THE NATIONAL Food Security Bill awaiting parliamentary approval should be backed by simultaneous plan to improve essential agricultural linkages as the demand is expected to exceed supply by 2020. While the proposed law aims at helping the poor to purchase 25kg of rice or wheat per month at Rs 3 per kg, the country does not produce enough to meet the additional demand. The food grain production in 2010-11 was 242 million tonne, capping an annual average growth of 2.9 per cent during first four years of 11th Five Year Plan.
The Act could suddenly increase the demand for food grains, which coupled with increased procurement by the government will result in further increase in market prices leading to higher inflation. This will consequently hit the weaker sections of the society who do not have access to fair price shops. India should secure land assets in Africa, Mongolia, Afghanistan and other countries to diversify its supply from multiple sources.
The food consumption is projected to grow from Rs 9.9 lakh crore to Rs 11.5 lakh crore in the next two years. So a multipronged approach will assist the country in meeting some of its short-term needs by aiding the private sector to expand its global footprint.
With 120 crore mouths to feed, twice a day, India is among the world’s major food producers and 52 per cent of land area is cultivable compared to 11 per cent global average. But high levels of wastage, low productivity levels, falling private and public investments, scarcity of land, water and labour are some issues that have led to supply constraints. The mismatch between demand and supply has been further exacerbated by rapid increase in food consumption on account of demographic changes. Improvements in development indices on account of sustained economic growth has also resulted in focus from food grains to other food categories like animal protein, pulses, oilseeds, dairy and processed food.
The critical areas of focus going forward for agribusiness community include boosting agricultural output in the near-term through modernisation of cooperatives that contribute to a significant share of production in critical areas like dairy, oilseeds and horticulture.
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Private investments need to be encouraged in farm production through contract farming, food processing and agri-logistics to build more effective and efficient food supply chains, and reduce overall wastage levels. The public private partnership route presents an excellent opportunity that has already had some limited success in few states and will need to be implemented systematically across the country. However, the long-term solution to correcting these supply deficiencies lies in drastic improvement in farm level productivity.
This can be achieved through investments in research and development in agri-sciences and subsequent information systems required to transfer this knowledge and monitor progress with the farmer. Wide-ranging reforms and clearer policies are needed urgently to effectively direct credit flow to the agriculture sector and encourage contract farming. Agricultural credit can be a means of furthering financial inclusion as it would be linked to economic activity. Of 148 million rural households, 89 million are farm households and 46 million of these are outside the financial services net.
Corporates can play a vital role in risk management and providing an assured market for agricultural produce which can benefit farmers, banks as well as the rural economy. The participation of corporate sector in farming segment will play a crucial role in technology transfer and capital inflows.
