File photo of a few thousand tonnes of wheat are said to have been damaged after the grain was exposed in the heavy rains due to poor storage.
Input subsidy expenses not contributing to boost productivity
CHENNAI, SEPT 23:
The World Bank has said that South Asia’s foodgrain stock management, especially in India, needs to improve to tackle inflation.
In its focus on food inflation in South Asia, the bank said that high stocks have led to high wastage due to inadequate storage capacity and technology. According to World Bank’s estimates, the Food Corporation of India lost 10-16 million tonnes of grains in 2000.
“The FCI’s inefficiencies not only lead to high losses of the grains it handles, they also drive up the costs of food handling. Comparisons show that the FCI’s handling and storage costs are significantly higher than those of the private sector. The increase in procurement has led to a significant increase in the fiscal costs of the system,” the report said.
The FCI procures nearly one-third of wheat, rice produced in the country, besides coarse grains at the minimum support price fixed by the Government. The stocks are then transported to deficit States and sold through the public distribution system at a subsidised rate.
It said demand for food is undergoing structural shifts as incomes rise. Growth in consumption of pulses, fruits, meat, eggs, and dairy items is more than double the consumption growth in cereals. Inflation in these items has been higher than in cereals.
“Public intervention in agricultural marketing in India and Pakistan has high fiscal costs and narrowly supports cereal production, while high food inflation and continuing high rates of food insecurity are linked to an inadequate supply response in non-cereal food products,” the report said.
Input subsidies contributed to the overuse of water resources, high losses of electricity utilities, and deteriorating soil conditions because of skewed application of fertiliser.
It said expenses on these were not contributing to productivity and they could instead be used as investments in agricultural research, education, and rural roads are amongst the most effective
public spending items in promoting agricultural growth and reducing poverty.
Food and fertiliser subsidies have increased to over 1.5 per cent of the GDP since 2008-09 from around one per cent in the 1990s.
ANNALS OF PUBLIC PROCUREMENT
Outlays on food subsidies are far higher than public investment in agriculture and outlays for extension services, which could increase agricultural production and lead to lower prices over time.
In India and to a lesser degree in Pakistan, large-scale public procurement hampered the private sector not only by pre-emption, but also by taxes and rules for moving grains across state borders, and caps on storage of grains designed to facilitate public procurement.
The bank found fault with mandatory Jute Packaging Act, frequent changes in the Essential Commodities Act, low private investment in grain marketing, insufficient investment in supply chain and marketing rules.
The bank proposed five policy options to tackle inflation including in foodgrain storage management. It called for demand management policies in South Asia earlier than in advanced countries because of the high share of food items in consumer baskets with priority for fiscal consolidation.
Over the longer term, it called for policies aimed at increasing agricultural output and productivity to alleviate pressures on food prices, including focus on technology, improved water management, rural infrastructure, agricultural diversification, and private sector investment in marketing and the agro industry.
It said governments should exploit the efficiency gains they could achieve (in terms of protecting and improving nutritional status) through provision of more nutritious foods (e.g. foods fortified with essential vitamins and minerals) and by increasing beneficiary knowledge on how to maximise household resources for nutritional impact.
It asked governments to explore developments of market-based tools and assistance for managing risks, particularly those that affect the government’s budget.
The focus of the plan will be to develop a long-term strategy and movement plan of foodgrain throughout the country, especially from producing states
Submitted on 08/01/2011 – 12:46:18 PM
New Delhi: The Department of Food and Public Distribution has proposed to prepare a plan on the movement of foodgrains in consultation with Food Corporation of India (FCI) and Railways.
The FCI and Railways have been asked to furnish relevant inputs for formation of such a Plan. Once these inputs are received, the Department will endeavour to prepare a National Foodgrain Movement Plan.
This information was given by the Minister of State in the Ministry of Consumer Affairs, Food and Public Distribution, KV Thomas in written reply to a question in Rajya Sabha on Monday.
Sources said a permanent command structure comprising the Chairman of the Railway Board, Secretary, Food and Public Distribution Department, and Chairman of the Food Corporation of India will oversee the entire operation.
A similar structure is also proposed to be constituted at the state level.
The focus of the plan will be to develop a long-term strategy and movement plan of foodgrain throughout the country, especially from producing states, during the peak procurement season.
This will make sure that the food-surplus states will transfer the grains to the deficient states in a systematic manner without any delay, sources said.
An academician suggests how an integrative supply-chain will address the food security issue.
The World Food Summit of 1996 defined food security exists when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life. Commonly, the concept of food security is defined as including both physical and economic access to food that meets people’s dietary needs as well as their food preferences. Food security is built on three things: Availability of sufficient quantities of food on a consistent basis; ensuring sufficient resources to obtain appropriate foods for a nutritious diet; and finally, appropriate use based on knowledge of basic nutrition and care, as well as adequate water and sanitation.
The Government of India has launched several initiatives towards ensuring food security to its citizens. They include the public distribution scheme (PDS), the mid-day meal program for school children, the National Rural Employment Scheme, and several others to help people below the poverty line. The well-founded plans lack the desired execution by the various governments in charge of these schemes. At the other end of the spectrum, there are millions of hawkers in all major cities termed illegal traders by the municipalities but serving the food needs of millions of urban poor and lower middle class. They are self employed serving a cause.
What is missing is an integrative, co-evolutionary innovation strategy based on end-to-end logistics and supply-chain that would lead to high service quality food solutions to millions of people by combining innovations in several of the ecosystem elements and also their convergences.
A Recipe For Riot
Consider the several schemes announced by various governments over the years that were meant to put an end to hunger or eliminate poverty. What is singularly lacking in all these ideas is the execution of an ideal supply-chain that could have functioned at a national level.
The PDS operates under the joint responsibility of the Central and State governments. The Central government, through the Food Corporation of India, has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the state governments. The operational responsibility including identification of families below the poverty line, and issue of ration cards rests with the state governments.
The Mid-Day Meal Scheme was launched by the Ministry of Human Resource Development with effect from August 15, 1995, for the benefit of students in primary schools. It involves provision of lunch free of cost to school-children on all working days. The key objectives of the program are: protecting children from classroom hunger, increasing school enrolment, improved socialization among children belonging to all castes, addressing malnutrition, and social empowerment through provision of employment to women.
The Department of Food & Public Distribution makes allocation of annual requirement of food grains under the scheme to the Department of School Education & Literacy, Ministry of Human Resource Development. About 120 million children are so far covered under the Mid-day Meal Scheme, which is the largest school lunch program in the world.
The State of Karnataka introduced the provision of cooked meals in 2002. It has successfully involved private sector participation in the program. One successful venture is Akshaya Patra, which started with leadership from ISKCON. The Foundation gets a corpus from the state government but meets a major share of its costs with donations from private corporations and individuals in the city.
The program is managed with an ultra modern centralized kitchen that is run through a public/private partnership. Food is delivered to schools in sealed and heat retaining containers just before the lunch break every day. The program contains one of the best menus in school meal programmes in India with tasty sambar, rice, vegetables and some curd on most days.
National Rural Employment Generation Act (NREGA) is an important Central law having a large demographic and geographical spread. It assures livelihood guarantee to the entire population above 18 years of age residing in rural areas of the country. The act gives the right for 100 days of guaranteed employment in manual/unskilled work in rural areas.
What Went Wrong
All the four schemes mentioned above are good initiatives but all of them have issues in implementation. The main problems with the system are the inefficiency in the targeting of beneficiaries and the resulting leakage of subsidies. Several opportunities to manipulate the system exist with widespread collusion across the supply chain.
The Planning Commission had the following to say on the PDS system in its 2005 report, “For every Rs. 4 spent on the PDS, only `1 reaches the poor.” The Supreme Court-appointed vigilance committee has slammed the PDS for “rampant corruption, black market and diversion involving a vicious cartel of bureaucrats, fair-price shop owners and middlemen”. Similar comments are available in the press for NREGAS and mid day meal programs.
The lower income groups in the country spend a higher proportion of their income in making purchases from hawkers mainly because their goods are accessible and affordable. Had there been no hawkers in the cities the plight of the urban poor would be worse than what it is at present. In this way one section of the urban poor, namely, hawkers, helps another section to survive. Hence though hawkers are viewed as a problem for urban governance they are in fact the solution to some of the problems of the urban poor. But hawking is not a licensed activity in most cities.
Over the past few decades there has been a substantial increase in the number of hawkers in the major Indian cities. Mumbai has the largest number of street vendors numbering around 250,000. Kolkata has more than 150,000 street vendors. Ahmedabad and Patna have around 80,000 each and Indore, Bangalore and Bhubaneshwar have around 30,000 street vendors. The Cuisines by the sidewalks is a successful story from Kolkata which can be copied to advantage.
Recognition of hawking as a profession would also benefit the municipalities. They would be able to officially enforce levies on hawkers. This would provide additional revenue for cash strapped municipalities. They would also be entitled to loans from public institutions thus reducing the hold of moneylenders over them.
An Integrated Supply Chain
The business processes can be identified, streamlined, standardized and automated or semi-automated using IT and sensor networks. Modernization and integration of PDS, midday meal program, vocational training programs under NREGAS, hawkers, and small food outlets using communication technologies would lead to a blockbuster industry serving the poor and creating millions of jobs for not so well educated. NREGAS can be used for training chefs, cooks, hawker owners, PDS employees, school employees, etc. Standardized and automated kitchens and IT enabled and GPS equipped push carts can be developed. The push carts can be built following standardized design and equipped with solar or gas run refrigerators and ovens. The entire process can be monitored, executed and controlled using a call center (See diagram).
The missing link here is sophisticated kitchens with chefs and cooks equipped with automated cookers, refrigerators, and ovens distributed all over the city. The location and capacity of the kitchens can be determined using standard optimization techniques from the demand estimates. Now the supply chain consisting of the PDS and kitchens and the schools participating in the midday meal program needs trained manpower. The vocational training centers can be funded through the NREGAS to train cooks, chefs, sales people, servers and millions of other jobs required for the supply chain operate well, given the perishable nature of the supply chain.
Depending on the demand one can find the optimum number and locations of the kitchens to serve the community. The processes can be streamlined using sensor networks, smart cards, cloud computing, and mobile vans equipped with heaters and refrigerators. One can use modern kitchens such as the Akshaya Patra with the help of NGOs and corporate. This new ways of meeting the food security will get rid of the prevalent corrupt practices and can be made smart and green.
The governance model for this supply-chain can be worked out with an assemblage of NGOs, Corporate, Government and Associations. Making this work is a challenge but the rewards and impact would be tremendous. It would help to give a new direction to the current system which is corrupt and not working. The new system can be designed using new technologies such as smart cards, wireless, smart kitchens technologies, new designs for push carts equipped with refrigerators and ovens, hygiene indicators and several others. In fact a McDonald’s kind of outlets can be opened to avoid traffic issues with push carts.
Given the perishable and hygienic nature of the supply-chain, the products are made in the day and ends by night. This requires careful demand forecasting, routing and rerouting of the supplies and monitoring the anti-social activities. The program needs trained logistics and IT manpower and millions of other jobs. Several product and process innovations are needed and there are opportunities for several small and big private entrepreneurs. This is a unique opportunity for people from all walks of life: Governments, NGOs, Big business houses and small entrepreneurs and micro finance and other FIIs to come together to make this program successful.
The author is Executive Director, Center for Global Logistics and Manufacturing Strategies, Indian School of Business, Hyderabad. He can be contacted at N_Viswanadham@isb.edu.
How can we achieve this? By building on small or large scale farming, low or high input systems? With surging land acquisitions by foreign investors in Africa, finding answers to these questions, a task taken up by the latest OXFAM research report, “Who will feed the world? The production challenge”, becomes an urgent matter.
The report opens with an empirically grounded list of pros and cons for small and large scale farming. Small scale farms have higher levels of productivity in terms of land and capital, have more biodiversity, have lower green house gas emissions and are more resilient to climate change.
Large scale farmers on the other hand, have higher levels of labour productivity, benefit from economies of scale for processing, packaging and marketing and have better access to markets, information and technology. Evidence however shows that investment projects, which have sought to establish large scale farms, have mostly failed and/or have provided no benefits to the local population. Targeting the, mainly access and scale related, constraints faced by small scale farmers, through for example private investments in technology, infrastructure, market access and institutions and by facilitating collaborative arrangements between large scale investors and local small-scale farmers, is more promising.
In the second part of this paper high external input systems (HEI), which refers to industrial agriculture, and low external input systems (LEI), which refers to sustainable production methods, are compared. Given the diversity of contexts and conditions, it is argued that no one-size- fits-all-model is appropriate. Nevertheless, it is argued that adopting LEI farming methods, which can be applied to both small and large scale farming, is crucial in achieving food security and climate change goals and that “successful LEI agriculture practices already in place could provide useful lessons for developing countries and in Africa in particular.” (p.38)
The research report withstands the temptation of declaring one mode of farming superior to the other. Instead the authors argue that food security and environmental policies should co-existence acknowledge and build on their co-existence. A four-pronged approach that addresses three types of farms and their complementarities is proposed.
- Small scale subsistence farmers are chronically poor and risk-averse smallholders and wage labourers. They mainly produce for their own subsistence. Policies should help move them to higher-risk/higher-return activities through insurance programmes, input subsidies and improved regulations to protect wage labourers.
- Small investor farmers have better access to assets, are less restricted by their production environment and produce for the market as well as for their own consumption. Policies should facilitate these farmers to engage more in high value agriculture through the expansion of local and regional markets; they should empower farmers’ organizations, provide training in new technologies and improve access to finance.
- Large scale farmers have access to assets, are situated in a favourable production environment and produce mainly for the market. Policies should ensure that the wealth created by these farms is widely shared. This means ensuring that investors’ proposals are consistent with local visions, that local land rights, particularly those of women, are secured, that land suitable for these farms is mapped together with local actors, that land acquisitions are transparent, that local governments can tax this land, that human rights are respected during land acquisition and that labour standards and sensible environmental safeguards are in place.
- Policies should moreover build on the complementarities between large and small scale farms through for example inclusive out-grower schemes.
While providing a rich empirically grounded overview of small and large scale farms and providing fresh insights into how to go further, the report could have been more comprehensive if pathways towards food security, other than farmer integration into global markets, were considered. It could for example have touched upon the concept of “food sovereignty”, introduced by La Via Campesina, the largest small scale farmer network organization in the world. From this perspective local and regional markets are not a transitional step towards global markets but are a means of achieving regional food security and autonomy.
Similarly, what the report refers to as risk averse behaviour, would not be considered as hampering growth but as a ways of reducing dependency and increasing farmer control over the production process. Whether farmers are always willing to give up this control, even if safety nets such as insurances are in place, is the question.
As a whole, the report makes a strong case to shift attention from the small scale versus large scale debate towards a debate on how co-existence between different forms of agriculture can take shape. This means a shift from a focus on productivity (with often an emphasis on “proving” that one form of agriculture is more productive than the other) towards a focus on collaborative arrangements and “improving”: how can we make collaboration work?
This shift is welcome and timely. There are still some major challenges ahead though. The report states: “The key question is whether large and small farms can build on complementarities instead of one displacing the other.” This is a good starting point for further debate, as well as for building new practical experience in inclusive agricultural development.
Current Issue : VOL 46 No. 25 June 18 – June 24, 2011, EPW
Can we agree in this country on a floor of human dignity below which we will not allow any human being to fall? No child, woman or man in this land will sleep hungry. No person shall be forced to sleep under the open sky. No parent shall send their child out to work instead of to school. And no one shall die because they cannot afford the cost of hospitals and medicine. Can we agree that whatever this costs, we will pay? A comprehensive National Food Security Act will be the first step in ensuring a hunger-free India.
Are we eating food or oil? Why our food production is so dependent on oil and what are links between the ways of production, consumption and climate change? Two interesting articles on this topic
MARGARET MELLON AND DOUG GURIAN-SHERMAN
By 2050, the world will have to feed 9 billion people, adapt to climate change, reduce agricultural pollution, and protect fresh water supplies – all at the same time. Given that formidable challenge, what are the quickest, most cost-effective ways to develop more productive, drought-, flood- and pest-resistant crops?
Some will claim that genetically engineered (GE) crops are the solution. But when compared side-by-side, classical plant breeding bests genetic engineering. Coupled with ecologically based management methods that reduce the environmental harm of crop production, classical breeding could go a long way toward producing the food we will need by mid-century.
Producing better crops faster certainly would help the world feed itself, but genetic engineering has no advantage on that score. Not only can classical breeding programs introduce new varieties about as fast as genetic engineering, technical improvements are making classical practices even faster.
Early steps in the genetic engineering process avoid the multiple rounds of cross-breeding inherent in classical plant breeding by directly inserting engineered genes into the crop. But seed companies then use classical breeding to transfer engineered genes to the crop’s numerous varieties for different markets and climates – and that takes time. And just as in classical breeding, new engineered varieties must be tested in the field for several years to ensure they perform as expected.
Second, GE crops are significantly more expensive to develop. Industry estimates of the cost of developing a single GE trait are in excess of $100 million. By contrast, a classical breeding program for similar traits typically costs about $1 million. Most of the cost differential is attributable to GE crops’ research and development requirements, which include DNA synthesizers and sequencers and other expensive equipment, in addition to classical breeding facilities.
Genetic engineering might be worth the extra cost if classical breeding were unable to impart such desirable traits as drought-, flood- and pest-resistance, and fertilizer efficiency. But in case after case, classical breeding is delivering the goods.
Plant breeders have already produced drought-tolerant varieties of sorghum, corn, rice, cassava and pearl millet – all critical for poor farmers in developing countries. Genetic engineering, meanwhile, has yet to commercialize its first drought-tolerant crop varieties. U.S. biotech companies have been working for years on drought tolerance, but two of the three varieties they plan to introduce within the next two years are the result of classical breeding.
Scientists using classical breeding enhanced with genomic information – a process called marker-assisted breeding – also have produced rice varieties that can tolerate flooding. These varieties, now cultivated in the Philippines, Bangladesh and India, are expected to increase food security for 70 million of the world’s poorest people.
Classical breeders likewise have developed papaya resistant to ringspot virus and corn that can fend off destructive rootworms – traits previously touted as requiring genetic engineering. And in Uganda, scientists have successfully bred sweet potatoes to resist virus diseases, while a multimillion-dollar, multi-year project in Kenya to genetically engineer similar virus resistance failed.
Finally, classical breeding and better farm management are responsible for all the yield increases for soybeans and most of the yield increases for corn in the United States. Recent yield increases are often erroneously attributed to genetic engineering, but data from the U.S. Department of Agriculture and academic scientists show that even during the past 15 years that GE crops have been commercialized, classical breeding and crop management improvements contributed the large majority of the increases, not the newly inserted genes.
Public sector crop breeders have succeeded despite shoestring budgets at public universities, international institutes and the USDA. By contrast, the biotech industry’s lavish budgets have produced commercial crops with only two types of GE traits. More than 60 percent of all GE crops planted worldwide are merely designed to survive being doused with herbicides.
So if the conventional wisdom is wrong, and classical breeding is superior, what does that mean for public policy?
Federal and state governments should dramatically increase their support for tried-and-true, cost-effective classical breeding technology – including better funding for breeding programs at public universities and nonprofit institutes where breeders can work with farmers to develop a wider range of farmer-ready crop varieties. Big biotech companies do not focus on small-acreage crops, which include most fruits and vegetables. Nor do they market many classically improved varieties without including their patented engineered traits, which doesn’t help farmers who don’t want to grow GE seeds or pay the high prices biotech companies charge for them.
We are not suggesting that genetic engineering has no role to play in developing improved crops. But its modest contributions come with an extremely high price tag. If we are going to meet the challenges of feeding a growing population and protecting the environment, the scientific evidence says we place our bets on technology that works – classical breeding.
ABOUT THE WRITERS
Margaret Mellon is the director of the Union of Concerned Scientists’ Food and Environment Program. Doug Gurian-Sherman is a senior scientist in same program. Readers may write to them at: Union of Concerned Scientists, 1825 K Street NW, Suite 800, Washington, D.C. 20006-1232; website: www.ucsusa.org.
This essay is available to McClatchy-Tribune News Service subscribers. McClatchy-Tribune did not subsidize the writing of this column; the opinions are those of the writer and do not necessarily represent the views of McClatchy-Tribune or its editors.
Read more: http://www.bellinghamherald.com/2011/06/20/2067418/the-cost-effective-way-to-feed.html#ixzz1Pw2uZEt2