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In the context of high food prices playing havoc on the lives of millions of poor people across the globe, a Seminar titled “High Food Prices and Development Challenges in India” was organised by Oxfam India in collaboration with Centre for Trade and Development (Centad) and NACDOR on the eve of World Food Day at Magnolia Hall, India Habitat Centre, New Delhi.
This Seminar was well attended by experts from diverse background, policymakers, bureaucrats, academia, media and civil society organisations. It has set off a relevant and enlightening deliberation on the current situation in India and on the occasion, a report titled “Double-edged prices” by Oxfam was released by Prof. Abhijit Sen, Member, Planning Commission of India.
While setting the stage up for discussion, Aditi Kapoor, Economic Justice Lead Specialist, Oxfam India, highlighted the relevance of the programme particularly at a time when the global food market is experiencing an unprecedented upswing in prices since the turn of the year 2008 albeit with a slight moderation during the last few weeks and their profound impacts on the lives of millions of poor and the marginalised. Stressing the issue of trade off due to high food prices between the losses at the consumers' end and income gains at the producers' end, Nisha Agrawal, CEO, Oxfam India, focussed on the impacts on women who form almost 60 to 80 per cent of the farm workforce in the country.
Samar Verma, Economic Justice Policy Team Leader, Oxfam GB, started the session by taking the audience through few key points of the report. Emphasising the potential danger of the hard earned progresses in poverty reduction in the previous decade getting reversed, he claimed, higher average food prices may force another couple of hundred millions more to the existing 850 million ailing underpoverty globally. The impacts on landless agricultural labourers, small & marginal holders, women and children are far deeper which has a multitude of repercussions in the long run. Quoting a study by RBI saying the glittering 9% growth in economy has come mainly from small holders’ participation, he stressed the need for inviting investments into agriculture and allied sectors and more inclusive growth duly recognising the services rendered by them in preserving the ecosystem in the wake of climate change, which is difficult to quantify. Taking the example of Mexico’s social protection scheme for the poor that costs just 0.25% of GDP, he pointed out that with improved effectiveness in implementation, any programme on providing social safety nets such as cash subsidies for food or health services can achieve enormous success in rescuing the underprivileged from hunger and extreme poverty. As the average levels of food prices remained perilously higher than 2005, millions of families across the globe who spend about 40 to 70 per cent of their monthly income on food were simply drowned into debt or forced to cut back heavily on quantity of food consumed and other necessary expenditures on health and education of their children. Explaining the DPT strategy, dousing the fire set off by high costs of food should be the immediate priority to ensure food availability and accessibility to the vulnerable sections of society which in turn requires a strong political will as shown by several Governments in response to the global financial crisis in the last few months. On prevention, taking clues from the contribution of biofuels over the recent spikes in commodity prices, he cautioned over the impacts of policy-induced externalities on the global food systems. While concluding with taking insurance during catastrophic phases, Samar stressed the urgent need for devising specific, targeted social welfare schemes for the poor and vulnerable populations.
Speaking over another report titled “High Food Prices in India – Factors, Consequences and Mitigation”, Linu Mathew Philip, Fellow, CENTAD, narrated the domestic scenario in conjunction with the trends in international food market. Although several factors such as unexpected turbulence in food prices, exchange rate fluctuations, surging inflation fuelled by high crude oil prices, amplified speculation in future trading on commodities being treated as an alternative asset class and reactions (e.g. export restrictions) from major players in the global food market, India fared better in handling the crisis as cooling off food prices since the last few weeks comes as a breather. However, not to go back to the same critical situation again, he called for a holistic review of existing domestic and international trade policies on agriculture to bring in much-needed stability, resilience and strength to wade through the vagaries of global food market such as: regulating speculative trade in key food commodities, smoothening barriers in movement of foodgrains between states to minimise costs and price variations, reviving the defunct PDS, releasing stocks to open market through OMSS by the Government, replacing knee-jerk policies (such as zero-duty imports, export bans) with long-term focussed trade policy initiatives, promoting food self-sufficiency at local levels and making agriculture a technology driven industry through changing the “Make to MSP” mindset of the farmers.
Professor Abhijit Sen quoting the “double-edged” situation in prices paradoxical since the alarming surge in prices from the beginning of 2008 has been settling to a much comfortable level with softening of prices of most of the commodities led chiefly by crude oil since last month. However, going with the trend, he cautioned a period of low prices that farmers may even complain in the near future – the forthcoming Kharif season. He invited the audience to focus on his key message that neither high nor low prices of commodities are a problem but the degree of variation or volatility certainly is. Blaming the global financial crisis since the last year leading to commodity boom, he also warned if high prices are to be blamed, then it may take the sheen off the agri sector and erode the investors’ interest. He also appealed to the academia and media not to spread panic but subtly highlight the potential danger points in the public eye. Explaining the interesting correlations between low prices and food production, Prof. Sen substantiated that during the period of very low domestic and world prices (1996 – 2004), growth in food production in India was also poor at about 2% but ever since the prices started rising (2004-07), agriculture and foodgrains production recorded a growth of 4%, twice the population growth. With limited resources (say fixed land), only technological innovations can help achieve the desired growth in productivity albeit not at the cost of future. Sustainability needs to be given top priority especially to avoid crisis purported by miscued policies. Commenting on the Ten advocacy points of Oxfam’s report, he clarified the budgetary allocation for agriculture sector is on the rise though other subsidy bills (e.g. fertiliser) are bulging and the 11th plan emphasises small, marginal farmers, women along with policies for promoting group approach to farming with a long-term outlook. He added that initiatives such as Food Security Mission and Commission for Unorganised enterprises will go a long way in promoting non-farm employment and improve the livelihoods of rural poor while also admitting the practical difficulties in translating these plans into results. Owing to earlier advocacy stance of the World Bank and IMF for lowering food reserves since 2002, stocks went dangerously low in 2006 globally pushing up the price. If not for the export bans, he commented, India could have shared the pain of many countries of high food prices but as the buffer situation is comfortable at the moment further building up of stocks might depress prices further to levels unremunerative for farmers and also reduce consumption by consumers. Calling for more stable and holistic policies, he reiterated that these instruments besides a paradigm shift in reforms must go beyond guaranteeing employment to ensure food security to the wage earners – agricultural labourers. Concluding with insistence on improving input use efficiency mainly water storage and utilisation, he asked everyone to appreciate the huge uncertainties related to climate change and focus on insulating our societies to withstand frequent and larger shocks.
Responding to a query on feed conversion ratios and demand trends, Prof. Sen claimed that opportunities for enhancing productivity in animal husbandry sector are very high though the sector has so far been almost neglected. On the differences between wholesale and retail prices, he clarified that the Government has little role to play except initiatives like OMSS. He further added that the critical issues – political and caste – that are ingrained in the social system are the predominant causes for the wider distributional inequalities in the performance of the PDS. Shedding light on land reforms, which is largely a political agenda, he said a commission on land reforms has already been set up by the Government.
Ashok Bharti of NACDOR lamenting on continued apathy of Governments worldwide towards food insecurity but who, as stock markets collapsed, swung into action rapidly to rescue run away bankers and billionaires.
Prof. Mahendra Dev hailed speculation in the commodity markets the chief cause for rise in food prices worldwide, however, said India insulated itself fairly better. He also explained that since 70% of calories in a standard Indian diet comes from cereals, maintaining prices at affordable levels is critical especially for ensuring nutritional security of women and children. Talking on different dimensions, he said, poverty is stark in certain sections – SC & ST, and among agricultural labourers, concentrated in few states (MP, UP, Chhattisgarh, Bihar, Jharkhand and Orissa) and among women and children. Contrasting with high economic growth, he explained malnutrition is prevalent in some states like Gujarat. India stands 61 out of 80 nations on Global Hunger Index which pulls down its stature globally. Mandating three necessary aspects, he insisted the growth needs to be high at least 4 per cent, equitable among large and small holders and sustainable for the environment. Suggesting delinking of consumer and farmer prices to stem steeper spikes, he added, it is imperative to ensure supply of inputs like credit, irrigation and marketing facilities for the farmers. Manufacturing sector, which is at present around 12 per cent against 40 – 50 per cent in China, particularly rural agro processing industries are a must, he claimed, for a sustaining the high growth. He further advocated the need for better designing of policy instruments taking into consideration the ground level realities for their better implementation. To a question on prioritising of policy initiatives on high prices of food, he said supply side measures are highly important in the short-term while others including technological progress, reclamation of degraded lands can follow. As uncertainties still loom large over Contract Farming or FDI in agribusiness, he suggested to wait and watch but to speed up public investment and group approaches in agriculture.
Speaking from the perspectives of women and marginalised groups, Annie Raja, General Secretary, National Federation of Indian Women who is also leading the Right to Food (RTF) Campaign, said the glossy plan documents hardly materialized at the ground level and succumb to vested interests. Questioning strongly the rationale for classifying families APL or BPL on the 13-point criteria, she further demanded quicker and effective reforms in PDS to better prioritise the malnourished and that essential commodities be supplied at subsidised prices. Not being able to cope up with steep hike in food expenditure, she said, more and more children, especially girls of poor families are being pulled out of schools and foeticides are also on the rise. Quoting the Raipur declaration of the RTF campaigners, painting of vehicles ferrying PDS supplies with a distinct and unique colour (such as an ambulance) would help to some extent curtail the leakage of PDS goods to the black markets and a response from the audience further finetuned the idea to preferably have a unique colour code like the post vans.
Though the 11th plan proclaimed the ‘Feminisation of Agriculture”, she apprehended that women are usually forced to take up agriculture after running out of all other options that too without any further assistance on inputs, finance or capability building and it could be a deathly blow if the Government cuts down the existing supports. Adding to her argument that of the 199 bank branches opened last year, only three were in the rural areas which showed continued negligence by the formal economy and the Government. The ostensible growth of eight per cent in GDP has done very little as still 73 per cent of women and 80 per cent of children under three years are plagued by chronic anaemia adding that this would seriously dent the quality of future human resource of our country particularly when the country is aspiring of a knowledge-based services driven growth. She appealed the Government should not wash its hands off to reduce to just a conduit of funds from donors but take more responsibility over the livelihoods of the poor and vulnerable. Responding to a question on NREGS, she hailed the programme fairly successful shrugging off some level of corruption since it helped the number of employment days and average wages for casual labourers rise in many parts of the country to cope up with increased food prices.
While voicing the concerns of the socially excluded groups, Sardar Anwer, President, Tehreek-E-Pasmanda Muslim Samaj, poetically explained the eons long struggle of mankind against the omni-present disease, hunger, which still continues to haunt in a much larger way. He questioned that whether several initiatives such as GRY had truly helped the poor and needy who fight for their living with just under Rs.12 every day. While basking on glamorous GDP growth, he wished to draw everyone’s attention on the plight of India’s rank of 61 out of 80 in GHI with only Bangladesh behind us in the South Asian region.
Dr. Shiraz A Wajih from Gorakhpur Environment Action Group brought out the plight of small farmers in the context of high food prices. Since these 300 million odd families are totally dependent on agriculture including the landless labourers, any rise or decline in prices can play havoc on their lives. While the input costs has risen 3-4 times since the last decade, the output prices have only doubled thus erasing any net gains further deteriorating their standard of living as 70 to 80 per cent of the income is reinvested on inputs in the next cropping season. Diversity in the agricultural systems has been declining to just Wheat/Paddy rotation that has severe impacts on soil health and underground water table especially in the Gangetic plains. The disturbing trend of disintegration of allied subsectors (livestock, dairy etc) from the farming system has eroded their inter-complementarity and led to steeper increases in input costs. He concluded with his argument that small farmers with their cumulative per hactare annual production levels higher than the large farmers had for long been lagging behind in per hactare income. Criticising that the present extension systems, credit facilities, technology infusion and other supports are favourable only to large farmers because of economic or operational considerations, he called for a substantial shift in the focus towards small holders and women farmers.
Mr. Shiraj Hussain, chairing the final session on role of the Government, surprised everyone by saying the Indian MSP for wheat (Rs.1000) is at the moment higher than the global prices. Further explaining the phase by phase changes, the universalised PDS was changed to Targeted PDS with enhanced focus on BPL families entitling them 35 kg of foodgrains per month from 10 kg in 1997 under the former scheme. Commenting on the request for turning back to universalisation of PDS, he defended that procurement has already been at record levels this year and the Government needs to purchase all the available stocks in the market to meet the demand if PDS is to be universalised but it would be catastrophic for other consumers in the market. With pressure over mounting subsidies on the Government not to increase the central issue prices, he suggested improving the effectiveness of delivery mechanisms, implementation and targeting of the needy and commended that with good governance, the performance of PDS is better as witnessed in Southern States. He also invited civil society organisations to wield tools such as RTI (Right to Information) act to lift up pressure on the Government machinery for better accountability.
Drawing the proceedings to a close, Amita Puri, Executive Director, Centad, thanked the organisers, speakers and all the participants for the intellectually stimulating discussions on the theme.
In sum, the deliberations laid a solid platform for exchange of ideas and concerns from different sections of society on the theme of managing higher levels of food prices, which are to be communicated to the policymakers to be translated into concrete and practically feasible initiatives.
Rapporteur
Sampathkumar Raghavan
Consultant, Centad
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