Here’s a solution to the country’s food problem

Two things which can bring down a government are prices and corruption. We have a government struggling with both. The common man evaluates a government by the impact it has on his daily living. At a time when there is so much talk of corruption, he must be feeling that the government is making money while he is struggling with basics.

Indians’ anger does not burst out into a revolution as in Egypt or Tunisia — Thoreau rightly pointed it out as a “life of quiet frustration” — it is seen during elections.

There have been two responses from the government to food inflation — blame the states for failing to control hoarding and increase interest rates. Both are tactical and do not really solve the problem. The first deflects responsibility, while the second is supposed to suck money out of the system, and in theory reduce the demand for goods. 

The question is, do you borrow money to buy food, and will you borrow less or consume less because of higher interest rates. It is difficult to bring down demand for food by increasing interest rates. The strategic response to control food inflation has to be on the supply side.

The trouble is that over the years corrupt politicians and even more corrupt bureaucrats have destroyed the supply chain. There is no strategic action on the agriculture front because advisors to the government are from the green revolution age. There are no institutions or independent think-tanks advocating farmer/consumer-friendly policies.

To repair this food chain the government has to commit to doing the following things.

One, the supplier (farmers) needs to be connected to the market directly. The government has created too many layers which distort prices and deprive the farmer. This is reason for the huge difference between urban and rural food inflation in the country. Farmer markets need to be created in cities where farmers can come and sell directly. This space needs to be earmarked by the city government and the state government needs to work on it. The US has 6,000 such markets.

Second, the farmer needs help in planning production. The anomaly in the system is that the farmer increases production based on current prices and the market gets hit by oversupply. This leads to low realisation. Which is why we see farmers going bankrupt and committing suicide when food prices are at their peak. No industrialist goes bankrupt when prices in his industry are at their peak. This happens in agriculture as here the farmer or producer does not know what the total future production and the price are. This process has to be enabled by advising the farmer on what to produce, like in France and other developed countries.

Third, do not depend on organised retail for building a supply chain. There is an active lobby using food prices as an excuse to seek FDI in retail. The rationale being it will help connect farm to the consumer. It may connect but this will not necessarily mean that the benefit will accrue to the farmer. An organised retail supply chain has to supplement a similar chain which has to be built by the government. And this is where the farmer market as an outlet and a consumer cooperative working as a buyer needs to come in. There is a huge difference in rural and urban inflation which clearly shows that this chain has to be built. This chain needs to be classified as public infrastructure.

Fourth, the issue of water and soil deterioration has to be addressed if sustainability of production has to be maintained. The government needs to study this problem region-wise, and find solutions. It is important that groundwater be preserved and use of free power or subsidised diesel be contained. Water planning at each village level needs to be done. This is where the banks or Nabard or even MNREGA needs to be directed. The rising salinity of soil is due to usage of groundwater. If this problem is not contained we won’t have agriculture in large parts of our country.

Fifth, an independent regulator is needed for pricing and import or export of agricultural produce. Currently, bureaucrats and politicians have too much power in controlling export of agricultural products. They are acting as traders at the cost of the country.

Only if the government commits to doing all these things will we really see a real change in the agriculture sector. If not, the inflation monster will not only eat up the government but also destroy the fabric of this country.

The author is managing editor, Dainik Bhaskar Group.