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ACHIEVING FOOD SECURITY FOR ALL: The Way Forward

ACHIEVING FOOD SECURITY FOR ALL: The Way Forward. Presentation by Prof. SHABD S. ACHARYA ( INDIA) PLENARY SESSION – 3 24th Conference of CONFEDERATION OF ASIA –PACIFIC CHAMBERS OF COMMERCE & INDUSTRY (CACCI) (hosted by the CEYLON CHAMBER OF COMMERCE) COLOMBO , JULY 5-7 , 2010. OUTLINE.

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ACHIEVING FOOD SECURITY FOR ALL: The Way Forward

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  1. ACHIEVING FOOD SECURITY FOR ALL:The Way Forward Presentation by Prof. SHABD S. ACHARYA ( INDIA) PLENARY SESSION – 3 24th Conference of CONFEDERATION OF ASIA –PACIFIC CHAMBERS OF COMMERCE & INDUSTRY (CACCI) (hosted by the CEYLON CHAMBER OF COMMERCE) COLOMBO , JULY 5-7 , 2010

  2. OUTLINE • ISSUES AND CHALLENGES • INDIA’S APPROACH TO FOOD SECURITY • LESSONS FROM RECENT POLICY REVIEW IN SRI LANKA • SOME OBSERVATIONS FROM ASIAN COUNTRIES • KEY LESSONS AND MESSAGES

  3. FOOD INSECURITY AND HUNGER • Is the highest priority issue the World is facing • In 1996 – World Food Summit (WFS) – Targeted to halve the number of hungry by 2015 (820 million to 410 million) • In 2000 – Millennium Development Goals (MDGs) – First was to halve the % of hungry by 2015 (8%) • FAO`s Assessment in 2003-05 – At current pace - Only South America & Caribbean will achieve MDG - None will achieve WFS target

  4. STATUS OF MDGs (FAO, 2008) CHRONIC HUNGER (UNDER NOURISHMENT) MILLION • Asia – home to 2/3 of food insecure • South Asia – home to ½ of food insecure

  5. MAIN ISSUES, CONCERNS & CHALLENGES

  6. CONCEPTUAL FRAMEWORK CONCERN SHIFTED : Global or National to HH and individual CONCEPT: • All People at All Times • Physical and Economic Access • Sufficient to Meet Dietary Needs • For Healthy and Productive Life NOW (IFPRI) • Food to Originate from Efficient and Low-Cost Production System - Sustainable use of Natural Resources CONNOTES • Freedom from Hunger & Malnutrition • Poverty - Food Insecurity - Poverty Cycle • Hence Food Security must look at Poverty, Hunger & Malnutrition • Non-Food Factors : Clean Water, Sanitation, Healthcare

  7. INDIVIDUAL COUNTRY CONTEXT : THREE LEVELS OF FOOD SECURITY • National or Macro Food Security (Domestic production or capacity to import on sustainable basis) • Household Food Security - Physical Access to Food - Economic Access to Food • Individual Food Security ( Intra-family allocation , individual health) A is necessary (but not sufficient) condition for B B is necessary (but not sufficient ) condition for C

  8. FIVE CONDITIONS FOR FOOD SECURITY FOR ALL 1.Sustainable Availability - Macro Security, Macro Policy 2.Physical Accessibility - Marketing System, Govt. programme. 3.Economic Accessibility - Purchasing Power, Food Prices 4.Intra-Family Allocation - Social Factors 5.Capacity to Utilize - Individual’s Health FOOD INSECURITY •Lack of Above 5 • Chronic or Transient • Acute or Mild

  9. CHALLENGE • Hunger and Malnutrition due to food insecurity • Food Insecurity continues despite high eco-growth • Majority of Food Insecure - Small Farmers, Ag. Lab. • Food Insecurity more among Foodgrain Producers • Cereals major source of calorie for Food Insecure • Food Insecurity continues despite pervasive Govt. Intervention / Intentions • Liberalised trade - Impact on Food Insecure ?

  10. GLOBAL FOOD CRISIS OF 2007-09 SITUATION • Food prices doubled in few months • Food emergency , food riots, export bans , rationing • Number of hungry 2007-923, 2009-1020 REASONS • Global demand-supply imbalance • Increase in prices of crude oil and energy • Diversion of grains for bio fuel • Market manipulations , speculations

  11. GLOBAL FOOD CRISIS OF 2007-09 (contd.) DEMAND SIDE FACTORS • Population growth • Dietary patterns • Diversion of food to non-food uses • Utilization did not adjust to fluctuations in production SUPPLY SIDE FACTORS • Decline in area • Deceleration in growth of productivity - In developing countries – ag. Investment down - Due to reduced research, tech  slowed down - Adverse Terms of Trade for agriculture - Complacency, reduced priority to agriculture

  12. INDIA – CHINA FACTOR Per Capita Consumption (2004-06) kg/year If world follows India's dietary pattern, 56% of cereals production is enough–900 million tonnes will be surplus (out of 2000 million tonnes)

  13. INDIA’S APPROACH TO FOOD SECURITY & AGRICULTURAL DEVELOPMENT

  14. STRUCTURAL CHARACTERISTICS • Current Population 1.18 billion - Reduced population growth from 3.0 to 1.3% • Rural Population 70 % 826 million • Farm Size - 1.32 ha average (121 million farms) 82 % (99 million) operate less than 2 ha 40 million(33%) Less than 0.4 ha 36 million(30%) 0.5 to 1.0 ha 23 million(19%) 1.0 to 2.0 ha

  15. STRUCTURAL CHARACTERISTICS (Contd.) • Land Utilization Pattern - Net Sown Area - 141 million ha (46%) - But Double Cropped Area Growing - 53 m.ha - Gross Cropped Area - 194 million ha - Cropping Intensity - 138% • Irrigation - 44% area irrigated (up from 18%)

  16. STRUCTURAL CHARACTERISTICS (Contd.) • Rural hh as % of Total hh 73.9 % • Farmer hh as % of Rural hh 60.0% • Farmer hh as % of Total hh 44.4% • Share of Farm Income in Total hh Income of Farmer hh 50.1%

  17. STRUCTURAL CHARACTERISTICS (Contd.) • Agriculture in the Economy – GDP share of agriculture decreasing - now only 16.7% – Employs 52% of workforce – Gap widened over the years Economic GrowthAgri. Growth 1950 to 1980 3.6% 2.5 % 1980 to 1995 5.5% 3.6 % 1995 to 2001 5.5% 2.5% 2002 to 2005 7.6% 2.3% 2005 to 2007 9.0% 4.4%

  18. AGRICULTURAL AND FOOD POLICIES • FIVE PHASES • 1947 to Mid-1960s • Mid-1960s to Early 1980s • Early 1980s to Mid-1990s • Mid-1990s to 2004-05 • 2005 to Till date • UNTIL MID-1960s • Objective was to keep food prices checked • Instruments of imports, controls, & rationing • Early 1960s – IAAP and IADP launched in selected districts for increasing food production • Land reforms launched • But no dent on food supply

  19. MID-1960s • Import dependence went up to 16% • Concessional imports from USA (PL - 480) • Two years of severe drought • PM appealed for fasting for a day every week • New food strategy and policy launched • Objective - Maximize foodgrain production • Three foundations of New Strategy • Improved technology to farmers • System for supply of inputs to farmers • Assured marketing and price support • Supported by Policy and Political Will

  20. MAIN POLICY INSTRUMENTS (i) National Agricultural Research System strengthened for technology generation (ii) Agricultural extension, education and training network for Transfer of Technology (iii) Input supply system and irrigation development (iv) Institutional credit for farmers (banks nationalized) (v) Expansion of physical and institutional marketing infrastructure (vi) Regulation of traders’ and millers’ activities (vii) Support prices and purchase arrangements (viii) Buffer stocking and public distribution of grains (ix) Food and input subsidies to reconcile conflicting objectives of farmers and consumers (x) Regulation of imports and exports

  21. EARLY 1980s TO MID-1990s • In early 1980s, situation became comfortable • Shift in objectives • From foodgrains to a balanced basket • From macro to household food security • Policy instruments changed/modified • Three support extended to non-cereal crops • New schemes for household food security

  22. EARLY 1980s TO MID-1990s (Contd.) • In 1991, programme of economic reforms • Initially, industry, trade, and financial sectors • Later, agricultural reforms also, but cautious & gradual • Food programmes started for all categories of households - Production-based livelihoods –» Small Farmers: Inputs • Labour-based livelihoods –» Employment & Food Prices - Market-based livelihoods –» Marketing system - Transfer-based livelihoods –» Welfare schemes • Life-cycle approach in food-based programmes

  23. SOME POLICY INSTRUMENTS NATIONAL AGRI. RESEARCH SYSTEM • Considerable expansion and strengthening • 21, 869 scientists in 564 establishments • ICAR 20%, SAUs 63%,Other Public 13% Private 4% • Research Investment Growth 4.4 % per year • Agricultural Research Investment 0.5% of Ag.GDP 588 Agricultural Science Centres (district level) 588 Agricultural Technology Management Agencies

  24. FARM INPUT DELIVERY Certified Seeds: Increasing (58% Private) Fertilizer Use: Increasing 113 kg per ha Chemical Pesticides: Decreasing over the years Mechanization: Increasing Electricity Use: Increasing Institutional Credit Delivery: Increasing Insurance Coverage: Increasing but still low

  25. PRICE SUPPORT FOR FARMERS • 25 farm products (Price Insurance) • Expert body determines support prices • Reconciles objectives of farmers, consumers & government budget • Farmers free to sale in the market • If prices fall below MSP, government buys • For Rice & Wheat, price support purchase is 16 to 25% of production

  26. PUBLIC DISTRIBUTION OF CEREALS Moved from ‘Food for the Nation’ to ‘Food for the People’, and now to ‘Food for the Vulnerable’. CURRENT PROGRAMMES – FOUR GROUPS (i) Subsidized Cereals Distribution • Joint responsibility of centre and state govt. • Initially universal, but since 1997 targeted • BPL families - 35 kg per month @ half the cost • Poorest 20 million families @ Rs 3 or 2 per kg • Indigent senior citizens 10 kg free • APL families also, but nearly full cost • 81.6 million families covered • 462,000 fair price shops

  27. CURRENT PROGRAMMES (ii) Supplementary nutrition programme - for infants and mothers - covers 23 million children and 5 million mothers (iii) Mid-Day Meals for school children • Pre-cooked or hot-cooked meals or 3kg grain per month • 120 million girls & boys in 1 million schools (iv) Food for Work/Wage Employment Programmes • Started in 1977-78, several schemes • Since February 2006, Rural Employment Guarantee Scheme (200, 300 districts) • Since April 2008, all rural districts covered

  28. QUANTITY DISTRIBUTED UNDER PDS (MT) Period Rice Wheat Total Cereals 1965 to 1975 3 6 10 1980 to 1995 7 8 15 1996 to 2002 10 6 18 2002 to 2005 21 18 39 Now 90% goes to BPL families

  29. BUFFER STOCKS AND FOOD SUBSIDY • Size of buffer stocks - Fluctuations in production PDS Commitment • Norms at four points of time, by expert committee, every five years • Actual stocks deviate due to several factors • Food subsidy - Difference between economic cost and issue price Year Rs (billion) % of GDP 1990-91 24.5 0.47 2000-01 120.1 0.62 2009-10 469.1 0.76

  30. INPUT SUBSIDIES • Instrument to reconcile twin and conflicting objectives of remunerative prices for farmers and affordable price for consumers • Subsidies are indirect or implicit • 96% go to food crops • Increasing trend 1993-94 – Rs 141 billion 2007-08 – Rs 780 billion • Canal water (27%), fertilizer (42%), electricity (26%), others (5%) • Across size groups, distributed according to operated area

  31. TRADE POLICY INSTRUMENTS TILL MID-1980s - RESTRICTIVE - Canalization - QRs and Licensing - MEP - Currency Devaluation Since 1999 : All restriction withdrawn In 2007-09 : Some temporary measures

  32. REGULATORY FRAMEWORK (2001 TO 2003) • Movement controls Lifted • Storage controls Lifted • Small scale reservations Lifted • Credit controls Lifted • Ban on futures trading Lifted • Bulk handling & storage by private Allowed • Foreign Investment in BHS Allowed • Licensing Lifted • Contract Farming Liberalized • MSP Exists • Levy on rice millers/sugar factories Exists • Organized Retail Entry Allowed

  33. AGRICULTURAL PERFORMANCE AGRICULTURAL GROWTH (% per annum) PERIOD ALL CROPS LIVESTOCK FISH 1951-68 2.5 3.0 1.0 4.7 1968-81 3.0 3.0 3.3 3.1 1981-91 3.5 3.0 4.8 5.7 1991-97 3.7 3.1 4.0 7.0 1997-02 2.5 2.2 3.5 2.6 2002-07 2.3 1.93.6 3.4 2005-07 4.44.1 4.6 3.8

  34. CROP PRODUCTION GROWTH Period Cereals P&O F&V Others 1951-68 4.2 3.0 2.7 2.4 1968-81 3.4 1.0 4.8 3.0 1981-91 3.5 5.4 2.8 1.7 1991-97 2.4 2.9 6.1 2.2 1997-02 1.5 -1.4 3.7 4.1 2002-07 0.7 3.71.2 3.8 2005-07 3.5 0.5 3.1 6.8

  35. MACRO FOOD SECURITY (i) Domestic Production went-up (million tonnes) Period Total Increase Per Year Increase 1951 to 1975 44 to 90 2.0 1975 to 1995 90 to 172 4.1 1995 to 2005 172 to 182 1.0 2005 to 2008 182 to 203 7.0 (ii) Kept pace with population growth except during 1994-95 to 2004-05, but later picked up

  36. MACRO FOOD SECURITY (Contd.) (iii) Import dependence reduced and became net exporter of cereals (rice + wheat) Net Exports (MT) 1980-85 - 1.0 1985-90 - 0.2 1990-95 + 0.5 1995-00 + 2.6 2000-05 + 6.4 2005-08 + 2.0 (iv) Inter-year instability reduced (v) 97% of increase from productivity growth

  37. HOUSEHOLD & INDIVIDUAL FOOD SECURITY (i) Physical access improved - PDS, marketing infrastructure (ii) Economic access improved - retail price to per capita income ratio declined continuously (15 to 4%) • Owing to (ii), consumption of nutrient food went up (fruits, vegetable, milk, eggs, meat, fish) (iv) Hunger reduced - HH with less food declined from 16% in 1983 to 1.9% in 2005. Only 0.3% reported inadequate food in all months (v) Economic Poverty declined from 51% in 1978 to 22% in 2005

  38. CURRENT CONCERNS STILL TO GO A LONG WAY • 0.3% with inadequate food is 660 thousand HH • 22% poor means 230 million • 47.7% under-3 children malnourished • 37% adults with energy deficiency

  39. SITUATION DURING 1995 TO 2005 • Complacency in mid-1990s • Cereal production growth plummeted to 1% • General agricultural growth slowed/stagnated • TFP growth decelerated • Input use growth turned negative • Farm incomes declined • Research Investment decreased • Right to Food Campaigns increased PDS demand • Imports of Wheat at double the support price

  40. NEW INITIATIVES SINCE 2005 • National Food Security Mission (Rs. 50 billion) • RKVY (New Ag. Dev. Scheme for States) Rs.250 billion • National Policy for Farmers • Credit flow to farmers doubled (72 million farmers with credit cards) • Crop, weather insurance expanded • All rural districts given Farm Science Centre • Investment in Ag. R&D increased • Loan waiver of Rs. 710 billion for 4 million farmers • Support prices of rice and wheat hiked

  41. OTHER INITIATIVES • Bharat Nirman (Building India) Programme • Watershed Development & Micro Irrigation • National Rainfed Area Authority • National Fisheries Development Board • National Bee Development Board • National Bamboo Mission • National Rural Health Mission • Revitalization of Cooperative Sector • New Food Law and Food Safety Authority • Warehousing Development & Regulation Act

  42. AS A CONSEQUENCE • Farmers’ faith restored • Production jumped to 212 million in 2007-08 • Procurement exceeded the needs of PDS

  43. RECENT POLICY STUDIES IN SRI LANKA AND SOME LESSONS (FEBUARY 2010) THEMES : • Agricultural Research and Extension Policy • Empowerment Policy for Farmers PARTNERS : • Sri Lanks Council for Agricultural Research Policy (CARP) • Agrarian Research & Training Institute (HARTI) SUPPORTED BY : • Food and Ag. Organization of UNO (FAO) • International Fund for Agric. Development (IFAD) S.S. Acharya – Senior Policy Consultant of FAO

  44. SOME MAIN FEATURES OF SRI LANKA • Overall poverty incidence reduced (to 15%) but is very high in rural districts & estate sector • Last two decades, economy grew @ of 5% but ag. sector grew only 2% per annum • Share of ag. GDP only 12% but employs 33% • 3.25 million ag. Holdings, average size 0.6 ha. 45 % tiny holdings (560 sq. meters) – 4 % land 54.8 % small holdings (0.8 ha.) – 76 % land 0.2 % estate holdings ( 58.3 ha) – 20 5 land

  45. SOME MAIN FEATURES OF SRI LANKA (contd.) Sector Share in ag. GDP Crops 71 % Fisheries 13% Livestock 10% Forestry 6 % • Continuous increase in agricultural land (now 65%) • Good linkages of ag. with international markets In 2007 Ag exports US $ 1.2 billion Ag imports US $ 1.6 billion

  46. MAIN SUGGESTIONS • Six Ministries related to agriculture – in 2008 , total spending was 3.8 % of govt budget. It should go up to 10% • TFP of ag. , in last four decades, has been negative. Ag. Res. Investment is less than 0.1 % of ag.GDP. International norm is at least 1% of ag. GDP • More R&D attention needed for maize, vegetables, fruits & livestock (seed, planting material & improved breed) • More adaptive research & better research – extension linkages - Frequent in-service trainings of extension staff - IT- based extension network - Involve private sector & NGOs • A separate National Agricultural University

  47. MAIN SUGGESTIONS (contd.) • Identify poverty hot-spots & put an integrated package consisting of • (a) Technology, (b) Inputs, (c) Marketing & Price support, and • (d) Food safety-net programmes • In the water management sector • Comprehensive water resource legislation • Groundwater endowment maps • Farmers empowerment for PIM • Maintenance of canals • Allow land leasing/ renting in settlement areas • Comprehensively review functioning of farmers organizations, organize marketing groups, & link these to processors , bulk traders or exporters

  48. MAIN SUGGESTIONS (contd.) • Up-scale cluster village development programmes, fisher societies. • Effective marketing & price guarantee programmes for balancing the interests of farmers & consumers • Credit policy & crops insurance • Make seed import policy hassle free • Trade policy should be based on comparative advantage • ATTRACT PRIVATE SECTOR FOR INVESTMENT IN MARKETING , STORAGE, AGROPROCESSING , & INPUT DELIVERY

  49. SOME OBSERVATIONS FOR ASIA • China & India - Treaded Paths to Food Security with Caution, attained near self-sufficiency and emerging as marginal exporters/importers • Medium Size Countries (except PKS) - Import Dependence gone up (IDS, BDS) • THL, VTN, MYN - Net exporters of Cereals - Improved their position - Remain net importer of Wheat • SLK, MLS - Net importer - Import Dependence went -up • NPL, BHT, MLD - Net Importer - Small Quantities • Degree of Globalization - Went up (except CHN) • Trade Assuming Increasing Importance

  50. STRATEGY FOR MACRO FOOD SECURITY IN ASIA • Large Countries (CHN, IND) - to continue high degree of self -sufficiency • Small & Import Dependent Countries (BHT, MLD, SLK, MLS) - Buffer stocking • Others - Planning, Steering, Monitoring - Production & Imports • Farmers to continue receiving incentives - livelihood • Appropriate policy flexibility under WTO - international price volatility

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