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Food Insecurity:POLICY & NOT MONSOON FAILURE, by Shivaji Sarkar,13 August 2009 Print E-mail

Economic Highlights

New Delhi, 13 August 2009

Food Insecurity

POLICY & NOT MONSOON FAILURE

By Shivaji Sarkar

“The world pays more for food as India goes shopping,” screams newspaper headlines. This has not happened in a day. Over the last few years, whenever India reaches the international market to buy foodstuff, prices have shot up. Neither can the monsoon be blamed for the food shortage and consequent food insecurity. It has assiduously, or unintelligently, been built since the ushering of the new economic era in 1991. And is a result of the skewed economic policy framed by the top economists – a virtual world’s who’s who - of the time.

Sadly, the economists were too concerned about the Forex shortage in 1990 that led to the pawning of gold to the Bank of England and its balance of payment crisis. Food prices were at their affordable best despite the so called “international” crisis. Our economists, concerned at the nation’s global image launched the fast track reforms process.

Some of them found that the agriculture-based economy was the “bane”. It followed a bashing of the “backward, retrograde looking farm-based economy”. They came out with the simplest solution –abandon foodgrain production as it was capital intensive, guzzled water, power and contributed ‘least’ to the economy.  They also said that India needed to produce cash crops, earn dollars and buy foodgrain from the international market.

The nation of a billion blindly followed the prescription, forgetting that the then 65 per cent of its people were dependent on agriculture. Now the figure is around 60 per cent. Shockingly, it was to be followed up with a cut in agriculture and food subsidies and in devastating the public distribution system (PDS), built over the past four decades. The PDS not only ensured food supply to the people but also effectively functioned as a market interventionist tool.

The impact of the policy was felt within a short span. Food started becoming scarce. Cultivation of BT cotton and other genetically modified crops started playing havoc with the farmers. They started committing suicide – a phenomenon that has not stopped since. The beneficiaries were the multi-national corporates (MNC), who entered the foodgrain production market in a big way and are now able to form a strong cartel, both nationally and internationally to extract the highest price.

However, the sober, “backward”, nationally-oriented economists had strongly opposed the moves in the mid-90s. They predicted what we are witnessing today. But the lobbyists of the MNCs backed by the World Bank were able to steamroll the protests and even labeled them renegades.

Clearly, they succeeded in devastating the base of the Indian economy, its agriculture. Since land is the base for a prosperous agriculture, they lobbied hard to change the Land Ceiling Act, both in urban and rural areas. This had a dual effect. The MNCs acquired large tracts of land and became corporate zamindars in rural areas. They backed similar large acquisitions in the urban neighbourhood too. This deprived the farmers of prime fertile land to their large housing projects. It also created the land mafia, who profit when someone loses his land.

The entire operation led to a reduction of several million hectare of arable land. By now agriculture became a bad word. The farming community was denied all support. Food production started falling. In 2008-09, growth originating from agriculture and allied activities declined to 1.6 per cent. Total food production at 230 million tonnes in 2007-08 is almost equal to that of 1980-81, when it was about 200 million tonnes. The Population then was 80 crore and it is about 110 crore now and in effect the per  capita food availability has reduced which has lead to the price spiral.

Moreover, the share of agriculture in gross capital formation between 1999 and 2007 has reduced from 10.2 per cent to 7 per cent. The decline was mainly attributed to turn down in share of private sector (farming community) despite an increase in the share of public sector (read large companies), according to the Department of Economic Affairs of the Ministry of Finance. It states that private sector share has come down from 11.9 per cent in 1999-2000 to 6.6 per cent in 2006-07.

 This speaks of a grim reality. The protagonists of privatization overlooked the crucial fact that the Indian farm sector was always managed by private farmers with minimal state support. These protagonists saw in the efficient farming community a road block to corporate march. So they worked in the interest of the corporate to monopolise agriculture in the name of high investment, which they did not do, futures trading and linking the farms to the equity market.

 It had its effect. The oilseed and pulses programme initiated in mid-80s was jettisoned. This did not suit the international food traders, who now also control a large chunk of the domestic food market. They created through policy makers an artificial shortage – by not allowing the country to increase production, devastating the affordable PDS marketing system and feigning to making up the shortage by importing pulses, sugar, edible oil and at times wheat.

Indeed, the companies are profiting both ways. They are buying products from their own parent farms. Profits are being earned exploiting the hungry Indians. Their repatriation to the parent companies is growing. The policy makers have turned blind eye to this international exploitation.

No sooner Indian firms, both public and MNCs, started the food purchase, sugar futures for October delivery at the New York-based International Commodity Exchange (ICE) broke a 28-year barrier reaching a 20.81 cents a pound (454 grams) in early August. In London, the futures price rose to $ 537.2 per metric tonnes - the highest since 1983.

Sugar trailed only petroleum and copper price in rise in prices in 12 months. Although pulses are not traded in the futures market, their prices have been skyrocketing in Canada, Australia, Myanmar and Turkey, main exporters to India. World production of pulses has been stagnating at about 56 million tons for several years.

What the Prime Minister has been saying about firming of food prices is a grim reality. The government is looking for short-term solutions. Instead, it requires long-term policy shift. The country needs to lay emphasis on agriculture, have a proper food production and marketing policy. Instead of industry and stock market, agriculture has to be made the base for any growth pattern. Unless the large segment of the people dependent on agriculture is protected all developments are bound to be lopsided.---INFA

(Copyright, India News and Feature Alliance)

 

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