Two weeks back Prime Minister Dr Manmohan Singh forewarned the international community that world is moving fast towards shortage of foodgrains. This would not only lead to high rate of inflation, even development efforts of the third world would get adversely affected. Prior to Prime Minister'sstatement Finance Minister P. Chidambaram had complained about reduction of area under wheat cultivation by US in an attempt to enhance its bio fuel production. And now it'sthe turn of US president George Bush. According to his statement a week ago, consumption in fast growing India and China is a major cause of the rapid increase in food prices. Before him US Secretary of the State Condoleezza Rice had also made similar statement blaming rising prosperity of India'shuge middle class for spiralling food prices.
There is no point in George Bush'sargument considering the fact that according to UN since 2006 consumption of foodgrains increased by huge 12 per cent against only 2.5 per cent annually. Irrespective of this debate there are not two views in this matter that the country is suffering from shortage of foodgrains. This not only raises cost of living, a large number of people are also at the verge of starvation. In the last two years, the price of wheat flour has more than doubled from Rs 8 to Rs 18/kg. Same is the case with rice and other foodgrains like pulses, vegetables etc. When the country started facing shortage of foodgrains, the government decided to import foodgrains from abroad. After that, the international prices of foodgrains started sky rocketing and India had to import the foodgrains at exorbitant prices, much higher than what was being given to our farmers.
India which had emerged as an exporter of foodgrains for a long time has become a net importer. This is also true that developing countries are making large-scale import of foodgrains. Situation for India becomes even more alarming if we compare availability of foodgrains with increasing population. In the last five years, India'spopulation has increased by 8 per cent, whereas foodgrains production could increase by hardly 5 per cent. In the last one decade production of oil seeds has definitely gone down. Despite the fact that oil is very essential part of our consumption, government did not make any plan to increase production of oil seeds. This ignorance of oil seeds? production has become a major cause of our increased dependence on oil & oil seeds imports.
There is no doubt about the fact that in the whole world the prices of traditional foodgrains like wheat, corn and rice have been rising. According to UN in the last six months the prices of the foodgrains have increased by 50 per cent. The major factor behind increasing prices of foodgrains is historic decline in the production of foodgrains world over. Food and Agriculture Organisation (FAO) has also cautioned that world production of wheat would be only 142 million tonnes by the year 2008, which is 10 per cent less than the last year'sproduction. Situation of rising prices has been made even more worst by constantly rising international price of crude oil. The price of crude oil has been moving around $120 US per barrel for the last few days. Constantly rising prices of crude oil is prompting various countries to shift their crop pattern such that the land previously been used for foodgrains production is now being used for bio fuel. Apart from this food products are also being used for extracting ethanol. In the year 2006-07, US utilised 20 per cent of its corn production for extracting ethanol. It is believed that by the year 2016, US would be utilising 32 per cent of its corn production for producing ethanol. In the light of rising prices of crude oil US has set target for itself for producing 25 billion gallons of bio fuel in the next 10 years. Europe has set a target of 5.75 per cent of its diesel needs to be fulfilled from plants by the year 2010. The China is extracting ethanol not only from corn but even from wheat and rice. Experts believe that this tendency will increase further. Even UN believes that US and European Union are both responsible for this sudden international food crisis, as these nations have reduced their production of foodgrains in order to produce more bio fuel. These countries have started shifting their land in favour of bio fuel plants.
Demand is gaining ground that subsidy being given for production of bio fuel is stopped forthwith. UN'sWorld Food Programme also believes that in the next two-three years prices of foodgrains and edible oils would continue to increase further. According to their estimates by the year 2008-09 prices of foodgrains may increase further by 35 per cent. Today 70 per cent of developing countries are dependent on imported foodgrains. By the year 2030 situation would be even worse. According to a study by the World Food Programme by the year 2030, developing nations would be able to fulfill hardly 86 per cent of their foodgrain needs. As a result of this their dependence on imports would increase further. At present developing nations are importing 103 million tonnes of foodgrains. This dependence would increase more than twice to 265 million tonnes in the next 20 years. US, European Union, Canada, Australia and Argentina would be the largest foodgrain exporters, it is believed.
All this clearly depicts that not only there is a shortage of foodgrains in India; even the possibilities of foodgrain imports to make up this deficiency are also very meager. There is hardly any single year when India could produce foodgrains for its need for the last so many years. For the last so many years we have been importing wheat. In the year 2007 we made a import of 5 million tonnes of wheat. Normally government keeps buffer stocks of 40 million tonne of foodgrains. But due to advent of corporates in the procurement of foodgrains, its buffer stock has constantly been depleting and government had to depend upon import of foodgrains to supplement supplies. Now even rice is being imported, apart from wheat.
Looking at the international deficiency of food, it is even more essential now that India once again strive for food self sufficiency. But situation has worsened in the last two decades due to neglect of agriculture. Not only that government is spending much less on agriculture than before, rising agriculture input costs, lack of infrastructure like electricity, roads, irrigation etc. and un-remunerative prices of agricultural products are all contributing towards ill-health of agriculture. Even rising number of farmers suicides and insufficient foodgrain production are the result of the same.
When we are neglecting our agriculture ourselves, we don'thave moral right to blame US for the rising prices of foodgrains as it is producing bio fuel from agriculture. We have to fulfill our food needs domestically and not by importing foodgrains at high prices from US and other countries. In addition to this we also have to arrange for effective distribution and ware housing facilities. Situation is alarming. If we don'trise to the occasion, worst food crisis is not very far off.
(The writer is a Professor of Economics in PGDAV College, University of Delhi and can be contacted at M-451, Guru Harkishan Nagar, New Delhi-110 087)