The recent gallop in food prices worldwide has refocused attention on an area that had been relegated to the sidelines: food security.
The facts are dismaying. In 1972-73, annual per capita consumption of cereals was 175kg. By 1999-2000, it had fallen to 147kg. By 2004-05, the figure had fallen to 145kg in rural areas and to 119kg in urban areas. Fluctuations in availability of grains complicate the picture. But if one looks at the area under foodgrain cultivation to total cropped area, the picture is disturbing: From 1975-76 to 2001-02, it fell by 10% across India and fell in all major grain producing states except Punjab and Uttar Pradesh.
Whatever may be the interpretation and the nuance involved, one cannot deny that food security, as defined by availability of grain, has dropped greatly. In the short run, the problem may be aggravated by high prices due to exports at a time when domestic demand is high. But in the long run, it’s a problem of productivity and government dominance of grain trade. The latter factor is something that can be handled as quickly as the government wants to.
(Illustration by Malay Karmakar/ Mint)
So far, it’s a command-driven system. The Food Corporation of India (FCI) purchases, stores and distributes grain. FCI then supplies it to deficit states. Because of the scale of operations and the costs involved, the wastage is immense. The economic (final) cost of rice in 2007-08, for example, was Rs1,572 per quintal, while the minimum support price (MSP) or the purchase price was Rs745 per quintal. In other words, the final cost was a whopping 111% more than the purchase price.
This is not only money wasted; it’s also less grain for the poor. In the mark-up from the purchasing price to the economic cost are a whole set of intermediaries: state governments levying taxes on what FCI purchases, private agents making a killing by inflating bills for polishing rice, transporters and, of course, rodents which consume grain that is stored while it awaits transportation. These factors erode food security.
One way out of the situation would be to decentralize foodgrain purchases. In the case of rice, the scheme has worked to an extent. But the costs have not come down significantly because state governments continue to be involved in the process. If food prices are to come down on a sustainable basis, it’s important that the number of intermediaries between the farmer and the consumer be reduced.
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