor people. Other measures are also necessary for supply-side management which was taken, though belatedly, in the past few weeks. But the basic problem of production-side management still remain unattended, despite the exhortations of the Prime Minister and the Agriculture Minister to others to adopt new strategies to maximize production and insure agriculture against the vagaries of the monsoon. No amount of lecturing the agricultural scientists and the states will do. Agriculture needs inputs, including assured irrigation, which the governments must provide.
It is simplistic to argue that growing incomes in developing countries have generated bigger demand for food. This has been happening for at least a decade but it did not upset the supply-demand equilibrium to the extent it did last year. The basic point is that production in several exporting countries has fallen due to continued droughts and stagnant production, as in India, thus reducing the size of the world food basket and creating scarcity, particularly in net importing countries, some of whom are industrialized. With some countries having reduced food subsidies and with agricultural input costs, including energy for pumping water and driving machinery, as well as, fertilizer and pesticides having gone up substantially, the output prices have also gone up, pushing up the market prices as well. A shortage of several million tonnes of fertilizers for the Kharif crop is feared due to the Center's fertilizer pricing policy. The Government's subsidy reimbursement mechanism has left producers in the lurch as payments often get delayed.
The Agriculture Minister now talks of a new approach and strategy to boost agricultural production, but there is no time to lose. The crisis has been building up for over a decade and the NDA's free market policies totally neglected public investment in agriculture and research, leading to falling yields and shift to cash crops. The farmers have been left to the mercies of seed and fertilizer marketing companies. Large tracts of agricultural land have been taken over by urban developers for housing purposes and industrial houses, for constructing new factories.
Very little attention has been paid to improving per acre yield, which is among the lowest in the world, and to improve soil fertility which gets reduced due to overuse of chemical fertilizers to the exclusion of organic manure. While it takes years to develop new strains and to apply them, in the interim, the Government could arrange import of quality seeds with the help of the FAO (as was done in the early stages of the first Green Revolution) to boost production. The UN has announced a programme to assist countries in getting inputs and India should also take advantage of it.
It is now realized that the reasons for the current food crisis are largely policy driven, though climatic factors have also played a part. If only a fraction of the money spent on importing wheat and edible oils were invested in agricultural research, in which the private sector could also participate, a solution to continuously declining yields could be found. High yielding seed varieties would increase the size of the food basket and grater research on dry land farming would boost production of pulses and coarse grain. Since the wheat and rice yield per acre in India is only half that of China, there is scope for doubling the current food production with the application of new strategies and intensive agriculture.
The Government also needs to regulate the markets better and ensure the farmers get an incentive price from private traders and food is made available to the consumer at affordable prices. There is no reason why, for instance, a 5 kg bag of wheat flour marketed in India by multinational companies or local packers should cost twice as much as that sold by small retailers who obtain their supplies direct from flour mills. First, they corner stocks by purchasing in bulk from the farmers and then manipulate the prices, thus driving inflation. The marketing margins are large and growing and the primary producers do not get the benefits. The Government has to act on several fronts and it must act quickly.
MK Dhar, NPA
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