The prospect of a failed monsoon at home poses biggerproblems for New Delhi than the spike in global prices for corn, soybeans andwheat resulting from America's worst drought since the days of the dustbowl,agriculture experts here said.
“The wisdom of New Delhi’s decision to build and maintainlarge grain reserves is now clear, considering the extreme volatility ininternational prices,” said M.S. Swaminathan, the agricultural scientist, knownas the father of the green revolution, which made India self-sufficient in thelate 1960s.
As reported earlier, New Delhi is, indeed, facing a food crisisof its own. But it has nothing to do with shortages or international prices.
Under a long-running welfare program, the government buysrice and wheat from farmers at a subsidized “minimum support price” to protectthem from volatile markets. And though this grain is intended for sale to thepoor at below market rates, problems with the distribution system prevent thegovernment from releasing its supply, even as a fifth of its citizens remainundernourished. So as the rest of the world faces the specter of food riots dueto skyrocketing prices, India is sitting on more than 80 million tons inreserves.
“In India there is no problem because we have a recordsurplus,” said farm policy analyst Devinder Sharma. “Even if production fallsthis year, it won't make a difference, because we are already trying to exportrice.”
Praying for rain
With millions of its own people already going hungry,however, New Delhi will not export its stockpile to take advantage of higherinternational prices. And the government is likely to reinstate curbs on foodgrain exports as the year progresses, due to the growing prospect of a failedmonsoon.
India's metereological department is now forecastingbelow-normal rainfall, following a 22 percent shortfall over the first two monthsof the rainy season. The government has already set aside 900 megawatts ofpower and stockpiled diesel fuel to ensure farmers in the breadbasket states ofPunjab, Haryana and Uttar Pradesh can pump groundwater to their fields. Localnewspapers have reported that the government is soon likely to announceasubsidy on lentils ” a staple protein that is not supported by the currentfood procurement and distribution system. And the ministry of consumer affairshas already asked regulators to take steps to stop speculation-driven tradingin commodities futures.
In the meantime, some say that in India the food crisis,though perhaps not related to international price fluctuations, never reallywent away. Since 2008, local food prices have risen steadily, mostly due toincreased demand associated with higher incomes. And the effect on the poor andlower middle class has been dramatic.
“When you have a situation in India where inflation is 10percent and food is the biggest contributor to rising inflation ... how couldyou expect the government to allow exports?” said Raghavan Sampath Kumar, aChennai-based agribusiness consultant.
“In India's political scenario, food refers to only twocrops: rice and wheat. In that sense, if you ask people in India if we shouldhave a food crisis now, they won't say yes, because that is not of muchrelevance to the drought in the US,” Sampath Kumar said.
“But there are problems in other crops. In pulses [lentils],yes, there is a crisis. In oilseeds, yes, there is a crisis. And if you thinkof the fast-growing livestock sector, yes, there is going to be a big crisis[due to rising soybean prices].”
Incentive for entrenching
If anything, the prospect of another global food crisis islikely to entrench India's opposition to integrating its agriculture sectorwith world commodities markets.
In 2008, food riots across the world confirmed topolicymakers that India had taken the correct course in focusing onself-sufficiency ” especially as the Gulf states and others began to buy upagricultural land abroad to ensure their own food supply.
And even as commodities analysts in the US and Europe arguethat export restrictions from food-producing developing countries mayexacerbate the spike in global prices, experts here suggest that India'scontinued refusal to expose its farmers to the whims and fancies ofinternational futures traders is the country's sole defense against disaster.
India has so far held fast against pressure from other G-20countries to force members to export their surplus food stocks, not so muchbecause of the fear of rising prices, but because of the specter that in timesof crisis enough food for its 1.2 billion people may not be available at all.
“In the 2007 food crisis, 37 countries faced food riots. Allthese countries were food-importing countries. Today, the situation is againthat there will be food riots in many countries. But India escaped that time,and India will escape now also, because we have still not integrated ouragriculture globally,” said Sharma.
“The world must draw a lesson from what India has done.”
