People's Democracy

Falling Per Capita Availability Of Foodgrains

Utsa Patnaik

THE per capita availability of foodgrains for human consumption has fallen substantially during the last decade of reforms, and the maximum decline has taken place during the last three years, 1998-99 to 2000-01. As may be seen from Table 2 the average annual availability at the start of the reforms process was 173.5 kilograms annually per head, which is 8.5 per cent higher than the availability in the last three years, which is only 160 kg. Moreover, availability was nearly 6 per cent higher even during 1995-6 to 1997-8, compared to the last three years, indicating that most of the decline has taken place during the tenure of the NDA government. This is no accident; foodgrains availability is strongly affected by economic policies, and it is the NDA government's pursuit of income-deflating policies, entailing reduction in mass purchasing power and decline in offtake, which are mainly responsible for the drastic decline in availability in the last three years. In order to establish this we first have to eliminate other possible reasons for decline in availability as explained below.

DIVERSION OF FOOD TO FEED

The title of this week's Notes might surprise some readers. Surely all foodgrains are for human consumption, they might think, so what need is there to use this phrase. It is necessary, however, because many foodgrains double as animal feedgrains. An increasing part of foodgrains are diverted to feed in commercially-operated livestock production enterprises in many developing countries, because the country's own domestic rich demand animal products, and the fact that they concentrate the bulk of income, means that their effective market demand can outweigh the pressing needs of bare minimum direct subsistence consumption of grain on the part of the much more numerous, millions of people whose share of income is small and may be falling. The diversion of food to feed speeds up as inequalities worsen and incomes become more concentrated under reform policies.

Additionally, typically developing countries are required to export feedgrains and concentrates to sustain animal products consumption in advanced countries, as well as export animal products directly. In some countries like Mexico this process of internal increase in inequality plus exports, led to the share of feedgrains in total grains output, rising from about 5 per cent in the sixties to over 30 per cent in the eighties as trade liberalization took place. This was at the expense of falling per capita availability of food for direct consumption by the Mexican poor.

In India too, this process has been going on and has speeded up in the last decade of reforms. Reform policies have increased already high inequalities further and there is a booming demand for animal products on the part of the well-to-do. There is a growing segment of animal products which is based on intensive modern capitalist methods of production using commercial feed. In order to have a correct idea of foodgrains availability, we have to first deduct this component to derive the net output.

There is an estimated projection of commercial feed demand with respect to cereals in India made by three economists under the International Food Policy Research Institute, which we have used to obtain the net output figures in Table1. These figures are correspondingly lower than the net output figures in Table S-26 of the official annual Economic Survey which gives net output and availability every year. Per capita figures are obtained by dividing through by total population. We have used the 2001 Census total population estimate and, comparing it with the 1991 Census total, derived the annual compound growth rate of 1.85 per cent, from which the population of each inter-censal year is calculated.

The official figures of population in the Economic Survey are inaccurate; the same absolute figure of 16 million has been added every year up to 1998 starting with the 1991 Census figure; since the base was expanding but the same absolute number continued to be added, the implicit growth rate of population works out to 1.7 per cent, lower than the actual rate, and the actual effect on per capita output was to that extent understated. Since inconsistency arose, with the demographers predicting that India would cross the one billion mark in early 2000, presumably in order to adjust its figures we find that the Economic Survey suddenly added 23 million to the population in 1998 which was a peak agricultural output year, and then went back to adding 16 million the next year! It is surprising that these ad hoc and inaccurate methods have not attracted comment earlier.

As may be seen from our calculations in Table 1, the per capita net output in the second half of the nineties is lower than in the first half . (Owing to annual fluctuations it is better to take averages of a number of years for purposes of comparison as we have done). However the per capita net output in the last three-year period which is centred on 1999-2000, is only marginally lower ( 1 per cent lower) than in the first period centred on 1990-91, though it is 2.4 per cent lower than during the second period centred on 1993-94. Thus the situation with regard to availability would not have deteriorated too much even taking account of correct population trends and diversion of food to feedgrains, if there were not major additional factors of change in the policies affecting food availability.

ADDITIONAL FACTORS

First let us define foodgrains availability. It is the net output of foodgrains plus net imports and minus net additions to stocks. The logic of this is clear enough: if a part of net output is exported that much less is available for consumption within the country, conversely availability rises above domestic output with imports. Addition to stocks reduces availability while drawing down of stocks adds to availability. During the last three years every year has seen a net export and every year has seen very large and increasing addition to stocks. As a consequence the availability has dropped to hardly 160 kg. annually per capita on average compared to 173.5 kg at the start of the decade, or dropped by about 8 percent. This is a very substantial drop, and as we can see, while up to the period centred on 1996-97 there was already a drop of about 4 kg per head, in the next period the fall has been steeper with an additional drop of as much as 9 kg per head in availability. These averages hide the fact that the drop has been necessarily concentrated on the poorest masses who have suffered a much larger fall in availability than the average. Since the initial level itself was marked by widespread poverty and undernutrition, it is hardly surprising that such a large drop in availability has meant increasing deprivation and manifested itself in starvation among the poorest and worst affected segments of society.

MISMANAGEMENT OF THE FOOD ECONOMY

These additional factors which have been responsible for most of the observed serious fall in foodgrains availability during the last three years have to do with the NDA government's comprehensive mismanagement of the food economy in the name of reforms.

Firstly the rate of growth of public expenditures was brought down substantially and as a proportion of GDP it has been falling, implying strong income-deflation for the masses and hence repression of mass demand . Second, the food subsidy was attempted to be cut by almost doubling issue prices and this naturally has boomeranged, with offtake falling and build-up of stocks which costs more to hold.

Third, the transition to a targeted system has been proved to be a comprehensive failure because the onus of identifying those "below the poverty line" is now on local officials who have not been given any clear guidelines for such identification. Consequently, a large segment of the actually poor are now de facto left out of the distribution network altogether whereas at least they were automatically included under the earlier universal system. Indeed it is very doubtful whether any targeting system can work, for the most sophisticated economists will find it impossible to identify on the ground, all those who are "below the poverty line". It is high time that it is admitted that targeting has been a monumental mistake, and the universal coverage of PDS is restored. This would immediately lower stocks and raise availability, while longer-term measures must address the problem of increasing purchasing power with the poor.

Table 1

Adjusted Net Output Per Capita Of Cereals And Foodgrains

( Annual Average For Three-Year Periods)

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Note: Feed demand projections by Bhalla, Hazell and Kerr, International Food Policy Research Institute 1999, used for calculating first column. Population figures derived by taking annual growth rate 1.85 per cent during 1991 to 2001.

Table 2

Availability Of Cereals And Foodgrains Per Capita,

1989-90 To 2000-01

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Note: Availability is Net Output plus net Imports minus net addition to Stocks. For the year 2000-01 it is assumed that net imports are the same as in the previous year and net addition to stocks during January to July 2001 are in the same proportion as during the corresponding period in the previous year.