International Food Security Symposium University of … Gulati...1.35 billion in mid 2017, likely to surpass China by 2024 (1.44 billion), and touch 1.5 billion in 2030; 1.66 billion

Ashok GulatiInfosys Chair Professor for Agriculture

Indian Council for Research on International Economic Relations (ICRIER)

5th International Food Security Symposium University of Illinois, Urbana-Champaign

April 1-3, 2019

Hunger within the overarching concept of Food Security

Institutions and Innovations- Past and presently unfolding

Political Economy of Food and Agri-Policies in India and its implications

Global Hunger Index (GHI) and India’s challenge

Not getting two square meals a day… NSSO…hungry…those who slept without a

meal (<2%)

But FAO’s food security concept:◦ Sufficient Availability of Food◦ Economic and physical access◦ Absorption in terms of nutrition◦ Stability of food systems

Large and Growing Population: 1.35 billion in mid 2017, likely to surpass China by 2024 (1.44 billion),

and touch 1.5 billion in 2030; 1.66 billion by 2050; and 1.52 billion by 2100; 65 percent of population currently below 35 years of age

Fast growing GDP: Since economic reforms of 1991, GDP growth around 7 percent p.a, and

likely to remain so by 2030;

Urbanization: from 380m in 2018 to 600m by 2030; need to build one Chicago each

year till 2030…will put pressure on scarce land, water, energy and logistics

High expenditure on food: Avg HH exp on food 45% (NSSO, 2011); per capita income likely to grow at

5-6 percent p.a till 2030.

Number of agri-holdings more than doubled, from around 71 million in 1970-71 to 145.7 million in 2015-16.

Average holding size fallen from 2.3 hectares in 1970-71 to 1.1 in 2015-16.

In 2015-16, 86% of holdings were small and marginal (<2 ha) operating 47 percent area.

2.29

2.00

1.84

1.69

1.55

1.411.33

1.231.15

1.08

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

Average Size of holdings (ha)

Source- Agricultural Census of India

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Perc

enta

ge o

f ass

esse

d b

lock

s

Over Exploited Critical Semi critical Safe Saline

Paddock brothers (1966)…Famine 1975

IFPRI (1998): India will be importing 63 mt of foodgrains by 2020

Govt of India (2006) (Planning Commission) projecting deficit of 10 mt by 2011-12

Hans Binswanger (2012): 73 mt imports of grains by 2039

0

20

40

60

80

100

120

140

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Import Export

26.5

7.8

13.5

6.0

42.4 37.8

2.6

15.9

24.3

0

5

10

15

20

25

30

35

40

45

US$

Bn

Trade surplus Agricultural Exports Agricultural Imports

Source: FTPA, MoCI

How did India overcome food shortages in the past?

What is happening on food front in recent years?

What is likely to happen in future, say by 2030?

Post introduction of HYV in 1966, very first wheat harvest in 1967-68 shot up by 45 percent from 10.4 MMT in 1966-67 to 16.5 MMT in 1967-68. In Punjab (Seat of Green Revolution), production increased 2.5 MMT to 5.6 MMT between 1966-67 and 1971-72.

Source: Agricultural Statistics at a Glance (2016) Directorate of Economics and Statistics Department of Agriculture Cooperation and Farmers

All India wheat production

0102030405060708090

100110

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

2014

2018

Prod

uctio

n (M

MT)

Period of Green

Revolution

02468

1012141618

1951

1956

1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

2011

2016

Prod

uctio

n (M

MT)

Period of Green

Revolution in Punjab

Wheat production in Punjab

“From Ship to mouth” to Green Revolution: Wheat

(second largest producer, up from 6.5MMt in 1950-51 to 99.7 MMT in 2017-18)

All India rice production

Source: Agricultural Statistics at a Glance (2016), Directorate of Economics and Statistics, Department of Agriculture, Cooperation and Farmers

0102030405060708090

100110120

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

2014

2018

Prod

uctio

n (M

MT)

Period of Green

Revolution

0

2

4

6

8

10

12

14

1951

1956

1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

2011

2016

Prod

uctio

n (M

MT)

Period of Green

Revolution inPunjab

Rice production in Punjab

IR8 from Philippines in 1966: Rice production increased by 24% from 30.4 MM

In Punjab, it increased from 0.3 MMT to 0.9 MMT respectively between 1966-6

Policy decision to import 18,000 tonnes of HYV wheat (Lerma Rojo and Sonara-64) from Mexico; and IR-8 from IRRI

Role of ICAR and SAUs, plus agri-extension

Critical Role of Pricing and procurement institutions: APC and FCI came in existence in Jan 1965

Operation Flood Production soared from 20 MMT in 1970-71 to 30.4 MMT in 1979-80 to 44 MMT in 1985-86 and 69.1 MMT in 1995-96, a jump of 50 MMT in 25 years!

India’s White Revolution largest producer at 176.4 MMT in 2017-18

(Innovations in institutions and technologies for small holders)

Source: NDDB FAO USDA Basic Animal Husbandry Statistics Department of Animal Husbandry Dairying & Fisheries (DoAHDF)

10

30

50

70

90

110

130

150

170

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

Prod

uctio

n (M

MT)

Business as usual

OF I

OF II

OF III

CompleteDe-licensing

4.2%

3.8%

4.7%

Vajapayee’sde-licensing

Effect

0.2%4.6%

6.9%

All India Egg and Poultry Meat production

Production - Egg production from 1.83 billion in 1950-51 to 88.1 billion in 2016-17 (3rd largest) and poultry meat production from 0.06 MMT in 1961-62 to 3.46 MMT in 2016-17 (5th

largest); Consumption – From 400 grams and 25 eggs per person/year respectively to 3.35 kg and 69 per person/year from 1990-91

to 2016-17; Feed conversion ratio – From 2.2 to 1.6 (Broilers);; Egg laying capacity - From 200 to 320+ eggs per year (layers).

0

10

20

30

40

50

60

70

80

90

0

1

2

3

419

50

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

Eggs

(Bill

ion

Nos

.)

Poul

try

Mea

t (M

MT)

Poultry Meat Eggs

-Liberalized grandparent breeding stock imports- Vertical integration &contract farming

Source: Basic Animal Husbandry Statistics, Department of Animal Husbandry, Dairying & Fisheries (DoAHDF), f

0

2

4

6

8

10

12

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

Prod

uctio

n (M

MT)

Source: Basic Animal Husbandry Statistics, DoAHD&F, Government of India

05

10152025303540

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

2012

2016

Prod

uctio

n (M

MT)

2002: Policy decision to introduce Bt cotton in

India

Source: USDA, 2017

Political Economy of POLICY SETTING

19

Indian agricultural policieshave DUAL (but conflicting) aims

Farmersensure remunerative prices

Consumersensure access to food at

affordable prices

Domestic market

regulations

Trade policie

s

Food subsidies

Budgetary payments

(Input subsidies)

Translating the policy setting into numbersOECD Producer and Consumer Support Estimates methodology

Result: India taxes its farmers and heavily subsidises its consumers

20

www.oecd.org/tadTrade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

India “implicitly taxes” its agriculture…large input subsidies do not fully offset the effect of price-depressing policies (on average, taxation amounted to 14 percent of gross farm receipts, 2000-01 to 2016-17)

0

- 5 - 5- 7

- 15 - 15

- 18

- 31

- 24

- 12

- 19

- 26

- 22

- 29

- 13

- 2- 4

-32

-28

-24

-20

-16

-12

-8

-4

0

4

8

-160

-140

-120

-100

-80

-60

-40

-20

0

20

40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

% PSE

Budgetary transfers Market price support (MPS) % Producer Support Estimate (right scale)

MPS and budgetary support,

Domestic and tradepolicies in place

reduced Gross Farm Receipts

by 6 % in 2014-16

21

www.oecd.org/tadTrade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

Producer Support Estimate (PSE): India taxes its farmers

Consumer Support Estimate (CSE): India heavily subsidises its consumers

How does India compare with OECD and other emerging economies?

Policies that depressed farm prices together with food subsidies reduced consumption

expenditure by 25% on average across all commodities

Negative PSE in India as producers receive prices below those on world markets

-150

-100

-50

0

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

PSE

(bill

ion

dolla

r)

OECD China India

Innovations in policies, from higher MSPs or highly subsidized inputs, and loan waivers to income/investment policies…beginning in 2019 (PM-KISAN) (Rythu Bandhu, KALIA, etc)

Invest in R&D- marginal returns are 5 to 10 times higher than on subsidies…yet to realise

Invest in Sustainable Agriculture- especially taking care of Water resource, and saving on chemicals…yet to realise

Child Mortality (1/3)

Child Undernutrition(1/3)

Inadequate Food Supply

(1/3)

Undernourishment:Share of the population that is undernourished (whose calorie intake is insufficient)

Under five Mortality Rate:•The mortality rate of children under the age of five

Wasting (1/6); Stunting (1/6):•Share of children under age of five who have low weight for their height (child wasting)•Share of children under the age of five who have low height for their age (Stunting)

21 25 31

6073

103

6.17.6

8.5

14.5

21.9

31.1

0

5

10

15

20

25

30

35

0

20

40

60

80

100

120

Russia China Brazil South Africa Indonesia India

GH

I Sco

re

GH

I Ran

king

Ranking 2018 GHI Score 2018

India likely to remain self-reliant on food at least till 2030; after that a lot depends on incentive policies…

But India real challenge now is not on food adequacy but of nutrition, GHI heavily tilted towards that

Our research shows that it needs massive investments and fixing of sanitation (safe drinking water, toilets, etc) and women education

26/04/2019