Its economy is booming, but in India, so is hunger

The 50-year-old farmer knew from experience that his onion crop was doomed when torrential rains pounded his fields throughout September, a month when the Indian monsoon normally peters out.

For lack of modern agricultural systems in this part of rural India, his land does not have adequate drainage trenches, and he has no safe, dry place to store onions. The farmer, Arun Namder Talele of Bamnod, said he lost 70 per cent of his onion crop on his five-acre farm here, about 70 miles north of the western city of Aurangabad. “There are no limits to my losses,” Talele said.

Talele’s misfortune, and that of many other farmers here, is a grim reminder of a persistent fact: India, despite its ambitions as an emerging economic giant, still struggles to feed its 1.1 billion people.

Four decades after the Green Revolution seemed to be solving India’s food problems, nearly half of Indian children age 5 or younger are malnourished. And soaring food prices, a problem around the world, are especially acute in India.

Globally, floods in Australia and drought in China have helped send food prices everywhere soaring — on fears the world will see a repeat of shortages in 2007 and 2008 that caused food riots in some poor countries, including Egypt.

While India’s agricultural problems are part of this bigger global puzzle, in many ways India’s food challenges are more entrenched and systemic than those faced elsewhere.
Western investors may take eager note of India’s economic growth rate of nearly 9 per cent a year. But that statistic rings hollow in India’s vast rural areas. Agriculture employs more than half the population, but it accounts for only 15 per cent of the economy — and it has grown an average of only about 3 per cent in recent years.

Critics say Indian policy makers have failed to follow up on the country’s investments in agricultural technology of the 1960s and 70s, as they focused on more glamourous, urban industries like information technology, financial services and construction.

There is no agribusiness of the type known in the United States, with highly mechanised farms growing thousands of acres of food crops, because Indian laws and customs bar corporations from farming land directly for food crops. The laws also make it difficult to assemble large land holdings.

Yet even as India’s farming still depends on manual labour and the age-old vicissitudes of nature, demand for food has continued to rise — because of a growing population and rising incomes, especially in the middle and upper classes. As a result, India is importing ever greater amounts of some staples like beans and lentils (up 157 per cent from 2004 to 2009) and cooking oil (up 68 per cent in the same period).

Food prices are rising faster in India than in almost any other major economy — and faster than they did during the 2007-08 surge.

In December 2010, India’s food prices jumped 13.7 from the year earlier, while inflation for all commodities, heavily weighted by the food number, stood at 8.4 per cent.

A snapshot number released in mid-January showed Indian food prices rising even faster — more than 17 per cent over the same period in 2009 — as the cost of onions, fruit, eggs, milk and other commodities rose.

Food inflation hits especially hard here because Indians — most of whom live on less than $2 a day — spend a bigger portion of their disposable incomes on food than people in other big, developing economies like China and Brazil.

“This is the worst form of taxation on the poorest of the poor,” said Ashok Gulati, Asia director for the International Food Policy Research Institute.

Indian government officials have scrambled to make up the shortage of vegetables like onions by importing them. These short-term efforts have helped; onions are now available at Rs 20 a kilo in Mumbai, down more than 70 per cent from their recent highs.

Supply and demand

But experts say the widening gap between agriculture’s anemic supply and the rising demand for food calls for fundamental changes in farming policies.

During the Green Revolution the government invested heavily in rural agriculture, with an emphasis on hybrid seeds, fertilisers and irrigation canals.

More recent policy makers have not built on that early success. Most Indian farmers still do not have irrigation systems, and waste and inefficiency have severely depleted precious ground water.

Although many farmers have access to free or subsidised electricity that can be used to pump water, few receive power for more than a few hours a day. Talele, the farmer in Bamnod, gets only four hours of electricity during the day and four hours at night. During those periods he pumps well water that he then floods into his fields because he cannot afford the sprinklers or drip irrigation that would more efficiently and effectively water his crops.

And rural India has far too few temperature-controlled warehouses that could help farmers and the nation build up reserves as a hedge against poor growing seasons.

When Talele’s vegetables are ready for harvest he immediately takes them to wholesale markets, which are controlled by committees of local traders. “Whatever the market decides, that’s the price we get,” he said.

Indian officials acknowledge that the country needs to increase investment in irrigation, encourage competition in wholesale and retail markets, and provide targeted food subsidies to the poor. And they also have to provide more education and jobs to villagers, so fewer people are forced to live off the land.

Experts say India needs to make changes like some of the ones China made, beginning in the late 1970s, when it started investing heavily in agriculture and eased regulations on farming.

As recently as 1977, Chinese and Indian farmers harvested roughly the same amount of wheat for each acre that they planted. But by 2009, United Nations data shows that wheat yields were 1.7 times higher in China than in India.

Kaushik Basu, a Cornell University professor who is also the chief economic adviser to India’s finance minister, says he now sees more willingness by Indian officials to reform agriculture policies.

But outside experts like Gulati are skeptical that real change will come from the government. The ruling coalition has been hobbled by corruption scandals, and an energised opposition last year effectively blocked proceedings in parliament.

Some Indian farmers are investing on their own, finding ways to circumvent the government when necessary and using subsidies when they are available.

About 10 miles from Talele’s farm in the village of Pahur, Sandeep Ram Karshanbakr’s farming income has jumped to Rs 2,00,000 a year, from Rs 80,000 three years ago. He credits the improvement to a drip irrigation system he bought from an Indian company, Jain Irrigation.

The government paid half the Rs 1,28,000  cost of the system. That has cut the amount of water and electricity Karshanbakr uses by about half on his three acres, while improving yields twofold to fivefold on his crops of chilis, cauliflower, eggplants, tomatoes and cotton.

Karshanbakr says he is now considering buying or leasing more land. But many farmers, like Talele, say they simply cannot afford such irrigation equipment — even with government subsidies as high as 50 per cent of the sticker price. “It’s still too expensive,” he said.

Anil Jain, managing director at Jain Irrigation, said India needs to help farmers like Talele invest. “Agriculture can grow at 6 to 8 per cent,” he said. “But we have to create opportunity and income in rural areas.”