04-30-2008, 11:16 AM
<!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo--> Thought for food
Shankkar Aiyar
April 24, 2008
You only need to look at the booming oil economies to realise that rising prices also have an upside. The global food crisis is an opportunity for India. The arithmetic is simple. Over 670 million people live off the rural economy.
Agriculture accounts for about 19 per cent of the $1 trillion economy, or $200 billion, which means nearly two-thirds of the populace lives off a fifth of the income. Rising food prices offer India the chance to raise the income levels of its worst off.
The first step in this would be to stop confusing the interest of consumers with that of farmers. Yes, consumersâparticularly the poorâneed a stable price regime.
The answer is to fix the public distribution system. Political parties are competing in a race downhill on offering grains at Rs 2 per kg. Fact is the Antyodaya programme is supposed to do just that but doesnât. Next, fix the problem of wastage.
Over Rs 59,000 crore worth of produce rots in the fields. Politicians must realise that waste not only erodes income levels but also fuels inflation. Solution: a supply chain management that will cut middlemen and deliver more to both farmers and consumers.
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So much for tactics to manage prices. Long-term growth strategy requires the Government to dismantle the current subsidy system. Long-term demand-led production cycles will ensure offtake.
Infusion of technology inputs through the mass media (even a farmersâ channel) will bring market economics to farms. Translated: focus on contract farming to improve output and incomes.
That, though, will not be enough to feed 18 million Indians who join the food queue every year. We need the âvision-thingâ. With finite land and growing demand for food, India will have to invest in farm land overseasâit could be South America, it could be Africa.
As with equity oil where oil companies have invested over $5 billion the world over, we need to look at augmenting supply. The $300 billion reserves could fund the seed capital. Like in exports, it could be incentivised with tax breaks.
It will generate an alternate source for food and trigger demand for Indian skills. Remember, the Chinese are already on to this, in Brazil and Kenya. Call it agriimperialism but the writing is on the wall.
The old book says, âWhatsoever a man soweth, that shall he also reapâ. If Indiaâs politicians fail to see the reality of scarcity and sow empty rhetoric they will only reap rebellion.
They would do well to remember that morals are but based on sound economics.
Shankkar Aiyar
April 24, 2008
You only need to look at the booming oil economies to realise that rising prices also have an upside. The global food crisis is an opportunity for India. The arithmetic is simple. Over 670 million people live off the rural economy.
Agriculture accounts for about 19 per cent of the $1 trillion economy, or $200 billion, which means nearly two-thirds of the populace lives off a fifth of the income. Rising food prices offer India the chance to raise the income levels of its worst off.
The first step in this would be to stop confusing the interest of consumers with that of farmers. Yes, consumersâparticularly the poorâneed a stable price regime.
The answer is to fix the public distribution system. Political parties are competing in a race downhill on offering grains at Rs 2 per kg. Fact is the Antyodaya programme is supposed to do just that but doesnât. Next, fix the problem of wastage.
Over Rs 59,000 crore worth of produce rots in the fields. Politicians must realise that waste not only erodes income levels but also fuels inflation. Solution: a supply chain management that will cut middlemen and deliver more to both farmers and consumers.
Image
So much for tactics to manage prices. Long-term growth strategy requires the Government to dismantle the current subsidy system. Long-term demand-led production cycles will ensure offtake.
Infusion of technology inputs through the mass media (even a farmersâ channel) will bring market economics to farms. Translated: focus on contract farming to improve output and incomes.
That, though, will not be enough to feed 18 million Indians who join the food queue every year. We need the âvision-thingâ. With finite land and growing demand for food, India will have to invest in farm land overseasâit could be South America, it could be Africa.
As with equity oil where oil companies have invested over $5 billion the world over, we need to look at augmenting supply. The $300 billion reserves could fund the seed capital. Like in exports, it could be incentivised with tax breaks.
It will generate an alternate source for food and trigger demand for Indian skills. Remember, the Chinese are already on to this, in Brazil and Kenya. Call it agriimperialism but the writing is on the wall.
The old book says, âWhatsoever a man soweth, that shall he also reapâ. If Indiaâs politicians fail to see the reality of scarcity and sow empty rhetoric they will only reap rebellion.
They would do well to remember that morals are but based on sound economics.