How to Achieve Food Security
By Ashok Gulati
Food inflation, hovering in the double digits, may play spoilsport to India’s ability to continue its rapid economic growth. It is truly troubling that food still consumes half of the expenditure of the average Indian household. No wonder a sharp spike in onion prices has the potential to upset the political calculus of social stability.
India’s biggest challenge still remains ensuring food and nutritional security to its masses. Notwithstanding the nation’s steady progress in alleviating poverty, India is home to the largest number of poor and malnourished people in the world. One of the reasons is the lackluster performance of its agriculture sector, with growth below 3% a year over the last two decades, and that too with high volatility.
India’s population of 1.2 billion is large, growing, and expected to touch 1.6 billion by 2030, surpassing China. With rising incomes in India, the demand on food is building.
In an effort to help the poor facing food inflation, India is likely to enact a so-called Right to Food bill this year, which will entitle a large mass of the population to buy rice and wheat at highly subsidized rates, almost one sixth of the market price. If enacted with universal coverage — one option under discussion — the government will be making a Herculean commitment to the people of India, requiring the government to handle more than 70 million tons of rice and wheat.
Given the government’s poor record with the administration of the existing Public Distribution System, in which more than half of the food grains meant to be sold to the poor at subsidized rates actually end up in the hands of the non-poor, India will almost certainly face a major challenge trying to get right this Right to Food.
Indeed, because of this, there is a big push to help the poor by switching over to conditional cash transfers, in line with best international practices. I am strongly in favor of making this switch, in which poor can be given smart cards or coupons to buy a selection of food commodities (including, but not restricted to, wheat and rice.) These cards or coupons can be given to the woman in the household, and even made conditional upon sending children (especially females) to school. These methods can help provide food security to the poor in a cost-effective manner, promote a more diverse diet and empower women through education. All this will have beneficial impact on nutrition.
It is important to note that while staples like rice and wheat still provide many of the calories for the poor, the exploding middle class is increasingly eating fruits and vegetables, milk, eggs, meat and fish — so-called high-value agriculture. This poses a twin challenge to agricultural policy makers: to increase the production of staples while also expanding high-value agriculture.
The states that fueled the Green Revolution–Punjab, Haryana and western Uttar Pradesh–cannot be relied on for ensuring grain security in the future as the water table in this region is falling at an alarming rate: by almost a foot a year. Eastern India, with its abundant water supply, offers the most promise for spurring a Second Green Revolution.
It is currently underdeveloped, with rice yield levels that are only about half of those in the former Green Revolution states. The government is moving in the direction of trying to promote a Second Green Revolution, having made its commitment public last year. But it is moving slowly and with very little resource-allocation.
Finance Minister Pranab Mukherjee made a special allocation for this initiative this year but so far the financial commitment of less than $200 million is far from the $8 billion to $10 billion required to build irrigation systems, buy and distribute seeds and provide incentives for farmers.
China had similar pressures on its food security as it started its economic reforms in late 1970s. China used hybrid rice to raise yields. More than 60% of the rice area in China is under hybrids. As a result, Chinese yields of rice are almost double those of India, which has less than 3% under hybrids. China produces almost 200 million tons of paddy from 29 million hectares (72 million acres), compared to India’s 150 million tons coming from 44 million hectares (109 million acres.)
India should make a priority of investing heavily in the eastern region by combining technology (say, hybrid rice) with effective incentives for farmers.
However, it must be noted that the current bout of food inflation in India is not being led by staples but by high value agriculture, especially in urban areas. Most of this is perishable in nature and requires very fast-moving infrastructure and well-integrated supply chains.
Given the economy’s weak infrastructure (especially in roads and power), Indian entrepreneurs struggle to build efficient supply lines. The government has just announced a program for peri-urban agriculture, encouraging vegetable production within a radius of 50 kilometers of big cities. But institutional constraints — such as the Agricultural Produce and Marketing Committee Act — which prohibit direct buying from farmers, act as a hindrance to building efficient supply chains from farms to forks.
Given the small landholding size in India (almost one hectare), government policy could encourage the formation of growers’ companies to aggregate farm produce (as was done for milk under Operation Flood in the 1970s) and then encourage large and organized retailers to buy directly from these farmer companies. This can help small farmers in rural areas find markets in prospering urban areas, and in doing so ensure food security.
* Ashok Gulati is chairman of the government’s Commission for Agricultural Costs and Prices and former director in Asia of the International Food Policy Research Institute. The views he expresses here are personal.
