The price rise...inflation at 7%... the food shortage... the farmer's loan miseries...
Even before the ink on the newsprints that touted the news of GDP growth at 8 and 9 percent plus, and about an economy on a roll dried out, headlines like the above have started hitting the news. Reading / watching all the discussions / "expert views" on the newsprint, television and on the internet, I am still trying to make sense of what exactly is happening and why.....
Meanwhile, I feel, a piece on Sunday ET April 6th '08 by Mythili Bhusnurmath - Columnist ET, written in quite direct and simple language, hits the bull's eye. My generation of Indians who grew up in the 60s and 70s could easily relate to the scenario she talks about.
Yes; we have blundered on agriculture. But we also failed in managing food stocks. What is painful is that we had surplus food rotting in FCI godowns only a few years back, till 2004. The government had to spend millions of rupees to maintain the surplus stocks. Due to lack of proper distribution and storing systems, we had paradoxical situation of people going hungry on one side and food rotting in godowns on the other. The surplus food –( the food stock was about 648 lakhs tonnes in 2004
-) Only when the stock began rotting that it was hurriedly offloaded by giving heavily subsidized food to the poorest of the poor, by increasing exports and some amount was offloaded in open market for bulk buyers. Soon the buffer vanished and surplus turned into shortage. Call it poor management or lack of vision and planning – no wonder if we end up with a scenario that this column paints in the end.
Over to.....Mythili Bhusnurmath - Columnist ET
Growing up in Delhi
in the 60s and 70s meant many things. It meant being swept away by Beatle mania, the idealism of the student movements in Paris, the anti-Vietnam protests and of course, ‘garibi hatao’. It also meant queuing up every month (and often more than once) to get the family's monthly rations. Wheat, rice, sugar, pulses, edible oil and in the early 1970s, even NTC cloth, was supplied through ration shops.
Milk was also was in short supply. But since milk had to be bought every day rather than monthly, it meant queuing up every morning and evening at the Delhi Milk Scheme (DMS) booth.
Since milk was often delivered late and in the summer months was in short supply, it was important to get a place at the head of the queue. It’s a different matter that more often than not, people would break the queue when the counter opened and then it would be a free-for-all. Queuing up was part of growing up. The story, I’m sure, was not very different elsewhere in India.
Then we had the Green Revolution and Operation Flood. Trips to the ration shop and the DMS booth became more infrequent and then stopped altogether. Today there are still a few DMS booths in Delhi but in most places what you see are the blue-and- white Mother Dairy booths. Milk is available throughout the day and supply is plentiful. Ration shops are fewer still. Why buy PDS (public distribution system) grains and spend the better part of the weekend removing rat droppings when you can buy good wheat and rice at almost the same price?
So if I grew up queuing up for the essentials of life, in the 80s and 90s my children grew up queuing up for other things – movie tickets, amusement parks and so on. But with global food shortages looming large on the horizon, could it be that their children would once again find themselves queuing up for food like I did almost 40 years ago? What have we done to come to such a pass?
The answer is that we’ve neglected agriculture
, (public investment in the farm sector has dried up almost completely) and then compounded our error by failing to reform it. We’ve done away with licence raj and other distortions in industry; and over a period of time have removed most of the reservations for the small scale sector that prevented them from realising economies of scale. But when it came to agriculture we continued to keep our farmers
Under the guise of helping them we did not price farm inputs — water, power, seeds and fertiliser — properly. The net result is farmers are growing sugar cane (a water-intensive crop) in the semi-arid lands of the Deccan and rice in the Punjab where the soil and agro-climatic conditions are better suited to wheat and rice cultivation leads to water-logging and soil salinity.
And in return for ‘supporting’ them, we’ve imposed all kinds of restrictions on how they sell/price their products. We tell farmers don’t worry we’ll provide you a minimum support price and will also procure whatever you wish to sell. The problem is prices are often announced too late to influence sowing and are not always market-related, procurement is limited to certain areas and most important of all, there is no policy stability when it comes to export/import of farm produce.
Manufacturing companies can reap the full benefit of a rise in international prices but the moment the global price of foodgrains rises, first we impose a ban on the forward trading and then we impose an outright ban on exports. Consequently the farmer is not allowed to get the full upside of a rise in global prices. Any wonder then that there is no incentive to increase acreage under food crops? Export curbs might buy short-term relief for consumers but only at the cost of lowering output in the long run. Long-term, the only solution is to increase public investment in agriculture and allow price signals to work in farming
as in other sectors, while extending a safety net to those priced out of the market in times like the present. Failing which the next generation of kids will once again spend their days queuing up at ration shops instead of movie halls..."
Update: April 10th. Using agri fields
to grow crops for production of bio fuels - could be one of the reasons for dimishing food crops and rising prices ... Looking for Alternative enrgy like ethanol is fine - but if we are going to produce alternate enrgy to feed the rising number of automobiles etc, by depriving basic food for the less privilaged across the world, the policy about ethanol or anything that affetcs food for human consumption, should be reviewed seriously.