Articles by Ramesh Chand

The main reason for the current surge in food prices is the supply shock due to the drought in 2009 and the carry-over effect of the low growth of food production in 2008-09. As the frequency of such shocks is expected to rise, India needs to have an effective food management strategy to deal with these episodes. It also needs to explore various other options for price stabilisation like maintaining buffer stocks and using trade. The economy has to invest heavily in expanding storage capacity for various types of foods in both the public as well as private sectors. Due to fluctuations in growth, the export of some commodities in one or two years is followed by their imports, which invariably involves a large variation in costs and prices. As India is a net exporter of food, a part of what is now exported needs to instead become part of domestic stabilisation stocks.

Wheat stocks are rising again, well beyond the minimum required, and a large procurement is expected from the 2009-10 wheat marketing season that begins on 1 April. India appears set once again for yet another phase of rising stocks, mounting carrying costs, and a crisis of plenty. The volatile cycles of rising and falling stocks appear to be the result of poor government intervention, in particular, poor procurement policies. It is argued here that unidirectional revisions in the minimum support price create serious demand and supply imbalances and extreme volatility in buffer stock cycles.

Despite the declining trend in per capita direct consumption of foodgrains, total demand is projected to increase at 2 per cent per annum in the medium term on account of an increase in the population, and the need for grain as feed and in related purposes. This implies that the growth rate in domestic foodgrain production needs to accelerate three to four times to guard against an adverse impact on food security.

The sharp deceleration in the growth of the agricultural sector against the background of an impressive growth of the larger economy is widening disparities between the incomes of workers in non-agricultural and agricultural activities. It also adversely affects the welfare of the majority of the population, which is dependent on agriculture. This paper examines the trend in agricultural growth and factors underlying the slowdown and explores ways and means to bring about an acceleration.

The last two years have seen a poor wheat harvest. While there has been some recovery this year, what consequences do recent trends have for the supply of wheat, its price and food security.