Tackling food inflation
sation of distribution and retail system
ood inflation continues to run
F amok, and very clearly, the gov-
ernment does not seem to have
any clue on how to rein it in. A year
ago, poor rains in 2009 were project-
ed as the primary cause. However, 2010
saw one of the best monsoon per-
formances in several years and yet, the
food price inflation has remained in
double digits, barring for a month or
two. Within the food basked, the
sharpest increase has been in the price
of vegetables and fruits, and it is here
where the government’s cluelessness
is most visible. Other than the usual
knee-jerk reactions entailing banning
exports of some products such as
onions, short-term imports from neigh-
bouring countries, and some tinkering
with import duties, there is not much
else to show by way of any ground-
breaking new idea or action.
Indeed, a deeper analysis of the un-
derlying demand-supply shifts over the
last few decades could have given very
early warning signals to the successive
state and central governments but sad-
ly, other than compilation of incom-
plete, relatively outdated and some-
times unreliable cultivation and pro-
duction statistics through a plethora of
agencies, there has been little reflec-
tion on the demand side changes and
also on the increasing challenges on
supply side that include increasing ur-
ond relates to encouraging moderni-
in the country without getting into a to-
tally irrelevant debate on the origin
banisation which has teins (pulses and meat) of the massive funding required for this
steadily reduced the
area (on the periphery
of cities) under cultiva-
and dairy products
which again leads to a
higher acceleration in
modernisation in the entire farm to cus-
tomer supply chain.
In the medium term, the solution is
tion for vegetables in demand, beyond just the to offer hundreds of millions of Indians
particular, and depletion population increase and “ready to cook” or “ready to eat” food.
of groundwater tables addition of more meals While the government has often spo-
in some of the more per day for those who ken about the importance of the food
agriculturally produc- have just moved above processing industry and efforts have
tive states such as Pun- the poverty levels. been made to encourage processing of
jab. Hence, while the
gross area under culti-
MARKETMIND With pressure on land
increasing every day, it
food, it must now come up with some
ground-breaking policy initiatives that
vation for horticultur- ARVIND SINGHAL is nearly impossible to can generate massive investments in-
al products has in- have any further dra- to food processing which can take
creased two-fold in the matic increases in area the relatively low-grade raw material
last 20 years (and output doubled too), under cultivation for agriculture in the output from the Indian farms and con-
the demand has risen much faster on coming decades. Water shortages and vert the same — preferably at the source
account of the rapid economic growth depletion of water table are likely to put of production or very close to it — into
which has taken almost 300 million In- further stress on agricultural output. products having higher shelf life and
dians out of poverty line even as the Hence, without losing any further time, which can be transported to retail out-
population also increased by a simi- the government and its planners have to lets without an expensive cold chain.
lar number (about 300 million). Hence, burn midnight oil to come up with bold In the long term, India has to work
effectively, India has to provide for strategies that can deliver some results on a two-fold strategy. One initiative
an additional one billion or more meals in the near, medium and long term. has to further increase the focus on
per day in 2011 compared to what it In the near term, the easiest and sim- coming up with new high-yielding seeds,
needed in 1991. By 2020, India’s pop- plest actions are just to do with two fun- including genetically modified ones, to
ulation will further increase by more damental policy changes. One is re- usher in a quantum increase in pro-
than 150 million, and if the economy lating to scrapping of all restrictions on ductivity. The second one should be for
continues to grow at the same pace marketing and movement of agricul- securing India’s food needs through
as it has in the last 10 years, another tural and horticultural products with- strategic (rather than reactive) imports
150 million or more may be pulled above in India and eliminating some of the since it is unlikely that India can achieve
the poverty line, requiring an additional spoilage on account of innumerable food security in future through domestic
600 million or more meals per day. stops at various octroi and other check- production alone.
Rising incomes also lead to higher posts by totally removing such local
consumption of vegetables, fruits, pro- taxes on perishable produce. The sec- arvind.singhal@technopak.com