To initiate the discussion I opine that food inflation in India is largely due to supply constraints and steps to curtail demand have not resulted in the desired outcome. Please provide your opinion.

You have narrated the current status of food inflation. It is quite difficult to lower current rate of inflation as the Deputy Governor of RBI told recently. The fuel price is amjor hurdle. Government should alter/improve the food policy.There are three aspects of food security: availability, access and utilization of food. These needs to be improved urgently. Food crop productivity is also an important point. As such, food inflation is inter connected and depends upon political decisions and social environment.

1. International food prices have increased in real terms since 2003, and had spikes in 2008 and 2011. They will continue to be high. In the long term, real food prices are NOT particularly high: the long term trend is DECREASING, although there was a real increase in recent years. Food prices were higher in the 1960s, and much higher in the mid 1970s, when people's real incomes were lower than now. Trends can be found in Timmer, C. Peter, 2009. Did speculation affect world rice prices? FAO/ESA Working Paper No. 09-07. ftp://ftp.fao.org/docrep/fao/011/ak232e/ak232e00.pdf.

2. Countries that attempted to restrict exports or intervene roughshod in the market (esp. through price controls) during the price surges in recent years have resulted in food scarcity, smaller areas planted and increased food imports at the worst possible time.

3. Best short-term policies are apparently those aiming at improving the income and access to food of the most vulnerable, such as conditional and unconditional cash transfers, and food assistance through schools and health centres. But this was also true before the price surges.

4. Medium and long term policies should aim at rapidly improving productivity and modernization in agriculture, and introducing all reforms necessary to attract investment in all sectors to achieve faster increase in national income and employment (in the case of India, such reforms have been so far quite incomplete).

Dear Dr Gahukar,

Thanks for your balanced comments.

I'm sure that Indian authorities are the best to resolve the case ( they know the problems and they know the economics theories better thn everybody) .But I put some question more. Does the food prices are faire? Does the weather changes? Does the migration to the city is reducing the supply and increasing the demand that now it is revealed (instead of self consumption)? Does the reference products are now been exported to countries with stronger currencies? It is really bad that prices rising if the farmers are the majority of the people?

Dear Jose,

Thanks for your thought provoking questions.

For non-Indians who don't know details of Indian agriculture; Indian agriculture is suffering from shortage of quality cultiable land along with policy negligence (e.g. investments in creating addtional irrigation facilities), uneconomical land holdings, deteriorating soil carbon levels, shortage of cheap labour and fast enhancement in the prices of agri-inputs in the recent years.

Regards.

Dear Dr Maletta,

Thanks for your expert comments. Your comments explain the global phenomenon of prices of food articles. Your suggestions are valuable. I personally find that investment in agricultural sector targetting at enhancing productivity may be very important in India as we have limited cultiable land.

Best regards.

Limited cultivatable land is no excuse. Israel is in the desert and food production is what it supposed to be. Government policies and investment in agriculture is very low in most of the developing countries. The knowledge and field test results transfer to farm workers is lacking or non -existent. Research is what most of these countries do not want to pay for including India because it is expensive and time consuming.

The land policies in India need to be reviewed by the government. Access to capital by the small farmer who can actually make a difference in food production is quite limited. Extension services is limited and inefficient.

if all theses issues are not addressed , food production in India will improve in the minimum.

Jose Fernandes asks: "Does the migration to the city is reducing the supply and increasing the demand that now it is revealed (instead of self consumption)"

1. Migration to the cities has never historically lowered food production, ever since the Neolithic revolution. It normally replaces traditional low-productivity agriculture by more efficient producers, in the same place or elsewhere. The participation of modern agriculture in total food production increases, as it has been increasing in India.

2. Monetary demand for food would logically increase as more people are urban and must acquire food in the market. This normally entails an improvement in the food situation. On-farm consumption does not normally cover food needs, as it is concentrated on one or a few staple products; even in India most subsistence farmers acquire various foodstuffs in the market, produced by commercial farmers or by other smallholders, and for that purpose they obtain monetary income in some way or another. In fact, those that rely on on-farm consumption for a larger share of their food consumption are normally the worst nourished of all, because many of them eat an insufficient and unbalanced diet, and lack access to other kinds of food. People try to escape such situation, as a matter of fact, by accessing the markets: first the labor market (including the market for the services or products of self-employed labor), then the food market as customers, then other markets as customers for other goods and services. Accessing markets enables higher incomes, which enables households to access better nutrition and better conditions of life generally.

Increased income, growing middle class, helped bring up new diets like dairy and meat into middle classes in new places around the world. Livestock will demand grains to feed. These are new changes to demand.

Dear Herman Oladimeji,

I agree that every country has to develop amongst varied constraints.

Dear Mr. Sahin

Your comments are very informative. About 5 years back it was said that crude oil above $70/barrel is supposed to enhance food prices globally. Do you have some estimates at current situation?

I think Indian government should implement food security bill effectively without affecting of minimum support prices for the farmers

Dear Mr Jagtap,

The articles largely contributing towards food inflation are not covered under support price mechanism and food security bil/ program is expected to cover only limited number of cereals and pulses which are already covered under support prices.

The most sustainable way to cut food inflation is to increase production while at the same time ensuring that production costs are kept low. I am convinced such programmes like farm input subsidy are implemented farmers will be able to produce more at a lower cost thus reducing the ultimate cost of food. In addition the whole value chain has to be carefully analysed in order to address the major production cost drive along the value chain.

Dear Stanford,

Your solution is ideal one. Sometimes we do work under situations which are far from ideal.

Prices are a reflection of demand and supply. Keeping down prices is battling the sympton, not tackling the root cause. I agree with previous contributors that increased demand from wealthier consumers has added to the price pressure. Good news in fact, we should be happier with wealthier consumers in India!

India has imposed an export ban for rice and wheat, which was succesful in keeping out peaks in global prices, but cannot prevent prices from rising. India's minimum price support policy has led to huge stocks, that are now partly rotting away. India's has an active price and food policy, but this comes at very high costs.

My recommendation as an economist is to invest in agriculture, let markets work more freely, and support the poorest consumers.

Dear Dr/ Ms Meijerink,

It is heartening to have an opinion from a worker at Wageningen University. You have good understanding of Indian food policy. I personally agree that we need to go far structural measures through investments in agriculture.

Regards

Dear contributors,

MAY I CONCLUDE from the discussion that India needs to pay more attention to following point (No. 1)? Please review the conclusions at point No. 2 and 3.

1. Increase investments in agriculture, particularly, to enhance area under irrigation using traditional irrigation methods where river water can be transported. In areas where rain water harvesting has to be done or ground water has to be expoited the use of micro irrigation methods such as drip irrigation and sprinkler irrigation need to be further promoted. At present various state goverments in India are providing subsidies (30 to 50% of capital investment) and arranging loans from financial institutions for rest of the amount. At present farmers have just to bear 5-10% upfront cost of micro-irrigation instalation.

2. Indian goverment is handling a large scale public distribution system for providing food grains at controlled prices for the poor consumers. These supplies are met from the procurements done throught the minimum support price policy/ mechanism. But food inflation is largely due to fruits, vegetables, milk and food articles not covered under minimum support price procurements.

3. India has about 60 million (conservative estimate) farmers who are operating on un-economical small sized holdings. These farm families need government support to sustain not only agriculture but to some extent their livelihood. At present government is providing relief to such families through subsided inputs such as fertilizers. Subsidized inputs have been instrumental for checking food inflation in the past. Goverment do support farmers in creating farm capital assets through various schemes. However, part time agriculture and cultivation on leased in lands are principal impediments towards full exploitation of such schemes.

Please provide input for further refinement of this conclusion.

Enhancing and modernizing food production is of course a good thing. However, In the short term, policies enhancing production will not solve problems caused by rising international food prices.

But there are things to do in the short run:

1. Higher prices are good for farmers, assuming they actually get the higher prices. Any attempt by the government to prevent farmers to get market prices for their produce would discourage production and modernization of agriculture. And in the stead of better prices, good policies to encourage investment, and assistance for marketing.

2. Higher costs of food imports (and probably increasing volume of imports for the time being) should be made up by more exports to the world, from all Indian industries (including agriculture when its products are competitive abroad). Each Tata car exported buys a lot of food abroad, and so does any other competitive export. A more competitive economy will produce and export more. This implies modernizing not only the relevant industry involved in possible exports, but the whole network of activities around it, including infrastructure (roads,railroads, electricity, ports), more agile government administration services (the "license Raj" is still alive), and so on.

Dear Dr Maletta,

Your reply was totally "Indianized" as if you are working in India itself. Being an agriculture scientist, I do agree that farmers should get benefitted from the higher prices. We would discuss in some other discussion how much percentage of this price rise is actually going to the farmers and what is taken away by middlemen and industry. Somehow I believe that tackling inflation (food and non-food) would not be an easy task in the upward spiral of WPI due to the effects of develolpment and government's enhanced emphasis on raising taxes on more and more goods and services.

Thanks for your interest in the topic and prompt reply.

Thanks, Rajesh.

I'd like to suggest that you may get a wider spectrum of answers in other ResearchGate groups. This one is on agricultural and food SAFETY, a topic not touched by your inquiry. You should try and discuss it in groups concentrating on agricultural policy, food trade, or food security.

On the other hand, this is supposedly a RESEARCH site, but I notice that many people, like you, do not pose research questions, and do not seem to be handling a research project. I could imagine several possible projects to investigate these matters in India, at various levels (transmission of international prices into the domestic economy, trade policies and policy responses, design and impact of policies to support consumers facing higher prices, impact on household food security for vulnerable groups (urban or rural), and so on. Since the 2007/08 spike in world food prices there has been a large number of research programs around the world to look into these and other problems.

Dear Dr Maletta,

Thank you very much for your guidance. I will try some other groups.

Regards.

I believe if the Government identifies with the farmers, listen to their plight and offer incentives to help boost their production will begin the journey of taming the inflation.

Indian govt should immediately stop the land encroachment by Land mafias for real estate. Conversion of fertile soil/ land for residential purpose is not good. Neither for India nor for world. Brokers and speculators are making money from sale of huge land. Recently Orissa is also hit by same story of conversion of agricultural land into societies. Really Govt should not ignore agriculture as this present story will make India a dependent country on others for its food requirement. If a country like India face food crisis then food inflation is bound to go up.

Regards,

Anoop

Dear Funso Omojowo:

I do not understand your idea that there is a lack of "incentives".

It may be true, especially for small subsistence producers (they are a dwindling group in many countries, in absolute or relative terms, and their share of total agricultural production is rapidly declining). But, in fact, higher food prices are actually incentives for farmers to produce more. I mean, for farmers that are interested in the price of agricultural products because they are producers and sellers of such products.

If prices were too low, as they were some years ago, we would be lamenting that there is no incentive to produce more food, and claiming that farmers are being led out of their lands because of the low profitability of growing crops (an "urban bias" in agricultural price policies was often detected in the developing world in the 1980s and 1990s, leading to low food prices and impoverished farmers).

Should we advocate low prices for agricultural products, to the benefit of consumers, and to the detriment of farmers, as in the "urban biased" policies of decades past? Shouldn't we reckon with the fact that prices are determined by (worldwide) supply and demand? And reckon also with the factors that drive (worldwide) supply and demand? (They are, mostly, economic development driving demand, and technological progress and capital investment driving supply; extent of land cropped is not relevant: for two decades now, agricultural land has been stagnant or declining worldwide and in most countries, while agricultural production keeps increasing).

The way to take advantage of higher prices is to invest more capital and transform production technology, which would result in more production. Prices would remain comparatively high as worldwide demand for food is firmly increasing. That is what is actually happening across the world.

I think we are not always thinking clearly on these matters.

Enhancing the food supply by reducing the loss at storage points, reducing post-harvest losses coupled with proper PDS will play a major role in taming the food inflation