Eating order

Why private buyers largely kept away from wheat procurement this year, as has been reported in this newspaper, may be an interesting story. It would not be staggeringly surprising if we find out that non-market official signals had gone out that private buyers must be mindful of the food crisis and therefore respect the need for the government to bulk up its food reserve. Food crisis 8212; everyone is talking about it and making each other nervous. When the government gets nervous it starts making policy, however. So it is important to always try to calm the government down, difficult as that endeavour is. So let8217;s recall a few facts for the government8217;s benefit. First, India8217;s agriculture was suffering from low productivity and therefore subprime output performance much before food became a global media story. Second, small increases in productivity can bring huge supply gains for India. If foodgrain productivity grows back to levels achieved by the Green Revolution, never mind US or Australian levels, India can feed its population and have mountains left for export. Third, productivity can increase in the short term even without big-ticket policies like stepping up irrigation coverage. China has on average poorer quality arable land and less irrigation coverage than India. But its yield levels for many crops are far higher. Better farm practices, including better use of technology, explain the difference. Fourth, fragmented landholding is a problem that cannot be wished away. When 60 per cent of land holdings are below 2 hectares, farming has a fundamental problem.

These facts show there is a policy deficit in agriculture, but it is a deficit that can be fairly easily tackled. But there is also another fact that everyone should become familiar with. It is hypocritical to moan high food prices as well as farm crisis. If demand-supply links work well 8212; they don8217;t in Indian farming, and that is another reform 8212; high food prices are good news for farmers and not dreadful news for consumers. The latter are benefiting from prices of non-farm products coming down over the years and if Indian farming is to be modernised, its prices will have to reflect global levels, which are and will stay high for a while now.

A final fact: Malthusian hand wringing is dramatic but not terribly logical. India and the world have been through food crises before. This country had to depend on American aid for foodgrains and then it responded with the Green Revolution. Similarly, in the 8217;60s-8217;70s, an unsolvable food crisis was taken as a certainty but output rose. Basically, producers responded to price and demand signals. There is little reason to believe the same won8217;t happen again.