The Hindu Business Line : Grow more

Stepping up domestic production and achieving self-sufficiency will not only make food more affordable for India, it will benefit poorer economies too.

Worldwide, inflation is beginning to bite. Concerned over the adverse effect of soaring food prices, governments are initiating precipitate action. Trade and tariff restrictions are being imposed, often as quick-fix solutions. The policy environment is becoming increasingly complex — most countries are struggling to reconcile the growing conflict between domestic political compulsions (to check inflation) and international trade obligations (say, under WTO or other a greements), with limited success. Governments are taking cover by pointing out that food inflation is a global phenomenon. And it has become fashionable to criticise the developed economies for the rise in food prices worldwide because of large-scale diversion of such traditional food crops as corn/maize, wheat and vegetable oils for use as bio-fuel.

India too has joined the bandwagon. The country’s contention that the increasing diversion of food-grains for bio-fuels has resulted in the unprecedented increase in prices, making food-grains unaffordable for the world’s poor, was articulated by no less than a Central Minister at the International Grains Summit recently. The fact of the matter is that a combination of demand- and supply-side factors are at work. Rising energy prices (crude, gasoline, natural gas) have prompted large food exporting countries to convert traditional foods into feedstock for fuel, more specifically bio-fuels that are not only renewable but also largely environment-friendly. Economic growth in populous emerging economies (notably the BRIC economies) is pushing up the demand for food. Meanwhile, there are supply uncertainties because of weather aberrations. Last, but not least, speculative capital is surely playing havoc with the agri-markets, whose demand-supply fundamentals are tightening.

Cribbing over high world prices and blaming developed countries does not befit a nation such as ours. In some sense, we are responsible for high international food-grain prices. Our failure to produce enough for our people — 110 crores, growing at 1.7 per cent a year — means we are forced to tap overseas supplies in large volumes, which pushes the price up. As a consequence, low-income, food import-dependent poor countries are the worst hit. As far as agriculture is concerned, India has everything going in its favour — all the natural advantages of varied agro-climatic conditions, vast stretches of land (150 million hectares of cultivable area), 270 days of sunshine a year, 880 mm of annual rainfall and a large manpower base. All factors of production are present except, of course, the managerial skill and political will to beneficially exploit the natural endowment. The farm sector should be energised with the objective of raising production through higher productivity and improved quality. India can do the really poor countries a favour by stepping up domestic food production and reaching real self-sufficiency.