Food: Not Grain Security

1. Food: Not Grain Security Yoginder.k.Alagh

2. Introduction • Food: not Grain Security, because poor people also eat vegetables, fruit, meat and milk products • And Infrastructure and Backup for food is more complicated than for grain • Simple but ignoring it leads to a narrow focus and policy failure

3. Demand • Agricultural demand is rising. When you grow in per capita terms at around 6 ½ to 7% every year Engels Law sees to it that demand for cereals is growing slowly, the demand for non-cereal food crops, non-food commercial crops and non crop based agricultural goods like milk, meat and tree crops grows substantially. Per capita income of $ 3000 annual in purchasing power parity terms seems a dividing line for higher food demand. This is happening in India, some what suddenly and is leading both to the resurgence of income possibilities for the agricultural sector and wage goods becoming a constraint (food Inflation?).

4. Details Source: F.A.O.,2008, Y.K.Alagh,2000 Cereal demand growth between 2020 and 2030 is 13%. Demand growth of fruits and vegetables, eggs, chicken and milk is much higher. The decadal growth figures for potatoes is twenty four percent, thirty percent for vegetables, forty percent for milk, two hundred percent for eggs and two hundred and fifty percent for chicken. Demand for beef, mutton and pork also goes up but given religious reasons the absolute figures are low. The low growth of cereal demand is compensated by very high demand growth of non cereal based and non crop based agricultural goods. Details

5. Some Numbers Income elasticity's are high for cereals for the poor and low for the non-poor. They are negative for inferior cereals for the non poor. Cereals have a low expenditure elasticity in the Nineties for the same group. The elasticity was low for the poor in the Seventies and is less than 0.5 for the same group in the Nineties. • For commodities like milk and milk products, eggs and meat, edible oil and sugar, the estimates of expenditure elasticity's were high for poor households, in some cases above 2, but were below 1 although not very low for the non- poor. There is a large literature on the declining consumption share of grains by poor households in India and its impact on poverty estimates. • (For details See, Yoginder.K.Alagh, The Future of Indian Agriculture, National Book Trust, 2012, Ch.2)

6. Rural Urban Continuum • I have argued for the last decade, beginning with my. S.K. Dey Memorial Centenary Lecture that we have underestimated the rate of growth of large villages and small and medium towns as also non farm employment. • This was later supported by the UNDP and the FAO and reinforced by studies of rural market spread by satellite pictures. Market towns are more wide spread in India then in other developed regions and also some developed countries. • Census clinched the argument in 2011 for the past but not the future

7. Underestimating Rural Movements Census Towns is a pan Indian phenomenon. Statutory Towns increased from 2001 to 2011 by 242, but Census Towns by 2532. • ‘The Census of 2011 estimates that 833 million people continue to live in rural India.’(Government of India,2011) But until very recently ignoring Census towns was projecting that 870 million persons would live in Rural India in 2011(Government of India,2008). It has finally changed its earlier figures on urban population in 2011 of 357.95 million to the Census 2011 figure of 377.11 million (missing out 2 crore persons) and notes the phenomenon of Census Towns but its projections for the future are sadly as earlier. They underestimated the rural population moving to small (Census, not official) towns by 37 million people. That is a lot of people. As compared to an existing population of 377 million, the projection of 405 million in 2017(Government of India, 2006) is grossly low

8. Infrastructure • This in my view compels a completely different approach to the development of market infrastructure of producer’s associations, cooperatives and self help groups, working with corporate and local institutions for support to the emergence of large villages and small towns as sustainable and growing communities of the future rather than resource starved social infrastructure denied outposts where large millions of young Indian women and men come from villages for higher wages and for trade in very adverse circumstances. In a benign policy environment it can be showed that with rising urban jobs rural workers will also increase their wages by over a quarter in the next decade, if not they will continue in poverty

9. Possible But? • In the next two decades, Indian agriculture can meet the requirements of food security and rapidly diversify itself. It can function in a rural urban continuum, with rapid developments of markets and shifting of working populations from villages to linked small towns and also from crop production to value added activities. Employment growth will be high in these activities chasing a high rate of economic growth. All this will happen if policies give the appropriate signals in term of technology and organizational support and the necessary economic support in terms of pricing and infrastructure support. Otherwise there will be rising food prices chasing few goods and immiserisation. We have separately developed a small model to provide a framework for such discussions (Y.K.Alagh, 2013).

10. Numbers again • The model to provide a framework for such discussions is as follows; • A benign process will be in the following larger frame work : • India 2020 • Total Population (million) 1273 • Rural Population (million) 738 • Labour participation rate % 46 • Labour Force (million) 340 • GDP growth (% annual) 8.5 • GDP agricultural growth (% annual) 4% • Employment elasticity w.r..t.. -0.3% • Agricultural growth (Low) • Employment elasticity w.r.t. • Agricultural growth (High) -0.1% • Land augmentation through • Increase in cropping intensity (High) 0.5% • Increase in cropping intensity 0.0 to 0.2%

11. Happy Outcomes • In a benign framework of development, agriculture will grow at 4% annual, technological change and diversification will be high so the shift away from agricultural on this account will be 20% over the decade 2010-2020. (Elasticity of -0.3%). This will mean a corresponding increase in real wages of the agricultural labour force. • Rising Wages have been a trigger of technical change in rural areas. It is not wise to restrict MNREGA since a large ICRISAT field study shows its role in investment and efficiency enhancement • If the shift does not take place on account of poor agricultural productivity increase, with an employment elasticity of minus 0.1, and a growth rate of these per cent annual, the shift will be 4% and an insignificant increase in real wages of the agricultural sector. This will be a very cruel process of economic transformation.

12. Land and Water • The only other factor which will affect outcomes in this logical frame work is the augmentation of the land base of Indian agriculture. If land augmentation emerges again with success of the interrelated issues of land and water management, cropping intensity rises by 0.5% annual and in the decade 2010 /2020, real wages would rise by 7% additional or 27% in the total and rural-urban inequality would go down. The two big question marks relate to non renewable resources, particularly land and water

13. The Cafeteria • Water Management is critical for agriculture: Our Plans include: • ‘Steps to greatly improve governance in water management through Water User Associations such as Pani Panchayats and similar PRI‐based institutions. • A focus on Command Area Development and the rehabilitation and physical modernisation of existing major irrigation systems. • Extensive rainwater harvesting assisted by space‐based maps with active ground truthing and convergence with other development schemes. • Comprehensive aquifer mapping and extensive ground water recharge.Farmer Based Ground water management systems( the Andhra Experiment) • Move towards sprinkler and drip irrigation and away from flood irrigation • Enable assured irrigation to much more land far beyond the present 42 per cent of arable land • Strengthen drinking water resources • Integrate these activities with existing surface reservoir based canal irrigation.’

14. Policies A bifocal policy initiative is required. Subsidies with adverse consequences on productivity of land must be phased out. Simultaneously profitability of alternate crops and activities must improve through market, economic and financial reform. The role of sponsoring policies for alternative distribution channels so that there is genuine competition in input supplies is very necessary. Cooperatives, non-profit organizations and partnerships between private sector, Coops, NGOs or local governments are required. A Committee developed a Producer Company Law which was incorporated in The Company Bill in 2002 but is now in trouble. Producer cooperatives, working on a cooperative principle can be a very powerful instrument of growth and the required level of diversification. Producers groups should be encouraged to enter into strategic relationships with supply chain actors.