By Dirk Seel
The recent high volatility in the price of rice, fuelled by fears of severe supply shortages, has further strengthened our belief that the world is currently merely taking a break from the food crisis that started in late 2007. The structural imbalances, exacerbated by increased incomes in emerging markets, rising production of subsidized biofuels, and climate change-induced weather anomalies, have not gone away. Currently, the dramatic consequences of spiralling food prices are particularly visible in India.
Historically, the country has been self sufficient in major crops such as rice, wheat, corn, millet and pulses. However, this obscures the fact that after decades of financial neglect, India’s agricultural sector is stagnating, while its people’s income and appetite are growing. As a result, local prices for lentils, meat, dairy products, vegetables and fruit – in short, prices for all nutritious foods – have sharply increased. The ones who suffer most from this are low-income urban and rural households who no longer can afford their usual consumption patterns. What is more, global prices are affected, too. Most notably, sugar prices continue to trade near 29-year highs, not least due to the negative impact of drought on India’s sugar production. The latter aspect illustrates another alarming signal: although cropland constitutes two-thirds of its land area and half of its labour force is employed in agriculture, India depends more and more on importing goods to balance its own production shortfalls.
The country’s failed agricultural policies have caused hunger, food insecurity and malnutrition. In order to ensure that staple foods are available to the poor and to avoid social unrest, the Indian government will have to declare food security the top priority on its political agenda. Significant investments into the infrastructure of farmland must be undertaken. For example, small-scale irrigation projects are a feasible and sustainable means by which to raise farmers’ productivity while reducing their dependence on monsoon rainfall. Likewise, grain supply is in need of reform. The country’s existing public distribution system is not capable of reaching the specific needs of its various working classes. Last but not least, the country needs to address the detrimental influence of lobbying interests. Only then will there be a chance for food price inflation to stop.
Comments