Weeks ago, I wrote about the rising prices of crude oil, slowing down of exports and the likely increases in the price of wheat. It is little satisfaction to see these events happening. The worry I had expressed then, that the proponents of capital account convertibility, free exchange rates and an open financial architecture were missing the heavy dependence on manufactured consumption goods, energy and food imports that this economy is hurtling towards, is now even more relevant.
On food security, a recent paper of the International Food Policy Research Institute raises concerns. It looks at two dimensions of food insecurity: the inability to access both sufficient food and nutritious food. The food energy deficiency prevalence is 51% in South Asia and 57% in sub-Saharan Africa. But, with the numbers far bigger, the problem is greater in South Asia.
As the paper points out, the number of underweight children under five, low birth weight children as well as underweight women are far greater in South Asia as a percentage than even in sub-Saharan Africa. The recent National Family Health Survey (NFHS 3) confirmed an increase in the percentage of underweight women and children in India over the last decade. The study also points to interfamily deficiencies and says that girl children and women suffer greater insecurity.
Some of this is known (perhaps not that we are comparable with sub-Saharan Africa). The added worry, as shown in a recent Economic and Political Weekly article, is that cereal production per capita is declining, and that the period of agricultural growth seems to be over. Those who argue that the share of agriculture declining to below 20% means we are more “developed”), should be worried that India has emerged as a large importer of wheat and that this can disrupt the future markets in wheat, as our demand accounts for more than 26% of all wheat traded in the current year. We are also a major importer of pulses and of oil seeds.
Finally, the commissioners appointed by the Supreme Court have reported that the Public Distribution System is just not working.
In short, not only have we worsened our nutritional and public health standards over the last decade, we have also moved into a food deficit territory over the last five years. We are unable to deliver food to BPL (below poverty line) families. Media photographers, printing pictures of the houses and SUVs of the newly rich farmers who have just sold off their fertile land for real estate, should remember this means less food for them in the future.
There is a similar story in energy, but that is for another column.
Sadly, there is little evidence of any policy intervention. The agriculture ministry is busy defending the price it paid for wheat imports, even when the issue is not about the tender process, but about what other countries were paying at the time. There is still time to correct matters.
The finance minister has rightly been talking about supply-side constraints driving food price inflation. In order to deal with this, three steps are necessary. First, raising production and supply of cereals requires a relook at the support prices for farmers, ensuring supply of fertilizer and seed inputs at reasonable prices, and technology and other support for increasing farm productivity. Sounds familiar? Then why is it that these very basics are not happening? A recent advertisement by the ministry of fertilizers made the shortages and distribution bottlenecks apparent. The past decade has introduced no new seed for paddy or rice that can be called a breakthrough. Clearly, we have the institutions and the infrastructure, but these have gone to sleep. Can one see any agricultural extension worker fromthe government in any village? Surely a little determination can make them work again.
Second, pushing rural credit mindlessly is only aggravating indebtedness. If we can pay horrendously high prices for imported wheat, we should pay our farmers comparable rates. Inter-state barriers to movement of farm goods need to be removed, and markets for these made free. Again, much talked about, but little done.
Finally, can we ensure industrialization does not take away fertile agricultural land? Take the marginal lands in Tamil Nadu, Gujarat, Maharashtra, not the fertile lands of Haryana. Instead, it is possible to bring the farmers of Haryana into the mainstream and add to their earning capacity by integrating them with food processing and value addition activities that produce goods for the urban table.
None of this is rocket science, or newly discovered solutions. The longer we don’t do the needful, the closer the danger of food insecurity. Let us focus the next five years on agriculture, not the stock markets or mergers and acquisitions.
S. Narayan is a former finance secretary and economic adviser to the Prime Minister. We welcome your comments at email@example.com