Asian Journal of Agricultural Sciences 2(1): 18-21, 2010 ISSN: 2041-3890 M axwell Scientific Organization, 2009 Submitted Date:

: October 14, 2009 Accepted Date: November 04, 2009

Published Date: January 10, 2010

Food Crisis in India (A Review Article)

Badar Alam Iqbal and 2 Theo Van Der Merwe 1 Chairman, D epartment of C ommerce, Aligarh Muslim University , AL IGA RH (UP ) India 2 Department of Economics, University of South Africa, Pretoria (South Africa)
Abstract: The main purpose of this study is to analyze the issue of Indian food crisis. The analysis has been made by examining the reasons for food crisis; existing trends in production of food crops, state wise procurement of wheat and rice, per capita availability of food grains; trends in price rise of foo d grain s, genesis of crisis and the fears that Indian planners are having in mind. The paper also deals with the current trends and econ omic impact. Key w ords: Ag ricultural productivity, food corporation of India, green revolution, global food crisis, disinvestment in agriculture, disastrous impact, inefficient marketing strategies and member planning commission INTRODUCTION India is also experiencing food crisis. The crisis has been building up for some time. Indian farmers seem to have hit a dead end, as their food grain yields are no longer going up. Grain production has been almost stagnant for more than 10 years and now there is a growing gap between supply and demand of food grains. According to the Member of Planning Commission we have a problem and it can be starkly put in the way: around 2004-2005, Indias per capita food grains production was back to the 1970s level (Bhattacharya, 2008a ). RESULTS AND DISCUSSION Major contributory factors: India has a mixed scenario of food crisis. The following are the major emerging trends in regard to Indian food crisis (Sandip, 20 08). C C Decline in investment in agriculture and slow agricultural growth. Farming provides livelihood to nearly 60% of Indias 1.1 billion pe ople even though farm produce comprises only 18% of the Indias current GDP. India is largely insulated from food prices due to huge stocks, but has challenges like inefficient distribution system and poor storage facilities. 70-80% of the net agricultural land is rain fed thus based on monsoon. Future food production is uncertain. Bumper wheat and rice crops are being expected. Reco rd procu reme nt of w heat by Food Corporation of India and other agencies. Curb on w heat and rice exports. Production trends: The emerging trends in Indias total food grains output can be judged from Fig. 1. It is evident that Indias total food production has been witnessing erratic trend. Output has been fluctuating sharply keeping pressure on supply side. India stands at a tipping point, particularly as food grains output is stagnant. Wheat production was stood at 72.8 million MT in 2002. This year i.e. in the year 20072008 the figure is 74.0 million MT. Rice productions was 93.3 million M T during 2002 and this year (2007-2008) it is stood at 90 million MT. M eanwhile, population has increased by nearly 88 million during the said period. So there is a need for imports. Th is in turn w ould lead to increase in global prices. As soon as India bought 795,000 M T of wheat in August 2008, at a record price of US $ 389.5, wheat futures in Europe would go up my 70% on expectations of more orders (W oolve rton, 20 09). State-wise Procurement: State-wise procurement of wheat is also showing the same trends. In the year 200506 the total procurement was 147.9 lakh tones and by the end of 2007-08 the figure went down considerably and touched a level of 113 lakh tones. In case of rice the trends are witnessing a decline trend. In the year 2005-6 the total figure for rice procurement was 276.6 lakh tones and the same declined to 250.8 lakh tones during 2007-08. Fig. 2 and 3 are the indicator of state-wise procurement of wheat and rice respectively. FIg. 2 and 3 also indicating the decline in procurement of wheat and rice by the major states. In case of wheat only Haryana states has procu red more in 20062007 than 2005-2006 . There are only three states nam ely Andhra Pradesh, Orissa and Tamil Nadu where the procurement of rice is much more in 2006-2007 over 2005-2006.
1

C C C C C

Corresponding Author: Badar Alam Iqbal, Chairman, Department of Commerce, Aligarh Muslim University, ALIGARH (UP) India. 18

Asian J. Agr. Sci., 2(1): 18-21, 2010 Per capita Availability: In 1979, at the height of the Green Rev olution euph oria, per capita availab ility of cereals and pulses had gone up to 476.5 g/day. In 20 06 it was still lower at 444.5 grams. The reason for this fall in the availability of food is that Indian farm output is just not growing. Since the mid 1990s the output has hovered nearly 415 million tonne. In the eight years i.e. between 1996 and 2004 when agriculture was growing at a low rate of 2% , there was in fact zero growth in food (Sen, 2008). The stagnation is hitting the agriculture situation in the country. For one, food price are rising and the rise is likely to continue. For another, despite nudging up wheat output in the last two years, the Government of India still needs to import wheat. The problem is not easy to make imports. This could be testified from the fact that last year India wanted to import nearly 5 million tonne of wheat, but could get only 3 million tonn e of w heat. T his was due to the fact that there is not any surplus wheat going around in the global market (Sharma, 2009). Price Rise: According to the data released by Consumer Affairs Ministry, Government of India, between May 24, 2004 and June 4, 2008 wheat prices have gone up by more than 62% to Rs. 13 a kg in Delhi, 47% to Rs. 15.50 kg in M umb ai and 42% to Rs. 17 in C hennai. The Government has also raised the Minimum Support Price (MSP) of wheat top Rs. 1000 a quintal from Rs. 630 levels, up by 59% during this period. Prices of wheat flour have increased in the range of 42 and 69%. The prices of wheat flour have increased to Rs. 14 from Rs. 9 a kg in Delhi, to Rs. 17 from Rs. 12 in M umb ai, to Rs. 15 from Rs. 9.50 in Kolkata and Rs. 22 from Rs. 13 per kg in Ch ennai. Another staple diet rise has also becom e more expensive. Its rates have moved up in the range of 25 to 45% to Rs. 18 a kg from Rs. 12.50 per kg in Delhi, Rs 16 from Rs. 11 in M umb ai, Rs. 14 from Rs. 10 in K olkata and Rs. 15 from Rs. 12 a kg in Ch ennai. The gram (chana) prices saw the maximum rise of 73% in Mumbai, while it was up by 56%. In Kolkata it rose by 50% and in Chennai it went up by 48% (The Hindu stan Time s, 2008). Genesis of Crisis: It is true that India has not yet witnessed food riots, as tak en place in A frican and Latin American continents, the agricultural economists have a worry that the present rise in inflation is because of the increase in prices of agricultural com mod ities. The rise in food prices h as far rea ching impact and consequence on major population of the country and accordingly this is hurting the poor. Nearly one out of four Indians lives on less than US $ 1 a day and three out of four earn US $ 2 or less a day (Sa ndip, 2008 ). Rise in food prices is a globa l phen ome non. There is a food shortage w orld ov er. W heat prices in India went up by 77% over the last year and also rice prices are

Fig. 1: Total food Grains production from 2000-01 to 2007-08. Source: Prepared by the authors from the data given Agricultural situation in India; March 2008

Fig. 2: Statewise procurem ent of W heat between 200506 and 2006-07. Source: The Financial Express; New D elhi; June 9, 2008

Fig. 3: Statewise Procurement of Rice between 2005-06 and 2006-07. Source: The Financial Express; New Delhi; June 9, 2008 19

Asian J. Agr. Sci., 2(1): 18-21, 2010 increasing much w ider margin than rise in wheat prices. The World Bank is of the view that India has contributed in global food crisis as the same has put restrictions on the exports of rice. There is another major con tributory factor. Rice producers namely, China, India and Vietnam have initiated export restrictions to keep stocks for international consumption and also to prevent sharp internal prices rise. Indias food crisis is sligh tly different from food crisis in other countries of the world that are facing shortage of supply of food grains. In case of India it is not a supply pushed crisis, but it is a case of the poor peoples are unable to get access to food. This is because of the ineffective and inefficient marketing strategies, lack of adequate storage facilities and man created hording. India is the one of the biggest exporters of basm ati rice in the world and between 2.5 and 3 million tones is annually exported. In internal m arkets, prices o f basm ati rive have witnessed a steep rise. In last October i.e. 2007, India imposed a complete ban on the export all nonbasmati rice. Later on the government has come under pressure of traders associations and the farmers to lift the ban and accordingly the Government lifts the ban on the pretext that this measure wou ld result into the sharp decline in rice prices in open mark et. But this lift of ban did not last long and ag ain in April 2008, the Government of India again imposed complete ban on the expo rt of all non-basm ati as the same has becom e inevitable du e to sharp increase in the price of rice in open ma rket. Keeping in mind the magnitude of the problem, Indian Government for the first time fixed a minimu m exp ort price on basma ti at US $ 1,000 per tone as the same has allowed the export of only high-priced non-basmati rice. Simu ltaneously, reduced import duties to zero. But one thing is true and sure that the era of cheap foo d is over (Bhattacharya, 2008 b). Another View Point: In the Indian context, slow agricultural growth has been a cause of food crisis and also a matter of great con cern for policy makers. Present agricultural practices in regard to food grains in general and wheat and rice in particular are neither econ omically nor enviro nme ntally su stainable and Indias yields for agricultural commodities especially wheat, rice and maize are low compared to the productivity levels of other major producing countries. Indias agricultural system is still marked by poorly maintained irrigation systems and almost universal lack of good extension se rvices all of which are adve rsely affecting agricultural productivity. To add to this, India has inadequate post harvest infrastructure and the resultant wastages associated with it. Fixing the said issues can automatically lead to significant rise in food production and thereby , food security for the nation to avoid food crisis in future (Chakravarty, 2008). The Government of India is going to consider the needed demand for exports of rice to less developed economies nam ely Bangladesh and other African countries. But lifting of complete ban on rice expo rts is neithe r possible nor advisable. Current trends: The Indian Government has fixed a target of 15 million tones for the current year for meeting the demand of creating bu ffer stock and Public Distribution System (PDS ). Against this backdrop, the Food Corporation of India (FCI) has already procured wheat at 22 million tones. This procurem ent figure is almost double of the procurem ent of 11 million tones of wheat year last year. W hile many agricultural eco nom ists anticipate a decrease in the prices of wheat, the lack of a strong marketing netw ork and inadequate storage facilities continue to add to volatility in prices. The Economic Survey for 2007-2008 has already pointed out that there has been loss dynamism in the agriculture and allied sectors and also there is a gradual degradation of natural resources through overuse and inappropriate utilization of chemical fertilizers that has affected the soil quality resulting into stagnation at the yields horizon. Another trend that has c ome up is tha t public investment in agriculture has declined and h ence , this sector has not been able to attract private investment which has becom e sine-q uo-non for attracting private investment. This is because of the lower or unattractive returns. Add to this, agricultural extension services which were provided by the Government in X Five Year Plan have collapsed. Accordingly, the extension system had generally not succeeded in reducing the gap between crop yields that could have been obtained through improved practices. Major issues of concern: It is a matter of great surprise and concern that while India is expecting to harvest record production of whe at and rice, prices of commodities are continued to be volatile in nature and ch aracter. There is a historical correlation between prices stability and the procurement of food grains by Food Corporation of India (FCI) in terms of stoc k. Bu t this notion has failed in the context of current food crisis. Rise in food prices is completely a domestic issue (Khan, 2009). Increase in prices of essential agricultural commodities to poor ma rketing and infrastructure. Hence, India must build a strong marketing network for our agricultural produce. There is a little hope of availability of cheap rice in India as other major producing countries namely Thailand and Vietnam too putting barriers on their rice exports. As the current situation and trends indicate that there is no alternative to self-sufficiency in agriculture, thereby every person in the country must get access to food. (Sen, 200 9). Economic Imp act: Food crisis has hit India enorm ously in economic terms. The rising global good prices are adversely impact on Government finances, and hence, may result in bloating of its deficit by more than 5.9% of

20

Asian J. Agr. Sci., 2(1): 18-21, 2010 the GD P (Th e Tim es of India, 2008). India would be hardest hit by the rise of food costs for 2008. India with revenue at less than 20% o f the G DP is keep ing Ind ia in a precarious position of large deficit and narrow underlying revenue base. Other econ omie s of A sia namely- Pakistan and Egypt are also fac ing such typ e of economic im pact. T heir genial Governmen t deficits stood at 6.5 and 6.9% respectively. Even developed econom ies are v ulnera ble to food price inflation and political instability if there is a mism atch between high revenues from food exports or dom estic supply. According to a Report Although global food price rise in itself is unlikely to be direct cause of adverse rating action, for many so vereig ns it will significantly increase overall susceptibility to negative rating movements by exacerbating already weak external and fiscal positions or through potential for political and social unrest ( Bernad, 2008). The other main pressure points would be on fiscal balances, wh ich w ould likely be from both the expenditure and revenue side. The Governments both developed and developing economies all over the world would need to bring about significant investmen t in agriculture and infrastruc ture to deal with the chronic problem long-term, which for lowincome sovereigns could me an m ore recourse to borrowing or increase in aid. While steps like increase in subsidies and export bans come at a cost of additional fiscal and external pressures, which in many ca ses w ould be un sustain able (Bernad , 2008). CONCLUSION There is no doubt that India is facing food crisis. It is more man created phenomenon in terms of marketing network, storage and infrastruc ture. India must believe in a notion preve ntion is better than cure. India has to meet its needs itself and the current market prices m ake im ports unviable. Future looks uncertain if India and other countries continue to neglect agriculture as has been the case for decades. Due to uncertain weather during 2009 the crisis may come up with more severe intensity. REFERENCES Bernad, A., 2008. International Public Finance Ratings Groups. T he U K. Bhattacharya, A., 2008a. India headed for food Shortages. The Times of India, New Delhi, April 1. Bhattacharya, A., 2008b. Feed India. April 1, The Times of India, New Delhi, India. Chakravarty, K., 2008. The Financial Express. June 4. New D elhi, India. Khan, A., 2009. Director. India Development Foundation, Gurgaon, Haryan a. Sandip, D., 2008a. Grain Drain. June 15. The Financial Express, New D elhi, India. Sen, A., 2008. The Rich Get Hungrier. May 29, The Times of India, N ew Delhi, India. Sen, A., 2009. Economist and Member. Planning Commission, Government of India. Sharma, D., 2009. Food Analyst. Food Corporation of India, N ew Delhi. The Hindustan Times, 2008. The Business, June 9. The Times of India, 2008 . Stand ard an d Poors R eport, July 4. W oolverton, M., 2009. Grain Economist, Kansas State University; USA.

21