G’nY. What are your views on India’s grain surplus status?
Food is a mixture of 50 to 60 commodities depending on the culture of the region. Each country is surplus in certain commodities while deficit in others. India till the mid-1960s was primarily food staple deficit. As self-sufficiency is identified based on essential food staple consumption, the bulk of food sought to be made available was grains. In India, it is now clear that we are surplus at the aggregate levels, defined as a crop (including horticulture) + livestock + fish. Surplus, therefore, can be defined as that which remains after the demand in the country at the current prices and income is met in relation to the amount produced. For instance, India’s agricultural and allied products exports in 2020-2021 grew by 17.34 per cent and is now at 41.25 billion USD. However, imports in the sector during the same period was about 20.67 billion USD. This is one way of looking at a surplus at the aggregate level where exports are twice the imports with significant foreign exchange earnings from the sector. Experts also calculate surplus based on nutrition. Good health requires a certain amount of energy, proteins, fats and carbohydrates, along with macro-and micronutrients. As per the Food and Agriculture Organisation’s (FAO) measure, nearly 60 per cent of rural people cannot afford nutritious diets. If we were to apply these norms, the net surplus value would perhaps shrink considerably. Maybe then we will simply be food self-sufficient. However, the surplus that I often refer to is defined by demand and supply in economic terms.
G’nY. Low productivity of pulses and oilseeds is a cause of concern as it is unable to meet the rising demand in India. What can balance this?
If a nation has a comparative advantage over certain commodities, we should allow its dominance, evaluating it to create a net balance in our favour (considering that there are no distortions). India is exporting high-value vegetables and fruits to Europe and the USA, rice to the middle eastern nations, fish to China, Europe and Russia and fish and buffalo meat to many countries worldwide. Being deficient in certain commodities is not always bad; rather, it may be beneficial. Let us take edible oil production – rapeseed, soybean, palm, groundnut, and mustard. These edible oils can be purchased from the international market at a lower price, in some cases 40 per cent less than the cost of domestic production for the same oils. It can lead to welfare gains from export and import, as I have calculated in an Economic and Political Weekly (EPW) paper. In imports, the government gains through the duty imposed while the consumer gains through lower prices. On the other hand, with the domestic price falling, the producer may lose out as they may have to sell their products at a lower price or switch to other crops. Hence there may be a decline in the welfare gains of the producer. Calculations that consider consumer vs producer welfare gains, therefore, provide a net welfare revenue to society. Ideally, trade is based on this principle. For wheat and rice from a demand and supply point of view, we are now surplus to the extent of 12 to 15 per cent. What is competitive is sold, else it is added to the stocks of FCI. In the case of pulses, we are deficit by 15 to 20 per cent, fluctuating annually. In vegetable oils, India is consuming 60-65 per cent more than it is producing. Naturally, the increased domestic demand for both these commodities is being met through imports. On the other hand, if imports are very high, like edible oil, any shocks in the international market can adversely affect India’s 1.3 billion population, with consumer prices skyrocketing. Therefore, it is essential to keep import dependency less than 50 per cent, which is presently at 64-65 per cent. In India, 36-37 per cent area grows a double crop while nearly 60 per cent area grows only a single crop. Each year beyond the 4-5 months used to grow a crop, the land remains fallow. This land presents an opportunity of producing more if there is demand. Import substitution can perhaps act as that demand to push up production. However, although we can perhaps reduce the import of oil without detrimental effects on people’s health, the same cannot be said for pulses in a predominantly vegetarian country where it is a primary source of protein.
G’nY. India needs to diversify the food basket, yet there is enormous pressure on agricultural inputs and resources. How can we move from the ‘grow more’ model to the ‘growth plus’ one?
At one point, we had a severe staple food deficit and we needed to produce wheat and rice at any cost. When sandy soil was producing rice, we would encourage it. Whether it would support it or not, or whether the groundwater was depleting or not—these were not the considerations. For instance, the cultivation pattern in Ludhiana district, Punjab, shifted from groundnut to rice. The only chant was ‘grow more’ to prevent hunger. Now we are no longer in that desperate situation. Thus a more balanced view can be taken as staples become affordable and in plenty with the Indian diet diversifying to include a larger basket of foods. As income increases, the share of food grains in the food basket decreases. Dietary changes lead to more diversified demands, heralding better health. It is essential to see that the diversified foods are healthy and the produce, along with the food staples, exerts a minimal effect on the nation’s natural resources. Right now, there are a lot of distortions in farm policies. It is populist and holds farmer appeasement orientations. There is an urgent need to reset priorities. We need to base our interventions on sound economic logic and in the interest of future generations. The effect of these needs to be evaluated on the nation’s natural resources. We must care for the air, water, soil and biodiversity and ensure an enhanced income to our farmers in the ‘growth plus’ model through the right set of policies implemented by the government.
G’nY. How can agriculture be sustainably developed from the perspective of common property?
Wherever the question of common property sources come to light—air, rivers, forests and marshlands, people tend to instinctively overexploit as they feel that if they do not use it, someone else will. Coupled with an underlying desire to maximise profits in the short run, natural resources are the worst sufferers. With free power and automatic starters available, groundwater withdrawal is easy and farmers opt for crops that require copious amounts of water. Neither does he judiciously use water, nor does he select drip or sprinkler irrigation options, changing traditional planting practices. I recently read that in 2021, 6 lakh hectares in Punjab planted rice using the direct-seeded rice (DSR) technique, reducing greenhouse gas emissions and water and labour requirements. Newer methods such as aerobic vs anaerobic rice do not require rice to be under continuous submergence. These need to be adopted by farmers who are still waterlogging rice fields. Development efforts from various political dispensations need to focus more intensely on real change on the ground. I earnestly believe that stringent regulations can reduce this blind exploitation through the ‘polluter pays’ principle. In the early days of my youth, tobacco grown in our family farms was heavily taxed to curb production, as tobacco consumption is not considered desirable for the country. So, if we know that this particular crop or practice raises environmental concerns, we need to have regulations to check it. Unfortunately, the problems emerging in agriculture and agro-industries call for more significant interventions from governmental bodies, strictly ensuring compliance with laws. Take, for example, farmers burning paddy stubble. In any other country, if stubble is burnt, the farmer would be directly responsible. In the European Union, governmental support depends on the agriculturists’ compliance with the set regulations and environmental obligations. So if, for instance, we were to stop the supply of water to any farmer who is burning paddy stubble, it may effectively deter him from the practice. We too, need to be stricter with new regulations in controlling the exploitation of natural resources that form the base of India’s agriculture.
G’nY. Smallholdings are no longer a sustainable source of income. What do you think needs to be done to remedy this?
India’s small and marginal farmers were 85 per cent in 2015-2016, which in my estimate would have increased to 90 per cent by now. However, countries in Asia, especially Japan and China, have landholdings smaller than India. The only way to make smallholdings economically viable is not through agriculture, whatever be the productivity, but through an alternative or secondary source of income. We may refer to Lewis’ dual sector model that explains the growth of a developing economy in terms of a labour transition between industry and agriculture. But in India, this shift of labour from agriculture to industry is now becoming increasingly complex with end-to-end mechanisation in industry. The alternative income possibilities lie in part-time non-agricultural employment, outside employment, contract farming and food processing. There needs to be an effort to value add to foods and non-food crops for these handkerchief-sized farms. Pulse, for instance, can be processed and the finished product sold at a higher price (with a 40-70 per cent margin) in the market. Direct farm to city connections for value-added products could also enhance the income of small farmers.
G’nY. Do you think private partnerships in research and development is a game-changer?
There is a conflict between public and private research in agriculture. Research is supposed to generate public good and welfare for everyone. For example, research being done to find an alternative crop to pulses that can better fix nitrogen in the soil will be for the public good. Therefore only the public sector or governmental units will undertake it as it is focused on welfare. Private companies will not take part as it does not meet its profitability goals. Also, as these are not commercial products, the private sector is unable to recover its investments. Thus, in the arena of natural resource economics, climate change and biodiversity conservation, the private sector remains relatively invisible. Interestingly, in many cases, the private sector is more efficient in research than the public sector. In some areas where intellectual property rights (IPR) protection can be offered, it is better to allow the private sector to undertake research and development (R&D). Take, for instance, soyabean. In the last 40 years, India could not substantially increase its yield—it hovers at around one tonne per hectare. If we were to allow private entities to offer hybridisation or GM solutions (just as an example, not to court controversy) the situation may be different. The private sector can sell seeds and recover the R&D costs—ensuring a competition between public and private sectors that proves beneficial for both. But where natural resource economics comes into play, the private sector will remain passive and public sector research will be imperative. Then there are more complex IPR issues of sharing seeds between farmers ensured under The Protection of Plant Variety and Farmers Right Act, 2001 (PPVFR Act). Very recently, there was a near-agreement for a wonderful variety of grape germplasm from Argentina. It fell through because they wanted the Indian government to check sharing between farmers, which could potentially lower their sales. That said, it is sad that we cannot allocate an adequate amount of money for research. Many government universities are starved of funds. Therefore, we need the private sector to engage in research so that India can compete with the rest of the world and find a synergy that works for both.