Shift in food policy from shortage to surplus management needed
By Pradeep Kumar Panda
Bhubaneswar, April 12: Attributing poor nutrition entirely to low paying capacity is not correct. India currently produces about 726 million tonnes of food to meet the food demand of 1.3 billion people.
Three-fourth of this food comprises food of plant origin (cereals, pulses, edible oil, sugar, fruits, vegetables, condiments and spices, tea and coffee) and the remaining one fourth comprises food of animal origin (milk and its products, meat, egg, fish).
In next 15 years, 40 per cent more food will be required to meet domestic demand. This involves 2.3 per cent annual growth. In case the country harnesses the export market and raises agricultural export share in GDP from present level of 12 per cent to 20 per cent, then the required annual growth turns out to be 2.64 per cent. These increases do not look very high when compared with the achievements of the last 50 years.
Since 1965, agri-food production in the country has risen by more than 500 per cent. Recent 15 years witnessed more than 50 per cent increase with no increase in the area under cultivation. This growth resulted mainly from intensive cultivation, increase in use of fertilizer and other agro-chemicals, higher use of water and irrigation, improved seed and technology and a favourable price environment for agriculture.
Based on this, it looks India will not have any serious problem in meeting aggregate food demand in next 15 years or so. The challenge comes from composition of food and meeting nutrition requirement. There is also talk about fortification of food to improve nutrition intake while options for biofortification, which is considered superior to food additives, show promising results in some crops.
Food safety and quality are also becoming important considerations for consumers. A study indicate that one third of food expenditure towards 2050 will be for quality traits. Food safety, especially before sale of produce by the farmers, is not monitored and inspected effectively. Food Safety and Standard Authority of India (FSSAI) which is entrusted with the responsibility of food safety, covers only post-harvest stage of food chain.
The need for quality and safety monitoring is equally important in pre-harvest stage. Domestic absorption of food has grown at a lower rate than domestic production. In early 1980s, India produced and consumed a little more than 1 kg food per person per day. The production has gradually increased to 1.73 kg. in recent years whereas domestic absorption increased to 1.59 kg.
This shows that food surplus (domestic production less domestic absorption) has been continuously increasing for the last 35 years. This require a complete shift in food policy from shortage management to surplus management. This also indicate that much of the under nutrition in India is not due to unavailability of food but it is due to low food intake by Indian consumers. There is need to address the reasons underlying this. In any case, India has to look for overseas market to dispose rising food surplus.
Agriculture production in the Country is growing by about 2.9 per cent per year. Domestic demand is projected to rise by about 2.3 per cent. Therefore, surplus available for export will further grow in the coming years and India will be required to sell higher proportion of domestic production in overseas market. This requires export competitiveness.
India need to act in three areas to achieve this. One, prices in primary markets should be sufficiently lower than international prices. Two, price spread in various stages of marketing should be reduced. Three, producers should be integrated with global value chains. In any case, future growth of agriculture will be significantly affected by exports.
At present minimum support prices of some commodities recommended by the government in the country are higher than the international prices. In such a situation, if MSP is implemented through the system of procurement, it will keep domestic prices much higher than international prices, making the export impossible. Experience of many countries, of late China, shows that paying higher than open market prices to farmers through mechanism like procurement cannot be sustained.
Fixing prices higher than open market price, attract imports even for exportable and surplus commodities. More focus on supply than on demand is justified as long as demand is ahead of supply. Once, demand falls short of supply the guiding principle for price intervention should be open market price or demand side factor. On the other hand, MSPs are considered important to ensure remunerative prices for the farmers. The best option to deal with such situations is to pay to farmers the difference between MSP and open market price rather than causing distortions in open market price through procurement.
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