The Finance Minister has delivered a Rs. 60000 crore handout to farmers.  How much of that will go to the farmers who are truly debt-stressed is a moot question.  But is this the tonic that our farmers need in order to restore agricultural growth to the 4% plus level that the Eleventh Plan wants? Are we addressing the right problems in our agriculture and food policy?

Over the past decade the agriculture component of GDP has grown at 2.5 % with some signs of acceleration in the last two years to over 4 %.  Foodgrains production however has not grown in pace with population and the consumption of cereals has declined from 468 grams per capita per day in 1990-91 to 412 grams per capita per day in 2005-06 and of pulses from 42 grams per capita per day  to 33 grams per capita per day during the same period.

Some may attribute this to a shift in consumption patterns with rising incomes except that the data from the National Family Health Survey conducted in 2005-06 suggest high levels of under-nutrition. According to the survey almost half of children under five years of age (48 percent) are stunted and 43 percent are underweight, including 24 percent who are severely stunted and 16 percent who are severely underweight. Amongst adults 36 percent of women age 15-49 in India have a Body-mass Index (BMI) below 18.5 indicating chronic nutritional deficiency, including 16 percent who are moderately to severely thin.  Nationally, 34 percent of men age 15-49 have a BMI below18.5, and more than half of these men are moderately to severely under-nourished.  Our basic problems of nutrition have not been resolved and we need to maintain a focus on the staples of our diet.

Foodgrain production increased by 8 %, over the ten years before 2006-07, almost entirely because of an increase in yields.  Some part of the explanation for this slow growth lies in market conditions.  According to this year’s Economic Survey the terms of trade moved against agriculture by about 1.7 % per year (for the period 1996-97 to 2003-04).  But the Survey also reports that input growth into agriculture was particularly slow in the decade before 2006-07- 1.2 % in net fixed capital stock, 0.5 % in irrigated area, 2.3 % in fertilizer use and, what comes as a real shock, nil in the yield potential of new varieties, a factor which grew at 3 % or so in the decade and a half prior to 1996-97. This year promises to be better with foodgrain output projected to rise to 219-220 million tonnes.

Foodgrain stocks fell below the buffer norm by July 2005 and have remained below since then. The wholesale price index for foodgrains shows quite surprisingly, only a 3 % increase in the 2007-08 till December.  But the data on consumer prices collected by the Price Monitoring Cell in the Dept. of Consumer Affairs tell a different story.  Their data for retail prices in Delhi for 8 February 2008 (the latest available as of now) show a one year increase of 13 % for rice, 8 % for wheat and well over 20 % for various edible oils.  At the folk-opinion level the situation is even worse.  If the monsoon is bad the Government may indeed be in for a torrid time with high world prices, low food stocks and a run down PDS.  So even if its horizon is limited by the impending election they had better worry about our food economy.

But, say the market fundamentalists, in an open economy you can import what you can’t produce.  However the world food situation is quite precarious at present.  For the first time since the early seventies, world foodgrain stocks have fallen below 60 days of consumption.  The last time stocks were so low world prices doubled.  The new demands on corn for ethanol and the rising demand for animal feed are reducing the amounts available for direct human consumption.  As a result world food prices have moved northwards with rice and wheat prices crossing the $450 a tonne mark in February 2008 as against the minimum support prices for 2008 of approximately Rs.10000 per tonne for wheat and rice.  So if the Government has to import wheat or rice they will have to allow prices to rise at a phenomenal rate or find really large amounts of budgetary resources to subsidise imported supplies. 

In the short run there is little that the Government can do except some contingency planning to lubricate the rusty PDS and allowing for some fiscal slack to subsidise imports in case the 2008 monsoon fails to protect the UPA’s electoral prospects.

The real issue is the medium term.  The difficult world supply situation is expected to continue for three to five years.  The challenge therefore is to revive the interest of farmers in foodgrain production.  Agronomic innovations that get us out of the zero growth in yield potential and foodgrain prices that can compete with alternative crops, more public investment in irrigation and other inputs are the obvious answers.  We must consolidate and advance the green revolution in North West India, push for a similar advance in Eastern India and at least make a beginning in rainfed agriculture in the dryer regions.  When it comes to priorities, one can only commend the five point programme advanced by Dr. Swaminathan recently where he asked for:

• Conservation of prime farmland for agriculture and soil health care ;
• Water harvesting, management and conjunctive use of surface, rain, ground and treated effluent water and safeguarding water quality;
• Credit and insurance reform;
• Low-risk and environmentally friendly Green Technologies  and the provision of the needed inputs at the right time and place and at affordable cost;
• Assured and remunerative marketing.

The loan waiver will not help in any of these areas, not even in credit reform.  Nor do we need yet another pompously titled Central scheme run by Krishi Bhavan apparatchiks. Decentralisation of responsibility and authority is the need as the locus for action is in the State administrations.  The Centre must focus its attention on energizing the research system, removing input bottlenecks and providing the sort of inspired leadership that the three great Tamilians, C. Subramniam, B. Sivaraman and M.S. Swaminathan did in the sixties.  Alas, such leadership is nowhere in sight.