India shows a substantial rise in per head food production in recent years but it is merely  adding to exports and to  stocks – food consumption by the people shows no rise

FOR a quarter century from the early 1980s, production of grain per head of population at the global level kept on declining. Developing countries were urged under neo-liberal free trade policies promoted by advanced countries and global institutions, to export more and more agricultural products, and their pliant governments did exactly that. Since advanced countries have a surplus of grain they wanted developing countries to absorb more grain imports and export to them the crops their own cold lands could never produce, to keep their supermarket shelves stocked all year round.

But tropical land is limited in physical extent even more than is temperate land, and in the absence of adequate investment, more exports meant diverting resources away from food grains which saw a sharp decline in terms of output per head of population. Grain provides not only cheap energy (calories) but also cheap protein. In India in 2005 food grains directly consumed, provided three-quarters of calorie intake and a slightly higher fraction of protein intake to the average rural consumer. Even in urban areas, two-thirds of energy and protein for the average consumer came from the food grains alone. Grain output decline meant nutritional losses in poor developing countries across the globe, including in China which saw a steep fall in per capita grain output from the mid 1990s.  

Advanced countries had urged developing countries to give up their public food grain procurement and distribution systems saying they could easily buy grain from the global market. Dozens of developing countries did in fact foolishly give up their food security system and in India too it was allowed to run down badly.   But advanced countries did not raise their grain output enough to make up for the fall in developing countries so that by 2001 the global level was down to only 313 Kg per head – this had to meet all uses, as food, feed for animals, seed for sowing, conversion to food products, and all other uses.  The tight global supply situation became worse as, after its Iraq misadventure, the US started exporting less and converting more and more grain to fuel (ethanol). Those developing countries which had been pressurised into becoming import-dependent were left out on a limb as global food prices rose sharply from end-2007. Food riots took place in 37 poor countries.

Facing massive food price inflation, the Indian government hastily scrambled to contain the damage already done to output and to farmers’ livelihoods by its prolonged neglect of agriculture. It raised procurement prices after years of stagnant production and declining procurement. Between 2008 and the present, farmers have responded by raising grain output substantially from around 218 million tons to a record 264 million tons in 2013-14. Of course, output during 2014-15 is bound to be lower owing to the deficient monsoon but is still likely to exceed 250 million tons.

But the paradox is that while output has improved the purchasing power of the masses has not, nor has targeting been removed from the PDS, so consumption is still at the same low level as before and grain consumed per head directly as food is actually lower today than a decade ago. The country continues to remain the Republic of Hunger.  All that is happening to increased output is that it is piling up as unsold stocks, and in desperation the government has been allowing exports to an extent never seen in the history of the nation. During 2013 and 2014 a record total of 42.2 million tons of food grains have been exported while millions of people continue to go hungry. By 2011 India already ranked right at the bottom, below not only Africa but also below the Least Developed Countries, in terms of food grains consumption per capita.  

The actual economics behind the trend of recessionary inflation is not understood by policy makers today, any more than it was understood a decade ago when the NDA government had exported 22 million tons of grain in a drought period, 2002-3. The conventional theory is that it is a demand-pull inflation hence the attempt of the authorities is to dampen demand through tight money policies and to implement austerity measures namely cut back on public spending. But the actual problem is the opposite, namely a deficiency of mass demand. All that present policy measures will do is to aggravate the problem of demand deficiency, cause more stocks to pile up and less cloth and other simple manufactures will find a market.

The rich minority will fare even better than before at the expense of the majority and will buy more modern durable goods, enjoy high-class housing, and travel abroad for holidays. This is because the process of surplus inflation continues unabated. Surplus inflation is the pouring of money into the laps of rentiers and profiteers and their hangers-on, through neo-liberal policies of de-regulation and privatisation at every level, thus sharply raising prices, raising the share of property incomes in national income and reducing the share of workers whether they are wage-paid or self-employed in small scale activities. Public-private partnerships ensure rising private profit at public cost. Deliberate neglect of the public health care and educational systems has led to a proliferation of private high cost institutions and raised the health and education cost share of household budgets substantially. Financial rentiers reap a bonanza with high interest rates which affect small scale enterprises in particular adversely.  Technological change in manufacturing raises productivity, but creates more unemployment so real wage earnings do not rise.

All this is getting reflected in many indicators, one being the steeply falling share of wages in gross value added in organised manufacturing to  below 10 percent by 2008. The NSS data show that average calorie and protein intake has been declining. Poverty correctly measured by applying the governments own nutrition norms, has been rising. While 69.5 and 64.5 percent of rural/ urban persons spent too little to reach 2200/2100 daily calorie intake in 2004-05, by 2009-10 the figures had gone up to 75.5 percent in rural and 73 percent in urban areas. Rapid food price inflation in recent years is raising urban poverty faster than rural poverty. Rising non-food costs owing to privatisation of healthcare and vital services, force households to cut back on food, the only thing they can control.

Table1 in which we have compiled FAO data for the latest available year, 2011 needs to be studied carefully – it shows India’s position vis-à-vis some major regions and countries as regards the crucial indicator, per capita cereals intake. For India, USA and the World, the position in 2001 is also given for a quick comparison. First, even though India has improved production per capita substantially comparing 2011 with 2001 (both good agricultural years) since the increase was exported or added to stocks, it ended up with almost the same total domestic cereal supply/demand of 176 kg  per capita. Second, at this level it reached the lowest position in the world, below Africa and the Least Developed Countries (LDCs), which recorded substantially higher figures of 226 kg. and 216 kg. respectively. Africa is heavily import-dependent for foodgrains and the LDC’s also import though to a lesser extent, but the point to note here is that their per capita domestic demand for all uses has not reached the abysmally low level of India.

Third, cereals directly consumed as ‘food’ per capita, has actually gone down to 152 kg only from an already very low level and this means nutritional decline since the per capita annual energy loss is about 13800 calories and protein loss is 400 gm. For those who actually suffer the loss, it is higher than this average. It cannot be compensated by the increase in animal products like milk from feed use rising by a mere 2.2 kg even assuming that the milk etc is consumed by those suffering the loss. Unlike India the use of grain as feed, and hence animal products consumption is much higher in both Africa and the LDCs.

The USA has reduced its grain exports and has raised domestic use of grain four-fold for ethanol production. It shows substantially lower feed use hence supply of animal products, reflecting the impact of the recession on ordinary consumers, but it remains the richest consumer with the highest food plus feed combination at over 500 kg per capita.  The world average cereal supply per head has risen by 24 kg but consumption as food plus feed is stagnant at the same level, since the entire increase has gone into fuel production. The nutritional stagnation at the global level mirrors the very low rate of demand growth which predates, but was intensified by the great recession from 2008.

While reviving domestic demand in India requires expansionary policies specifically directed at raising employment, another important factor is the disastrous targeting of the PDS. Why targeting  has been retained under the National Food Security Act passed in September 2013  is a mystery since it will be just as difficult to identify the specific one-third of the population to be officially designated ‘non-beneficiaries’  as it was earlier to identify who were the persons ‘below the poverty line’. The Act needs to be amended to make it universal in scope and it needs urgent implementation. Otherwise India will continue to export food while its citizens remain hungry, and will continue to remain at the very bottom of the global food security ladder.  

Note: From total production, net imports and net addition to stocks, are deducted to give total supply which is identically equal to demand.  Seed and waste are not shown but can be obtained by subtracting from supply, the sum of the last three column figures.