There is something very wrong with food prices and food inflation. No one seems to get it right, neither the finance minister nor the Planning Commission deputy chairman, nor the Prime Minister’s economic adviser. The agriculture minister is least accountable. For the whole of last year these gentlemen have been hopeful, telling us that food inflation would go down by the end of 2010. They were left fumbling on Thursday when food inflation hit 18.32 per cent for the week ending December 25, 2010. The usual excuses for high prices is trotted out, namely demand outstripping supply, purchasing power up due to the 6th Pay Commission, the National Rural Employment Guarantee Scheme where the minimum wage is `150 per day, changing patterns of food consumption, migration of farmers to urban areas as agriculture is unremunerative, destruction of thousands of tonnes of food grain by rodents, food and grain rotting due to lack of warehousing and storage facilities, and so on. The obvious question is, why has the government not planned for increased production and the infrastructure to get these from the farm to the table? Is the government really serious about increasing production? When is the last time that we had an experiment like Amul that saw a milk revolution, or a breakthrough like the green revolution?
Around August last year, for instance, when the government announced the support price for food grain it announced a minimum support price for tur (widely used for making sambhar) of `3,000 per quintal with a bonus of `500 per quintal purchased by the government. But till date no purchasing centres have been opened. On the contrary, tur is being imported from Burma duty-free. The result is that the farmers who were getting `100 per kg are now getting only `30 per kg and they are discouraged from cultivating tur. It is the same story with other food items.
The problem is that the government is looking at food inflation only from the point of view of the consumer, and not from the farmer’s angle as well. You cannot please the former at the cost of the latter. From the farmer’s perception, the bureaucrats in Delhi have one solution: importing cheap grain. But now the international scenario has changed and commodities are no longer cheap. This is what the bureaucrats do not seem to realise. For instance, edible oil prices have been increasing. They have a connection with crude prices. Crude oil has gone up to nearly $91 per barrel so the price of maize has shot up as it is used to make ethanol. Similarly, palm oil is used to make bio-diesel in Europe to heat buildings. Palm oil had increased from $800 a tonne to $1,300 per tonne in the last two months. We are major importers of these items and this pushes up international prices further.
The government needs to sit with people who understand agriculture and the dynamics of agricultural production and find ways to increase food and food grain production so that we are nearly self-sufficient. Imports are becoming expensive also because of the droughts in Russia, Brazil and Argentina and floods in Pakistan and China. So, relying on imports is no longer an option. The pioneer of India’s green revolution, M.S. Swaminathan, who chaired the government’s Farmers Commission, has recommended that agricultural growth not be measured by production but by how much the farmer’s income has increased. When wages are increasing everywhere and the country is becoming a consumerist society, why should it be only the farmer who makes sacrifices but does not get the benefits of a growing economy?