In one year, Agriculture under-performance costed more money than Black Money recovered

In one year, Agriculture under-performance costed More Money than Total Black Money recovered in demonetisation drive in India

By:

Vijay Sardana

Caution: Before you make your opinion, please read the hard facts presented in this article sourced from various Official database.

Rising food inflation, rising imports and declining exports costing huge money. According to Department of Commerce, Government of India, agriculture based commodities imports gone up by Rs. 19,873 crores between 2014-15 and 2015-16 where as in the same period the country has lost export market of agri-based commodities worth Rs. 25,832 Crores. The total value loss in just one year due to ineffective agriculture and food security policies, the country is losing about 45,706 Crores. So, we have not detected this must money in demonetisation drive. If you add the food losses and wastage of about 30 percent every year, it is about Rs. 100,000  crores every year. So, due to neglect of agriculture, India lost about 1,50,000 crores last year. This is the revenue loss in just one year. The lost to farmers due to not getting remunerative price even minimum price is another huge cost to society and rural economy. This is more than total black money which we are anticipating in India economy within the country. The impact of food inflation of other sectors of economy and also on public health and nutrition is not factored in.

Political leadership of India has taken a drastic step like demonetization to address the black money issues within India.  Can we now expect similar action and political will to address agriculture and food security issues in the country?

No country can ensure its political sovereignty without food security. There is close relation between food security, economic growth and law and order in the society. The economic growth is directly related to food inflation. Higher the food inflation lower will be the economic growth because high food inflation reducing consumer spending on non-food economic activities. In India we are also adding about 15 million people every year. They all will need food to survive and perform. Food intake less than required by the body will lead to widespread sickness due to malnutrition, stunting and disease due to imbalanced diets.

Considering these facts on ground let us be clear that there is no hope that food inflation will come down in coming years, unless we have some serious rethinking about our food production, food supply chains, lifestyle and consumption habits.

The biggest challenge for the policy makers and for governance is going to be, how to improve our productivity and prevent food losses to ensure food security for masses at an affordable price in coming years.

How much food India will need in coming years?

It is good to hear that India is food secure, no doubt we have managed out food supplies to a great extent, but now India is at cross roads.  It is high time we should recognize the ground reality before it is too late.

In a country of 1270 million, where per capita income is lower than world average, and where 30% of population lives below poverty line, about 45% kids suffer from undernourishment, majority of child mortality is due to stunting, lactating mothers are not getting enough diet to feed her new borne, food inflation is and will always remain a biggest political issue in every election. The management of food inflation will be the corner stone of good governance claims by any ruling party.

Agriculture reforms will take time because no government has capability to take on vested political interest. Policy makers are habitual of offering freebies as political bribe to voters to win elections but they are not keen to look at productivity and efficiency as criteria for policy reforms.

If case we want economic success in India, agriculture sector needs due attention by political establishments in India. Long term consistent policy is pre-condition to ensure minimum food security. There is need to develop a food security plan.

Demand Projections by author based on various recommended consumption parameters (in million tons)
Category	Production In 2015 (Estimated.)	Demand By 2030 (Projected)	Required Growth in production per year (in Million tons)
Pulses	17.2	40.0	1.52
Coarse Cereals	41.7	102.0	4.02
Wheat	88.9	95.0	0.41
Rice	104.8	156.0	3.41
Oilseeds	26.7	70.0	2.89
Milk	146.3	182.0	2.38
Fish	10.1	16.0	0.39
Egg	39.2	57.0	1.19
Meat	6.0	15.0	0.60
Fruits	86.0	110.0	1.60
Vegetables	167.0	180.0	0.87
Tea	0.9	1.1	0.01
Sugar	25.0	33.0	0.53
Total food Demand	759.8	1057.1	19.82
Please note: Demand for many other items which make part of food system is yet to be estimated. Source: The POLITIECONOMY, Int’l Research Journal of Political Economy, Volume 3, Issue 1, September 2016, Page 135

High time to Develop National Food Security Plan

The National Food Security Plan will act as a blue print for all and will also encourage private investment. This document should include growing demand for food, feed, fiber and fuel. This plan must address supply chain issues at all levels including agriculture based inputs for other industrial sectors. This should give clear direction to all stakeholders for next 10 to 15 years, which can be evaluated on yearly basis for any corrections based on experiences on ground.

Many political leaders and policy makers will claim that all is fine and we are in comfortable situation. If that is so why we are losing our export markets.

Indian agriculture is losing global competitiveness is also visible from decline exports in major commodities.

HS Code	Agro-based Commodity Exports from India (All Values are in Rs. Lakhs)	Export Value in 2014-2015	Export Value in 2015-2016	Export Growth in Value Terms
10	Cereals.	5,828,222	4,096,626	-1,731,596
13	Lac; gums, resins and other vegetable saps and extracts.	1,189,543	567,190	-622,353
23	Residues and waste from the food industries; prepared animal fodder.	1,000,615	523,662	-476,953
3	Fish and crustaceans, molluscs and other aquatic invertabrates.	3,208,438	2,937,892	-270,546
12	Oil seeds and olea. Fruits; misc. Grains, seeds and fruit; industrial or medicinal plants; straw and fodder.	1,356,084	1,096,778	-259,306
2	Meat and edible meat offal.	3,018,653	2,760,392	-258,261
22	Beverages, spirits and vinegar.	231,523	209,761	-21,761
15	Animal or vegetable fats and oils and their cleavage products; pre. Edible fats; animal or vegetable waxex.	595,502	574,181	-21,321
4	Dairy produce; birds' eggs; natural honey; edible prod. Of animal origin, not elsewhere spec. Or included.	231,358	214,579	-16,779
5	Products of animal origin, not elsewhere specified or included.	60,838	60,251	-586
6	Live trees and other plants; bulbs; roots and the like; cut flowers and ornamental foliage.	46,080	48,341	2,262
14	Vegetable plaiting materials; vegetable products not elsewhere specified or included.	36,609	43,426	6,817
11	Products of the milling industry; malt; starches; inulin; wheat gluten.	186,709	195,504	8,795
20	Preparations of vegetables, fruit, nuts or other parts of plants.	308,948	320,095	11,146
21	Miscellaneous edible preparations.	359,105	372,659	13,554
19	Preparations of cereals, flour, starch or milk; pastrycooks products.	299,646	331,359	31,713
1	Live animals.	7,775	46,627	38,852
18	Cocoa and cocoa preparations.	84,866	126,761	41,895
16	Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	95,198	138,745	43,547
8	Edible fruit and nuts; peel or citrus fruit or melons.	985,913	1,040,376	54,463
24	Tobacco and manufactured tobacco substitutes.	586,859	645,236	58,377
7	Edible vegetables and certain roots and tubers.	721,603	826,753	105,150
9	Coffee, tea, mate and spices.	1,756,310	1,932,656	176,346
17	Sugars and sugar confectionery.	657,473	1,160,778	503,305
	Exports (in Rs. Lakhs)	22,853,871	20,270,629	-2,583,242
	Exports (in Rs. Crores)	2,28,539	2,02,706	-25,832
Data: Dept. of Commerce, Govt. of India & Analysis by Vijay Sardana

Food requirement for India by 2025

According to an FAO study, food energy requirements for South Asian population will be about 2700 Calories / capita / day in the year 2025.

In India, the food grain availability is at present around 525 gms per capita per day whereas the corresponding figures in China & USA are 980 gms and 2850 gms respectively. Due to improvement in per capita income, if per capita consumption is 650 gms, the food grain requirement will be about 390 MT of food grain by 2025.

In case of Pulses, according to WHO requirements, India will need about 35 million tons of pulses by 2025.

In terms of edible oil demand, it is estimated that it will be about 17 kg per capita per year. It means India will need about 23.8 million tons of edible oils by 2025.

Deficit for feed and fodder is already about 35% to 65% in various regions.

Shrinking and fragmenting landmass for food production

Indian agriculture is dominated by small farmers, having small landholdings for cultivation. The average size of the landholding was 2.30 ha in 1970-71, which declined to 1.32 ha in 2000-01. The absolute number of operational holdings increased from about 70 million to 121 million. If this trend continues, the average size of holding in India would be mere 0.68 ha in 2020, and would be further reduced to a low of 0.32 ha in 2030.

On the other hand, by 2025, per capita agriculture land available will be just 0.1 ha per capita. In other words, it is just 100 feet x 100 feet plot per person to meet the daily needs of food, fuel, fodder and fiber round the year. With increasing population this area will further shrink.

Soil health is becoming a serious concern

At the same time, available estimates with agriculture ministry reveal that nearly 120.72 million ha of land in the country is degraded due to soil erosion and about 8.4 million ha has soil salinity and water-logging problems. Besides, huge quantities of nutrients are lost during crop production cycle.

Annually, India is losing nearly 0.8 million tonnes of nitrogen, 1.8 million tonnes of phosphorus and 26.3 million tonnes of potassium— deteriorating quality and health of soil is something to be checked. Problems are further aggravated by imbalanced application of nutrients (especially nitrogen, phosphorus and potash), and excessive mining of micronutrients, leading to deficiency of macro- and micronutrients in the soils.

Water Requirement and Shrinking Availability

According to Minister of Agriculture, by 2025, India will have about 1700 m3 of water per person and 84% of this water will be used for irrigation purpose. This is at stress level.

At the time of Independence of India, population was less than 400 million and per capita water availability over 5000 cubic meter per year (m3/yr).

In the year 2007, India’s population was about 95 crore and per capita water availability was fallen to about 2,200 cubic meters per year. With the population crossed 1 billion mark, water availability has fallen to about 2000m3/yr per capita. By the year 2025 per capita availability is projected at only 1500 m3/yr or just 30% of availability levels in comparison to what was at the time of Independence.

By 2025, the water requirement for irrigation will be 790 billion cubic meter. Our total reservoir capacity will be about 300 to 350 billion cubic meter.

This per capita water availability will further fall to about 1500 cubic meter per year by the year 2025 due to increasing population. It means about 4000 liters of water per day per person to meet all our requirement for food, feed, cleaning, industrial and non-industrial activities like recreation, etc. Animal also need water to survive which we have not factored in. 

At the same time, economic growth and individual wealth are shifting diets from predominantly starch-based to meat and dairy, which require more water. Producing 1 kg rice, for example, requires about 3,500 L water, 1 kg meat some 15,000 L, and a cup of coffee about 140 L. The water requirement for per litre of milk production is about 2000 litres. This dietary shift will have the greatest impact on water consumption over the next 10 years, and is likely to continue well into the middle of the twenty-first century. 

This is a very complex and serious problem. Food security of India needs serious attention by all.

India will emerge as major net importer of food products in coming years

According to author’s estimate, with the best of the efforts and resources India will be not be able to produce enough essential commodities to meet her growing demand mainly in the area of edible oils and pulses for human consumption and protein meals and fodder for livestock. Milk production growth reach will reach stagnation.

Challenges before India in meeting food production targets

In order to meet the demand for food and other agriculture products, according to author’s estimate, by 2030, India will need double the land mass to produce food and other agriculture items if the productivity remain static at the same level. The alternate option before us is double the yield per unit area to meet the growing demand or look at alternate sources of food supplies.

There are many supply side challenges which will need out-of-box-thinking because existing way of working has exhausted its potential to deliver the desired results.

Food inflation is indicating stress in agriculture system:

It is also important to note that most of the essential commodities are facing food inflation and into to stabilize the prices in domestic market, imports are increasing.

HS Code	Agro-based Commodity Imports into India  (All amounts are in Rs. Lakhs)	Import Value in 2014-2015	Import Value in 2015-2016	Import Growth in Value Terms
7	Edible vegetables and certain roots and tubers.	1,735,882	2,640,929	905,047
15	Animal or vegetable fats and oils and their cleavage products; pre. Edible fats; animal or vegetable waxes	6,518,454	6,892,714	374,260
8	Edible fruit and nuts; peel or citrus fruit or melons.	1,628,775	1,988,399	359,624
10	Cereals.	13,650	122,541	108,892
9	Coffee, tea, mate and spices.	446,276	505,682	59,406
23	Residues and waste from the food industries; prepared animal fodder	202,261	249,999	47,738
17	Sugars and sugar confectionery.	418,870	456,252	37,382
22	Beverages, spirits and vinegar.	332,245	366,706	34,462
13	Lac; gums, resins and other vegetable saps and extracts.	111,812	133,446	21,634
12	Oil seeds and olea. Fruits; misc. Grains, seeds and fruit; industrial or medicinal plants; straw and fodder.	196,584	214,340	17,757
21	Miscellaneous edible preparations.	76,176	90,082	13,906
3	Fish and crustaceans, molluscs and other aquatic invertabrates.	37,929	44,152	6,223
20	Preparations of vegetables, fruit, nuts or other parts of plants.	45,923	51,371	5,448
14	Vegetable plaiting materials; vegetable products not elsewhere specified or included.	13,782	18,978	5,196
4	Dairy produce; birds' eggs; natural honey; edible prod. Of animal origin, not elsewhere spec. Or included.	30,519	34,045	3,526
24	Tobacco and manufactured tobacco substitutes.	29,845	33,122	3,277
5	Products of animal origin, not elsewhere specified or included.	22,694	25,113	2,418
6	Live trees and other plants; bulbs; roots and the like; cut flowers and ornamental foliage.	11,337	11,440	103
16	Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	2,001	1,861	(140)
11	Products of the milling industry; malt; starches; inulin; wheat gluten.	37,570	37,263	(308)
2	Meat and edible meat offal.	1,966	1,276	(690)
19	Preparations of cereals, flour, starch or milk; pastrycooks products.	40,008	38,739	(1,269)
1	Live animals.	7,398	6,123	(1,275)
18	Cocoa and cocoa preparations.	155,163	139,891	(15,272)
	Import Amount (in Rs. Lakhs)	12,117,120	14,104,464	1,987,344
	Import Amount (In Rs. Crores)	1,21,171	1,41,045	19,873
Data: Dept. of Commerce, Govt. of India & Analysis by: Vijay Sardana

Recommendations for Policy Makers:

1.      Let us move away from the political slogans and accept the facts that situation is not under control.

2.      The way PM has taken change of Demonetization, I feel National food security should also be priority for Prime Minister and he should not delegate to any other Minister of ministry because improper handling of this vital issue will derail all the plans developed to provide ‘acche din’ to masses. My concern is, in 2019, food inflation will emerge as major political issue.

3.      We should Learn from GST experience and we must create a “National Food Security Council” because agriculture is a state subject and unless all state governments don’t have commitment towards food security at state level, any initiative of central government will be of no use.

4.      Food Security and Agriculture must get priority in fund allocation once GST is implemented because food and nutrition is essential to livelihood and employment for unskilled and semi-skilled masses in urban as well as in rural area. No industrialisation and technologies can provide them jobs and they are about 30 million people and their skill development will take minimum 20 years.

5.      Develop National Agriculture Technology Policy, and not just Agriculture Policy. Agriculture Universities should be made accountable for the growth in productivity in their regions. In order to achieve this, even if we have to change the mandate of India Council of Agriculture Research (ICAR) and Agriculture Universities, we must do it in the budget session itself, without wasting time.

6.      Niti Aayog should develop state wise action plan and report the progress on quarterly basis so that we don’t lose time and resources.

7.      Government must also create a spate head in the biggest about agriculture infrastructure with special focus on food handling infrastructure and related facilities to minimize food wastage and to preserve the efforts of farmers and tax payers’ money.

8.      We must use all technologies options like satellite technologies and IT technologies to manage agriculture and food systems in India.

9.      Imagine if we invest just 50 percent of the revenue lost in last one year for the development of agriculture, we will be able to save at least USD 50 billion every year.

10.   Food Security and Agriculture is the only sector which will ensure that India remain a political power on the world stage, without food security India will lose its strategic political and economic power on world stage.

In my view, 2017, will be crucial for national food security and now we don’t have buffer stock across the commodities to ensure comfort zone for policy makers.