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Mainstream, Vol XLVIII, No 49, November 27, 2010

Surge in Food Insecurity

Wednesday 1 December 2010, by J. George

Every passing day makes it clear that the proposed food security law may not come by for a while. One report quoting the Planning Commission even suggested that it can be expected only in 2012. This Twelfth Plan (2012-17) launch has support from the concerned dual Ministry of Agriculture as well as Food, Consumer Affairs and Public Distribution. In that eventuality it does mean a surge in food insecurity.

A dispassionate analysis will indicate that the National Advisory Council (NAC) will have a tough job to contain fears of the surge in food insecurity. The pattern of discussion is certainly arrayed to provide arbitrage advantages to middlemen inhabiting the hour-glass shaped foodgrains supply chain. Thus the extremes of this supply chain, namely, the producers as well as the consumers, will have to grin and bear with the rhetoric of food security.

Indecision Dilemma

THE Prime Minister has correctly and “respectfully” bought peace with the Supreme Court on matters of policy-making. This, unfortunately though, is going to be short-lived despite the best of intentions. The Prime Minister, however, may not be responsible. The Food Ministry mandarins are the main culprits whose “Buridan’s Ass” stance has been further reinforced as a consequence. The ground realities since 2007-08 strongly indicate that the surge in food insecurity has moved from the realm of strong possibilities to reality. The affidavit submitted to the Supreme Court for its consideration clearly points out that the rise in food insecurity is inversely proportional to the ‘livelihood security of public servants’ who zealously follow the “Peter principle”—rising to the level of inefficiency.

The apt satirical legend of “Buridan’s Ass” has it that when an ass is placed midway between a pile of hay and a bucket of water, it dies of both hunger and thirst. This happens because the ass is unable to rationally decide between the two equidistant objects. The current imbroglio, similarly, is between grains storage and supply (GSS) to the needy and the vulnerable.

It may be noted here that the Supreme Court has had a direct engagement with grain supply/distribution for some time now. For instance, the Justice Wadhwa headed Central Vigilance Committee on Public Distribution System (PDS) that was set up (on July 12, 2006) by the order of the Supreme Court (the Supreme Court Commissioners as well) has been making a number of suggestions that has found credence under both justifiable policy choices and political exigencies like the PDS control order, etc. So was our dear Prime Minister expressing personal grief or providing a hedge? My studied guess is that in real terms it is both. The 14th century French philosopher, Jean Buridan, however, supported a moral determinism such that human beings could always choose that option which provides the greater good when faced with competing alternatives except when ignorance and/or capricious obstructions as also non-application of mind hold authority.

Moral Determinism

INDEED moral determinism has always been witnessed and shamelessly demonstrated when the choice is between the ‘livelihood security of the public servant’ and efficient escalation in the public distribution system. The 19-page affidavit not only testifies as well as reinforces this legendary dilemma but obdurately hides behind the large multitude of poor farmers. If this was so critical why did the scientific storage capacity not get augmented? The grain storage capacity under public entities appears to be a function of procurement. Then the procurement must be a function of grain production particularly to the marketed surplus ratio. This distinction is fundamental and must be made. The surge in food insecurity therefore is an unmistakable consequence.

A survey and critical review of all writings and media bytes unmistakably points out that the language of discourse has slowly, steadily and decisively shifted to the ‘livelihood security of public servants’ instead of food security. For instance, the current expression and construct of discourse like calculus of atta, chawal, dal, chini unambiguously concentrates on the processing segment of the food chain that thrives on escalating the exclusion errors at both the densely populated extremes of the spectrum, namely, producers and consumers.

It is indeed remarkable to highlight here that our valued Prime Minister in October 2009 boldly affirmed such a divisive policy slant that “despite the economic slowdown the food pro-cessing industry in India grew at an impressive rate of 14.7 per cent in 2008-09” and exhorted to “think big” and “think globally”. The parallel with the rising food price inflation during this period, monumental failure of the Essential Commodities Act (ECA) and Prevention of Black Marketing and Maintenance of Essential Commodities Act 1980 are, indeed, not incidental. Clearly, the flow of policy intentions and authority in the PM-CM-DM direction has worked uncouthly and hence at cross purposes.

‘The Dirty Dozen’

A full engagement with grains storage and supply (GSS) has been highly skewed towards the livelihood security of the decision-making functionaries, but there do exist short to medium term resolutions of the GSS dilemma. Two cases are in point here. First, the de-hiring of storage space by the FCI was incentivised by the carrot of an excellent career performance and progression. The second is the number of sticks brandished by the Standing Committee on Food, Consumer Affairs and Public Distribution (2009-10) in their sixth Report presented to both the Houses on August 12, 2010. These strictures are on the (i) snail’s pace in enactment of the national Food Security Act under some frivolous grounds, (ii) utter callousness in containing the food subsidy bill, (iii) serious concerns on poor quality (recall that in 2008 the then Food Secretary dismissed serious questions on poor quality of wheat imports as mere issues of ‘appearance’ as if quality parameters are comparable to the maxim ‘beauty lies in the eyes of the beholder’) were dismissed by pointing to the foodgrains supplied to the BPL/AAY families under PDS and extremely poor response to involvement of PRIs, women’s self-help groups, ULBs etc. by allotting them licences to run fair price shops, (iv) absolute lack of seriousness in implementing actions, including technological options like GPS and smart cards, etc. to prevent diversion of subsidised foodgrains, (v) absence of energetic efforts towards various steps required in godown construction, (vi) casual approach of the Ministry towards key recommendations of the committee regarding scientific and safe storage of foodgrains, time limit not being fixed for movement of grains from the collection/procurement point to consuming point, (vii) complete lack of deterrent punitive actions—painfully it must be recorded that out of 1172 officials charged for abnormal storage and transit losses, only four officials were dismissed from service and seven officials were compulsorily retired from service, (viii) complete absence of a comprehensive plan for time-bound disposal of the stocks, (ix) high establishment costs in the FCI and CWC not commensurate with the socio-economic realities on the ground, (x) highly whimsical proclivities of the CWC to write off bad debts, (xi) rising rent outgo on storage and extreme callousness in utilising funds allocated for augmenting storage, (xii) disgust generated by the ‘cock and bull story’ of defence/comments offered by the CWC.

Each of these enumerated deficiencies, despite clear policy directions, have a (judicial) ‘rights’ dimension since they are anchored to the human resources. The deficiencies in food management enumerated above can be broadly summed up in one word—LOADS. Each of these five alphabets means as follows: L-Leadership; O-Ownership; A-Accountability; D-effective Decentralisation and S-Sustainability. Indeed there exist tremen-dous opportunities to tweak meaningful reform particularly in the GSS domain. Surely, the Prime Minister has a tough task in days to come.

Besides, a host of other alternative solutions become apparent as one goes through the old classics of Dharam Narain and A.M. Khusro on the subject. Certainly, there is a dire need for all stakeholders to revisit these classics to nuance a suitable strategic GSS policy and standard operating protocol. “Substantial shift to other non-food crops” is yet another phrase in the 19-page affidavit that could have been avoided as a consequence because neither is it the voice of a great number of Indian farmers nor is it reflected in any credible data set.

Fortunate Circumstances

THERE exist three most auspicious conditions for a ballistic thrust towards food management and thus agricultural fundamentalism; we must open up similar opportunities for concrete action plans. The conditions are: (a) an unprecedented rise in the number of marginal and small holder farmers in the country, say, between 1970-71 (49.11 million out of a total of 70.49 when the buffer stock was first conceptualised) and now (110.45 out of a total of 132.85 million in 2005-06 for which data is available); (b) the inclusive and faster economic growth swan song of the Eleventh Five Year Plan (2007-12); (c) defined rural infrastructure template, namely, Bharat Nirman. In effect vibrant grassroots level organisations like PRIs with constitutional mandate for 29 functions including PDS and urban local bodies with 18 functions certainly require to be brought in to the centre of action plans since we are mandated to follow inclusive growth strategies.

A moment’s engagement will demonstrate the dire need to replace telecommunication connectivity (the worst performer during UPA I) from the business plan for rural infrastructure on the Bharat Nirman package with augmenting grain storage exclusively to be handled by the panchayati raj institutions. The FCI and CWC are too big and have miserably failed both the producers and consumers due to diseconomies of scale. Small holder farming is our strength and we must not caricature large farm practices.

Although the National Commission on Farmers completely ignored farm level storage issues, the National Commission on Agriculture in its 1976 Report (Part XII Chapter 56) did make a forceful case for providing ‘improved storage structures at reasonable cost’ to all needy farmers. The cause of action for this pointed recommendation was the fact that 71 per cent of the CWC storage capacity was utilised by traders as opposed to a mere six per cent by producers on December 31, 1970.

Roadmap for Positive Action Plans

THE blueprint of affirmative action plans built on the public private partnership mode for progress (PPP4P) template seek to avoid the pelf seeking infrastructure induced inconvenience index-PIIII (akin to the Commonwealth Games syndrome). This requires that forgotten funda-mental principles of economics of grain storage are immediately recalled from the Planning Commission archives as well as reputed academic libraries.

The yawning gaps in the performance (between 2004-05 and 2009-10) of different constituents of the rural infrastructure business plan template not only belie any hope of a balance between equity-efficiency trade-offs in ‘India’ and ‘Bharat’, the lack of interest in learning from the ground realities is also certainly very disturbing. Due to non-availability of satellite transponders telephone connectivity could be provided to only 10,212 villages against a target of 32,518 villages during 2007-09. These flaws should not carry over to the Twelfth Five Year Plan (2012-17).

We must recognise in our analyses that efficiency gains in food management is critical. That is the way of improving the future streams of farmers’ income. Since the distribution of farmers holding is dense at the mean, ensuring market access to marginal and smallholder producer necessarily demands nuanced partici-pation in time, space and form utility creation by this segment. In the livelihood security dilemma, accessible storage facilities are known to enhance the socio-economic benefit streams.

Take, for instance, the September 2010 Working Paper where a spirited case for grain traders and millers’ profit maximisation is made by Kaushik Basu. The Supreme Court, on the other hand, is gravely concerned about the rotting grains and open storage of procured foodgrains primarily due to lack of storage infrastructure. The traders and millers in this milieu are the major recipients of the Central Government’s PAT-procurement, allocation and transport-largesse. Storage is subsumed to be integral to procurement by the designated statutory agencies. The Standing Committee on Food, Consumer Affairs and Public Distribution (2009-10 FCAPD) in its Sixth Report presented to both the Houses of Parliament on August 12, 2010 severely indicts the Central Government on 12 counts (the “dirty dozen”) including reneging on scientific storage capacity augmen-tation programme.

In the food management ‘game’ a la Kaushik Basu, however, storage infrastructure concerns have been dismissed as the ‘populist view’. It is perhaps pedestrian and pedantic to be on the same league as ‘India’. Kaushik’s concern (unlikely, at best) may be genuine if the storage typology is restricted merely to capital intensive, heavily carbon emitting, labour displacing and welfare depleting silos.

Principles of Foodgrain Storage

THE storage of grains in India, we must recall, is conceived on the lines of three entities of money supply. The mother legislation, Essential Commodities Act, and all derivatives thereof have these three as their micro-foundation. Such ground and statutory realities cannot be assumed away in any ‘games’ framework. Be that as it may, isn’t economics the everyday business of life, where growth with social justice forms the firm foundation?

Three questions need to be raised here. First, during the high food inflation in the country who has been supplying grain to the traders when there has been poor off-take from the government’s Central Pool account? Secondly, what is the distribution pattern of producers and consumers—two extremes of the hour-glass shaped food supply chain—in the country? Thirdly, what are the key decision criteria for tweaking a surge in investment for storage capacity augmentation and how does it compare with augmentation in rural telephony?

Fear of Failure and Changing Discourse

THE abyss of failure and hopelessness in the event of crop failure or bad year (peak-trough ‘mechanical trap’) gets precedence over the poorest (amongst six rural infrastructure menu template) performance of telephony. Hence the refrain, “why invest in failure?”, in matters concerning storage.

Besides, the income transfer protocol of the decision criterion embedded in recent expressions and construct of discourses like calculus of atta, chawal, dal, chini unambiguously concentrates on the processing segment of the food chain. The food chain spectrum thrives on escalating exclusion errors at both the thickly populated extremes.

The agrarian crisis has been deepening despite many promises. The ‘seven sutra’ approach and its variants pronounced from the ramparts of the Red Fort for the past so many years are immediate cases in point. According to the Prime Minister, these seven sutras—agriculture, water, education, health care, employment, urban renewal and infrastructure—are essentially integral to the transformation of India into a fully literate, well-fed, healthy and gainfully employed nation.

India-Bharat Divide

THE telling incidence of widening ‘India-Bharat’ rift could be found in the multi-media flash of how the Bharat Sanchar Nigam Ltd. (BSNL) distributed free mobile handsets to the hapless villagers falling in the constituency of the Minister of State for Communication and Technology. Certainly as the corporate social responsibility (CSR) implanted template this strategy is blissfully not concerned about the funds crunch refrain of the Planning Commission.

The stylised facts emerging from any dispas-sionate engagement with three questions raised above bring out the imminent necessity for a network of decentralised covered storage infrastructure that will also act as the feeder-balancing intermediate backbone to the food management system in the country. Notably, the IS code 607:1971 is claimed to provide the scientific foundation to the storage construction and hence a norm for deriving storage cost function.

The Central Government, by (i) expressing helplessness on August 11, 2010, and further reiterating on September 6 in affidavits filed in the Supreme Court in connection with the right to food writ petition; (ii) transferring the onus to State/UT governments, (iii) gross underutili-sation of allocated funds under the internal and external budgetary resources (IEBR) scheme for augmentation of storage capacity obscuring into oblivion, has effectively widened the India-Bharat chasm.

The storage construction axiom can be briefly stated as the linear dimensions—length, width and height—of a structure increase in a given dimension; the volume or capacity of the structure increases as a cube of the increase in the linear dimensions. We, however, have to watch out for the diseconomies of height. This truism has a direct relevance to the construction cost of the covered storage structure provided we attend to other contin-gent issues of fixed capital and expected capacity utilisation. The truism is that construction cost per unit of the volume stored is an even more rapidly decreasing function of the volume of grain stored.

The opportunity cost disadvantages suffered by over 80 per cent of the producer segment can thus be converted into an advantage by creating the critical mass of storage in their vicinity. The sure shot mechanism to ensure price stability as well as enhancing the share of producers in the consu-mers’ rupee is available by allowing the pancha-yati raj institutions to own and operate these utility creation activities (in the non-farm rural genre) and developing a healthy networking relationship with the urban local bodies. The Operation Flood model for the complex perishable commodity should give us sufficient confidence to embark on this path post-haste.

SchemeOFFTAKE
[A] TPDS Rice Wheat Total % To Total
1. BPL: Below Poverty Line 78.53 45.91 124.44
2. APL: Above Poverty Line 52.41 77.31 123.64
3. AAY: Antyodaya Anna Yojana 48.73 25.36 74.09
TOTAL (1-3) 179.67 142.50 322.17
DEFENCE, etc 0.83 0.91 1.75
SUB-TOTAL [A] TPDS 180.51 143.41 323.17 90.40
[B] OWS: Other Welfare Schemes
1. MDM: Mid Day Meal 13.51 3.41 16.92
2. WBNP: wheat Based Nutrition Programme 1.81 3.75 5.56
3. E FP: Emergency Food Programme 0.13 0.00 0,13
4. HWI: Hostels, Welfare Institutions 2.08 0.44 2.52
5. ANNAPURNA 0.41 0.21 0.61
6. WFP: World Food Programme 0.01 0.16 0.17
7. NPAG: National Pension & Old Age Pension 0.13 0.04 0.18
8. VGBS: Village Grain Based Storage 0.01 0.06 0.07
9. ORS: OTHER RELEIF SCHEMES 3.01 0.49 3.50
SUB-TOTAL [B] OWS 21.10 1.85 4.78 8.30
[C] OMSS—Open Sales/Tender Sales/Export 2.93 1.85 4.78 1.30
TOTAL [A+B+C] 204.55 153.81 358.36 100.00
57.0 43.0 100.0

Source: Annual Report 2009-10, Department of Food and Public Distribution

Alternative Strategic Economic Initiatives

THE present grain stocks should sustain opportunities to recommit our nation’s resolve to purge all traces of misery and persistent malnutrition. The small holder farming system requires the small capacity covered grain storage infrastructure lest we succumb to what the yesteryear gurus (Andrew Shepherd and A.M. Khusro) termed the obsession with sophisticated bulk technology—silos—as ‘rusting monuments to bad planning’ and captured in a ‘mechanical trap’.

In a similar manner making the Warehousing Development and Regulation Act 2007 really tuned to the food security concerns will eliminate the speculative gains of cartels. Arbitrage by stockholding entities is the key factor here. These advantages must flow to the producers and control over storage and distribution processes needs clearly defined non-opaque operating protocol.

Launching a mid-day meal like scheme immediately through philanthropic institutions across the country is indeed a feasible proposition. If I were in a position to decide I will involve all interested people to provide a free “langar” like in any Gurudwara.

This is based on the ground realities obtained through a rapid-fire and focussed group discussion amongst students of Delhi and Mewat district in South Haryana. They were asked to recall the visibility of a fair price shop (FPS) and any religious institution during the past three days, two weeks and one month. Religious institutions were the most visible and the FPS was the least visible. The fragmentation of grain storage and grain supply to vulnerable groups is indeed a sound economic proposition.

Consider the scheme-wise allocation and off-take of major cereals (rice and wheat) during the 2009-10 period to visualise the import of this strategy in the short term. The opportunities available in tweaking the other welfare schemes are sadly being wasted to escalate food insecurity.

The Prime Minister must desist those real players involved in the food management from behaving like the peacock’s tail, of no direct practical use but a good way of attracting a mate for ensuring their own ‘livelihood security’.

Prof J. George is with the Institute of Economic Growth, Delhi. He sewed as a Working Group (Agriculture) member for the Eleventh Five Year Plan.

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