JOIN USThe government has adopted a policy of maintaining the food security of the country through imports of food grains. The question to ponder is: Can food security be established by imports?
According to dictionary.com ‘security’ means “freedom from danger and risk; safety; freedom from anxiety or doubt; well-founded confidence; assurance; guarantee”. In my reading of this definition, food security is not established from imports. There is always a danger that supply of food from imports may be prevented by a war or natural calamity. There is doubt about food imports being cheaper as well. Prices of a particular food grain like wheat may be low on the international market at present. We may reduce domestic production of wheat to avail of this opportunity. We may shift our land to the cultivation of other crops, say sugarcane or jatropa. But price in the international markets may increase next year. We may not be able to revert to production of wheat so quickly. Thus, establishing food security from imports is beyond comprehension. Indeed, one may rely on imports to tide over immediate problems but that can hardly be called ‘security’.
The government is happily presenting food insecurity as food security. Western economists have taught our leaders that India should capture the benefits of free trade and establish her food security through foreign trade. Our prime minister does not see what western countries like America are doing themselves. Instead he listens to what advice they give.
America is giving huge subsidies to its farmers in order to maintain her food security. It is exporting wheat in order to kill the food security of other countries and make them dependent on America. Wheat is produced cheaper by Indian farmers. Yet America chooses not to import cheap Indian wheat. Instead, it exports wheat at prices lower than its cost of production. But it tells us that we must ensure her food security by imports and our prime minister willingly listens.
The message sent out is: India must produce those goods at which it has comparative advantage like rose and tea. India can export these goods and import wheat from the global market. This policy gets us to reduce our domestic production of wheat and other grains. Living in the make believe world of food imports, the government is unwilling to maintain high domestic price of wheat to increase production and to establish true food security. Instead, it is trying to lower the domestic price of wheat to kill domestic production.
Truly speaking, there is a direct contradiction between gains from free trade and the need for maintaining food security. Free trade implies we will produce those goods in which we have comparative advantage. Obviously, we cannot be No 1 in all items.
Vietnam can produce coffee at lower price than us, Malaysia can produce edible oils, Brazil can produce sugar and Australia wheat. If our advantage lies in rose and tea, we should produce and export these and import wheat from Australia. We may indeed get cheaper wheat from Australia and that will be economically beneficial. But that does not establish our food security. The benefits from free trade can be reaped only if we are willing to depend on food imports. That means that free trade and food insecurity go together. We will have to choose between the two. But the government cannot tell the people that their food security is being sold for obtaining higher economic growth. Thus the government is saying that food security will be established through imports.
Disastrous policy
What makes the government implement such a disastrous policy? My assessment is that the interests of the middle class are served by this policy. The middle class wants cheap wheat. It makes no difference to them whether it is imported or homegrown. Since food grains are often obtained cheaper through imports, the government has embarked upon import-based approach to food supplies in order to appease the middle class. Further, they gain from the country embracing free trade. The export of services produced by them such as medical transcription and call centres is increased with the integration of the Indian economy with the global market. The middle class is confident that it will be able to get food for its consumption even in times of crisis just as the middle class in Kolkata fed itself during the 1942 Bengal famine. The government is peddling the interests of the middle class in trying to lower domestic prices of wheat, lowering home production and importing food. It is not concerned about the impact of this policy on the masses. They have neither the money to buy imported wheat nor do they have goods and services that can be exported.
The situation is similar in many other developing countries. A paper by Oxfam cited the case of Haiti. The import tariff on rice was reduced to a nominal 3 per cent. As a result, says Oxfam, “rice imports, mainly subsidised rice from the US, have increased 30-fold, but the price of rice in Haiti has hardly fallen and malnutrition affects 62 per cent of the population. Only big rice traders and American farmers have benefited.” Sophia Murphy of the Institute of Agriculture and Trade Policy mentions the case of Burkina Faso. Trade liberalisation has pushed up the number of rural traders but most gains of liberalisation, she says, have been “captured by companies in the distribution chain, rather than by consumers”. She also cites the case of Mexico where maize cultivation is the main source of livelihood for some 3 million producers. The Mexican government made maize trade tariff-free. As a result, “A massive influx of US maize ensued, leading to a sharp reduction in the price paid to Mexican producers. By August 1996, prices had fallen by 48 per cent...” Says Murphy: “Greater pressures on maize farmers... have produced a sharp increase in land concentration... with a few of the richer farmers buying out the rest”.
It is time to tell the government, this will not do. Instead of importing wheat, we should pay high prices to our farmers so they continue to produce sufficient food grains. That would both establish our food security and equity.