Resources Research

Making local sense of food, urban growth, population and energy

Posts Tagged ‘household

Debt and kisan households

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rg_cultivator_hhs_debt_201612For the 21 larger states, this is the picture of how much average debt a cultivator household has incurred, and how many amongst cultivator households are in debt.

The data I have used for this chart are taken from the report, ‘Household Indebtedness in India’, which is based on the 70th Round of the National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation, Government of India, and collected during January to December 2013.

The states are plotted on average debt of such households, in lakh rupees on the left scale, and the proportion of such households, as a percentage of all such households, on the horizontal scale. The size of the circles are relative and based on the amount of average debt.

The average amount of debt per cultivator household seen in this chart is for most of the 21 larger states, lower than the overall rural household average debt of Rs 1,03,457. However the cultivator household is one of six types of rural household (the categories are: self-employed in agriculture, self-employed in non-agriculture, regular wage/salary earning, casual labour in agriculture, casual labour in non-agriculture, others). About 31.4% of all rural households are in debt.

The chart shows that cultivator households in Punjab and Kerala carry the highest amounts of debt, and that a highest percentage of cultivator households carrying debt are in Telengana and Andhra Pradesh. There are two distinct groups. One group of nine states occupies the right and most of the vertical area of the chart. The second group is of 12 states clustered towards the lower left corner of the chart panel.

This difference describes regional variation. In the first group are all the southern states. In the second are all the eastern and central states. Madhya Pradesh, Gujarat, Uttar Pradesh and Uttarakhand cultivator households exhibit the greatest similarity, with average debt of under Rs 40,000 and with less than 35% of cultivator households carrying debt.

Bihar, West Bengal and Odisha are likewise similar, their average debt being less than Rs 20,000. Assam, Jammu and Kashmir, Chhattisgarh and Jharkhand cultivator households bear the lowest average debt and less than one in five of such households is in debt.

These are the broad brush strokes of debt amongst cultivator households in the 21 major states painted by the NSSO’s ‘Household Indebtedness in India’ report. A more detailed examination of such debt, and also the debt of the other kinds of rural households, will give us a deeper understanding of the subject.

Written by makanaka

December 16, 2016 at 09:24

The uses of a Nobel prize in economics

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The 2015 Nobel prize for economics has been awarded to Angus Deaton, who is based in the Princeton University, in USA. Deaton’s work has been on poverty and his contemporaries in the field are Amartya Sen and Jean Dreze; all three have focused on poverty, malnutrition, consumption by households and how to measure these.

Herewith my view which I set out in a series of 37 tweets:

1 – like every single Nobel award category, the one for economics is calculated recognition of the use of Western ideas.
2 – There is no Nobel in economics for, say, Pacific islander economics or nomadic/pastoral economics. The boundary is clear.
3 – There is the additional problem, and it is a weighty one, of what is being recognised: a science or a thought experiment?
4 – Western economics can only ever and at best pretend to be a science (ignore the silly equations). There’s more.
5 – It has to do with food and food consumption choices. Do remember that. For the last 5-6 years the food MNCs and their..
6 – collaborators in Bharat have moved from hunger to nutrition. Remember that we grow enough food for all our households..
7 – and there are in 2016 about 175 million rural and 83 million urban households. So, food is there but choice is not yet..
8 – as clear as the marketeers and retailers pretend. No one truly knows, but economists claim to, and this one does.
9 – What then follows is the academic deification of the thought experiment, done carefully over a decade. The defenders..
10 – of the postulations of Deaton, Dreze, Sen et al turn this into a handmaiden of poverty study. And India is poor..
11 – (but Bharat is not). So we now have consumer choice, poverty, malnutrition and a unified theory to bridge the mess..
12 – for such a third world mess can only find salvation through the scientific ministrations of Western economics. The stage
13 – was thus set some years ago, when the Congress/UPA strove abundantly to craft a halo for this thought experiment..
14 – and in the process, all other explanations concerning food and the manner of its many uses were banished from both..
15 – policy and the academic trend of the day. But Deaton’s experiment is only as good as his references, which aren’t..
16 – for the references, as any kirana shop owner and any mandi bania knows, are more unreliable than reliable. What our..
17 – primary crop quantities are have only ever been a best estimate subject to abundant caution and local interpretation..
18 – for a thought experiment which seeks to unify food, malnutrition, poverty and ‘development’ this one has clay feet..
19 – which nevertheless is good enough for the lords of food crop and seed of the world, for it takes only the shimmer of..
20 – academic respectability such as that accumulated by Deaton, Dreze and Sen to turn postulate into programme. What we..
21 – will now see is what has been seen in medicine (and therefore public health) and in ‘peace’ (hence geopolitics) because..
22 – of the benediction the Nobel aura confers. This work will be press-ganged into the service of the new nutritionists..
23 – whose numbers are growing more rapidly than, a generation ago, did the numbers of the poverty experts. It is no longer..
24 – food and hunger and malnutrition but consumer choice, nutrition and the illusions of welfare. This is the masala mix..
25 – seized upon by those who direct the Nobel committee as they seek to control our 105 million tons of rice, 95 of wheat..
26 – our 43 million tons of coarse cereals, 20 of pulses, 170 of vegetables and 85 of fruit and turn this primary wealth..
27 – of our Bharat into a finance-capital manifesto outfitted with Nobel armoury that is intended to strip choice (not to..
28 – support it) from our kisans who labour on the 138 million farm holdings of our country (85% of them small and marginal)..
29 – and from our 258 million households (as they will be next year) towards whose thalis is destined the biofortified and..
30 – genetically modified menace of hyper-processed primary crop that is digitally retailed and cunningly marketed. This..
31 – is the deft and cunning manoeuvring that has picked on the microeconomist of post-poverty food study aka nutrition..
32 – as being deserving of Nobel recognition (when five years ago the Nobel family dissociated itself from this category).
33 – And so the coast has been duly cleared. The troublesome detritus of poverty macro-economics has been replaced by the..
34 – big data-friendliness of a rickety thought experiment which lends itself admirably to a high-fashion ‘development’..
35 – industry that basks in ‘sustainable’ hues and reflects the technology-finance tendencies of the SDGs. Food is no longer..
36 – in vogue but the atomisation of community crop and diet choice most certainly is. The pirate pennant of Western macro-
37 – economics is all aflutter again, thanks to the Nobel wind of 2015, but I will not allow it to fly over my Bharat. Never.

The slowing motion of India’s quick mobility

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RG_vehicles_households_20_years

This is a chart whose lines drift downwards as time goes by, quite the opposite of all the usual depictions of India’s rising GDP, rising income, rising purchasing power, and so on. But in the two dropping lines is the proof that India’s households are tying themselves up in stifling vehicular knots.

This chart shows what we call two-wheelers (scooters and motor-cycles) and cars (four-wheeled passenger vehicles, formally). It also shows number of households and a span of 20 years. The two lines show the number of households to a car (the orange line) and the number of households to a two-wheeler (the blue line). As there are many more two-wheelers than there are cars, they are on different scales, so the left axis is for the two-wheelers and the right for cars.

vehicles_2012I have taken the data from two sources. One is the Census of India, for the census years 2011, 2001 and 1991. The other is the Road Transport Yearbook (2011-12) issued by the Transport Research Wing, Ministry Of Road Transport and Highways, Government Of India. The yearbook includes a table with the total number of registered vehicles (in different categories of vehicle – two-wheelers, cars, buses, goods vehicles, others) for every year. The number of households is from the census years, with simple decadal growth applied annually between census years. I have not yet found the detailed data that will let me refine this finding between urban and rural populations.

This is what the chart says: in 1992, there were 10 households to a two-wheeler and 48.7 households to a car. Ten years later in 2002 there were 4.8 households to a two-wheeler and 26.2 households to a car. Another ten years later in 2012 there were 2.2 households to a two-wheeler and 11.8 households to a car.

vehicles_2005The implications are several and almost all of them are an alarm signal. Especially for urban areas – where most of the buying of vehicles for households has taken place – the physical space available for the movement of people and goods has increased only marginally, but the number of motorised contrivances (cars, motor-cycles, scooters and more recently stupidly large SUVs and stupidly large and expensive luxury cars) has increased quickly. Naturally this ‘growth’ of wheeled metal has choked our city wards.

But there are other implications. One is the very idea of individual mobility in and through a town or city. The connection – foolishly maintained by one government after another, and foolishly defended by macro-economists and industrial planners – between the automobile industry and gross domestic product (GDP) has crippled common sense.

vehicles_1995More motorised conveyance per household also means more fuel demanded per household, and more fuel (and money) wasted because households are taught (by the auto industry with the encouragement of the foolish cohorts I mentioned earlier) that they are entitled to wasteful personal mobility. Over 20 years, the number of cars per household has increased 4.1 times but the number of buses per household has increased only 2.8 times. That is embarrassing proof of our un-ecological and climate unfriendly new habits.

In 2012, there were 1.67 million buses (of all kinds and configurations), there were 7.65 million goods vehicles (to move all those appliances demanded by households, food crops, fertiliser, retail food, etc), 13.16 million other vehicles (which as the ministry says “include tractors trailers, three-wheelers (passenger vehicles)/LMV and other miscellaneous vehicles which are not classified separately”), 21.56 million cars (including jeeps and taxis), and 115.41 million two-wheelers. There are far too many of some kinds and not enough of others. More than 20 years after ‘liberalisation’ began, India’s household mobility is crawling along in first gear for having made too many wrong choices.

Six out of 10 are farm households in rural India

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An agricultural year begins at the beginning of July and ends on the last day of June the following year. What we know now, thanks to the data provided by the Situation Assessment Survey of Agricultural Households, carried out by the National Sample Survey Office (NSSO) of the Ministry of Statistics and Programme Implementation (MoSPI) is that in the agricultural year 2012-13, rural India had an estimated total of 90.2 million agricultural households.

RG_NSSO_agri_households_201412_1These agricultural households were about 57.8% of the total estimated rural households. Uttar Pradesh, with an estimate of 18.05 million agricultural households, accounted for about 20% of all agricultural households in the country. Among the major states, Rajasthan had the highest percentage of agricultural households (78.4%) among its rural households followed by Uttar Pradesh (74.8%) and Madhya Pradesh (70.8%). Kerala had the least percentage share of agricultural households (27.3%) in its rural households preceded by other southern states like Tamil Nadu (34.7%) and Andhra Pradesh (41.5%).

The NSSO’s previous such survey (the ‘Situation Assessment Survey of Farmers’) was conducted in 2003. The differences between the two, a decade apart, have been explained by the NSSO. First, such surveys aim to gather an assessment of the situation of our farmers and farming households.

RG_NSSO_agri_households_201412_2This assessment determines a standard of living as measured by consumer expenditure, income and productive assets, the indebtedness of farmers and farming households, farming practices and preferences, what resources are available to them, their awareness of technological developments and access to such technologies. The survey for the 2012-13 agricultural year also collected information on crop loss, crop insurance and awareness about the Minimum Support Price (MSP).

Second, the big difference between the two surveys is that the new survey has dropped the criterion of land possession for considering a household agricultural. “Recognising the fact that significant agricultural activity can be conducted without possessing any land, the definition of ‘farmer’ and ‘farmer household’ followed in NSS 59th Round was critically reviewed and the land possession as an eligibility criterion was dispensed with, replacing it with the concept of ‘agricultural production unit’ as one which produces field crops, horticultural crops, livestock and the products of any of the other specified agricultural activities,” is how the new survey (called the 70th Round) has explained its decision.

RG_NSSO_agri_households_201412_3I find this puzzling and an aspect that needs careful probing. We know, from a close scrutiny of the Census 2011 data at the district level, that the number of people and households engaged in cultivation and farming has dropped when compared to the last census, in 2001, and the previous census, in 1991 (as a percentage of the rural working population but in several cases as absolute population numbers too).

What reason could the NSSO have had to amend the definition it used ten years earlier? “With a view to keep the large number of households with insignificant agricultural activities out of survey coverage, it was decided to have a minimum value of agricultural produce for a household to qualify as an ‘agricultural production unit’,” the NSSO has explained. I cannot follow this reasoning. Are urban households which make negligible contributions to the local gross domestic product to be kept out of surveys that ought to assess their conditions – such as those with pensioners and informally employed people who get by on job work?

RG_NSSO_agri_households_201412_4If this is the basis for exclusion, what qualifies a household for inclusion in the survey? The NSSO has considered average Monthly Household Consumer Expenditure (MHCE) for “home grown consumption of some specific items” and adopted a cut-off value amount of 3,000 rupees worth of annual agricultural produce. The activities which provided such value are given as “cultivation of field crops, horticultural crops, fodder crops, plantation, animal husbandry, poultry, fishery, piggery, bee-keeping, vermiculture, sericulture etc” with such a household “having at least one member self-employed in agriculture either in the principal status or in subsidiary status during last 365 days”.

This cut-off value amount needs investigation. So does the idea of an ‘agricultural production unit’. And the NSSO for this survey has also excluded households which are entirely agricultural labour households, those households receiving income entirely from coastal fishing, as also the activity of “rural artisans and agricultural services”. Nonetheless, these data are important and useful for our understanding of the changes that have taken place in the food and agriculture domain.

Written by makanaka

December 22, 2014 at 16:16

Visiting our total household food budget

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RG_pvt_final_cons_exp

Twice as much over the 11 years until 2009-10, and three times as much over the 10 years until 2012-13. That has been the increase in rupee expenditure for this basket of foods.

The data is from the private final consumption series, calculated by the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation (MoSPI). The totals (left scale of the chart) is in thousand crore rupees.

In this chart I have shown the expenditure (in current rupees) for: Cereals and Bread, Pulses, Sugar and Gur, Oils and Oilseeds, Fruits and Vegetables, Milk and Milk Products, and Meat Egg and Fish. These totals also indicate the size in rupees of the food industry – but do not include the processed and packaged food industry.

The rise in consumption expenditure expressed in rupees is a money measure alone, and not a quantity or volume measure. We can see that the portion of milk and milk products in this group has gone up from just over 18% to 25% over 14 years, and the portion of meat, eggs and fish has gone up from just under 9% to 12.5% over the same period.

From 2006 the rising trend of expenditure on fruits and vegetables became steeper than the rising trend of cereals and bread. In 2005-06 the portion spent on fruit and vegetables in this group was just over 26% and that has risen slightly to 28% in 2012-13. In contrast for cereals and bread, the portion of 27.5% in 2005-06 has dropped to just over 21% in 2012-13.

We, the rather wealthy, people

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Are those standing for election to the Lok Sabha capable of relating to the needs of those they claim to represent? Many measures exist for testing that claim, and the most base amongst them concerns income and assets.

If your candidates are very much richer than you are, once elected how much of their energies will they devote to enriching themselves (and their sponsors) rather than attending to your civic needs?

The area of the circles represents assets in rupees for 2014. The twin circles for rural and urban households' assets is based on NSSO studies, with upper and lower circles being estimates of household assets using higher and lower growth rates to provide comparisons with candidates' declarations for Lok Sabha 2014.

The area of the circles represents candidates’ assets in rupees for 2014. The twin circles for rural and urban households’ assets is based on NSSO studies, with upper and lower circles being estimates of household assets using higher and lower growth rates to provide comparisons with candidates’ declarations for Lok Sabha 2014.

This chart shows why this should be a matter of democratic procedure. The data has been taken from the excellent work done by the Association for Democratic Reform, which runs the ‘My neta’ website, which has tabulated the statutory declarations of the candidates. Among the set of declarations is the candidates’ assets.

To show the relation between what the candidates to Lok Sabha 16 have declared and the assets of those they say they represent, I have included national averages, rural and urban, for household assets.

There are 12 assets averages to be seen. The candidates (more than 3,200) have been divided into deciles (or tenths) ranked by their declarations. Thus the eighth decile would have candidates in the 80% to 70% positions ranked on rupee value of assets, and the fifth decile would have candidates in the 50% to 40% positions, and so on.

RG_Lok_Sabha_2014_assets_7In between are the average household assets for rural and urban households in India. These are taken from studies based on the National Sample Survey Office (NSSO). The chart displays these averages as a pair (lighter and darker coloured circles) to indicate a range. We find the assets of the rural household are between the eighth and seventh deciles of what candidates have declared, and the assets of the urban household are between the seventh and sixth deciles of what candidates have declared.

This chart tells us very quickly that from the sixth decile of candidates onwards, their worth is already at least twice that of those they claim to represent. At the fourth decile, their worth is a stratospheric eight times that of the average rural household. At the second decile, their worth is an astounding 20 times that of the urban household. At the first decile, the equation is meaningless.

This is not based on an exact mathematics. The asset averages for the rural and urban households I have used are broad estimates, and are no doubt skewed by the richer rural and urban deciles and quintiles themselves. But the relative differences are seen starkly, and help indicate why the inequality between Member of Parliament and electors we saw in 2009 has deepened in 2014.

The hunger that Bharat inherited from two lean decades

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What did the ‘liberalisation’ of the Indian economy bring? What has 20 years of the ‘India growth story’, which is sold around the world, brought its labour and workers? How have households rural and urban fared at balancing their budgets and meeting their needs? Poorly, for it has been a struggle that continues.

RG_nutrition_3An analysis in the journal of the National Sample Survey Office, Sarvekshana, has compiled estimates of average calorie intake for the country and the major states from six quinquennial (every five years) surveys of consumer expenditure. These surveys show a decline in average calorie intake between 1972-73 and 2009-10. The overall decline is substantially greater for rural than for urban India, and appears to have been sharper in the period since 1993-94 (as measured by the 50th round of NSSO surveys), especially in the urban sector.

The analysis on ‘Trends in Nutritional Intake in India’ has shown that the proportion of households with calorie intake below the level of 2700 kcal per consumer unit per day (this is a measure different from per capita) has grown steadily since 1993-94: from under 52% in rural India to nearly 62%, and from 57% in urban India to about 63%.

This is no surprise to the large proportion of our population who have borne the merciless brunt of food inflation for close to a generation. Between 2004 and 2013, food prices in general rose by 157%. Cereals, the staple diet of the poorest, were high on the scale, with rice at 137% and wheat at 117%. Pulses – the sole source of protein for most – had risen by 123%. Potato was even higher at 185%. As for vegetables, they have long priced themselves out of the diet of the poor, by rising up to 350%. This crippling rise continued while the government (UPA-I and UPA-II) loudly claimed every few months it would bring prices down.

RG_nutrition_1That is why the share of cereals in total calorie intake has declined since 1993-94 by nearly 7 percentage points for rural India and by about 3.5 percentage points for urban India: the share of oils and fats has on the other hand risen by 3 percentage points for both. The share of milk and milk products has grown by about 1.4 percentage points in urban India but by only 0.6 percentage points in rural India.

Moreover, at the all-India level protein intake has fallen from 60.2 grams to 55 grams per person per day in rural India and from 57.2 grams to 53.5 grams in urban India over the period 1993-94 to 2009-10. The decline has taken place in most major states but has been sharpest in rural areas of Rajasthan, Haryana, Uttar Pradesh and Punjab – where intake has fallen by 9-12 grams.

As the major trade unions have been raising an alarm about at least every quarter, the price of rice for BPL (below poverty line) card holders increased from Rs 350 per quintal in 1997-98 to Rs 415 per quintal in 2007-08. In the same period the APL (above poverty line) price was increased from Rs 550 per quintal to Rs 755. For wheat, the price for BPL card holders was increased from Rs 250 per quintal to Rs 415 and for APL card holders from Rs 450 to Rs 610 in a period of 10 years.

RG_nutrition_2In such a situation, fats ought not to be a contributor to calories more than it was 30 years ago. But the analysis tells us otherwise – for India has become the favoured importer of palm oil from Malaysia and Indonesia. Every major state shows an increase in its population’s fat intake. At the all-India level the increase has been from 31.4 grams per person per day in 1993-94 for the rural population to 38.3 grams in 2009-10 – a rise of 7 grams per day over the 16-year period, and from 42 grams to 47.9 grams per day for the urban population, a rise of 6 grams per day over the same period. Between 1993-94 and 2009-10, the contribution of cereals to protein intake has fallen by about 4.5 percentage points in rural India and by 3 percentage points in urban India, while the contribution of pulses has fallen slightly in both rural and urban India.

This analysis from the NSSO must be viewed against the growing trend in India of the corporatisation of agriculture and the industrialisation of the food system. New market monopolies whose reach is far greater than could be conceived in 1993-94 are now at work, aided by speculative financial predators. There is in response a need for strengthening social ownership of the cultivation of food staples, of the organic agriculture movement, of shortening the distances that food travels, of localisation of the Bharatiya food web.

The enormous world of household small food purchases

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What households in India spent, in crore rupees and all put together, on major food categories in 2011-12.

What households in India spent, in crore rupees and all put together, on major food categories in 2011-12.

How much do Indian households, all of them put together, spend on fruit and vegetables in a year? How much do they spend on pulses, or footwear, or transport? The Private Final Consumption Expenditure (PFCE) tells us, and these enormous figures are calculated by the Central Statistics Office (CSO), of the Ministry of Statistics and Programme Implementation (MoSPI).

The Central Statistics Office has now released the ‘First Revised estimates of National Income, Consumption Expenditure, Saving and Capital Formation’ for the financial year 2011-12. Here, in the biggest of big numbers for an ocean of motley small purchases, is what we now know: that Private Final Consumption Expenditure (or PFCE, to add to the army of acronyms) at current prices is estimated at INR 5,056,219 crore in 2011-12 as against INR`4,349,889 crore in 2010-11. In constant (2004-05) prices, the PFCE is estimated at INR 3,334,900 crore in 2011-12 as against INR 3,088,880 crore in 2010-11.

(How to deal with big numbers? An Indian crore is ten million. so 990,511 crore in the paragraph below is 9.905 trillion!)

It is the food category of the PFCE that I am interested in and, at current prices, consumption expenditure by India’s households on food has risen from NR 990,511 crore (about USD 182 billion) in 2008-09 to INR 1,472,086 crore (about USD 271 billion) in 2011-12 (in current prices, the corresponding figures in constant 2004-05 prices are INR 929,881 crore and INR 1,046,228 crore).

There is an earlier year given, 2004-05, which is the year to which the constant price has been based, and it becomes useful to use this to estimate the rise (in a straight line for convenience) for the intervening years to provide a sense of what components of the food main category are rising more quickly than others.

Under food, the component with the highest PFCE is ‘fruits and vegetables’ with INR 372,727 crore – see the pie chart. This is followed by ‘milk and milk products’ with INR 332,728 crore and by ‘cereals and bread’ with INR 323,592 crore.

Using the set of current prices, and examining the increases in PFCE for two periods – 2008-09 to 2011-12, and 2004-05 to 2011-12 – we can see which food components have attracted the greatest expenditure. These increases (as they are calculated using current prices) are likely to be as much a tale of inflation in the price of that food component as they are to be due to the changing dietary patterns in urban and rural India.

Hence we see the expenditure on ‘potato and other tubers’ having risen 78% in 2011-12 from 2008-09, and this is the steepest food component rise (this is a puzzle). Close behind is the 76% increase in ‘hotel and restaurants’ which undoubtedly reflects the growing new tendency (especially amongst youth who have migrated to cities to take up service sector jobs) to eat their meals out. Expenditure on ‘tobacco and its products’ from 2008-09 to 2011-12 has risen 61% while on ‘milk and milk products’ it has risen 59% over the same period, and this gives a number to the explosion of dairy products in the last five years.

How food took 57% of the rural Indian’s budget

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The National Sample Survey Office of India conducts country-wide household consumer expenditure surveys at regular intervals. These surveys are conducted through interviews of a representative sample of households selected randomly through a scientific design and cover almost the entire geographical area of India.

Monthly per capita expenditure in India's states for the rural population. Source: NSSO, Report No.538

The household consumer expenditure survey is generally conducted as one of the main subjects of the NSS survey at intervals of five years (called quinquennial intervals). This  provides a series of expenditure surveys. The 66th round survey (July 2009 to June 2010) was the eighth such survey of this quinquennial series, the seventh having been conducted during the 61st round (July 2004 to June 2005).

The NSS consumer expenditure survey aims at generating estimates of average household monthly per capita consumer expenditure (MPCE), its distribution over households and persons, and its break-up by commodity group, separately for the rural and urban sectors of the country, for India’s states and union territories (there are 35), and for different socio-economic groups.

The NSS Office calls these indicators “amongst the most important measures of the level of living of the respective domains of the population”. In fact, they are the most important by far, unmatched in size and scale and detail. The distribution of MPCE highlights the differences in level of living of the different segments of the population and is invaluable for the serious study of the prevalence of poverty and inequality. These numbers enable central and state planners and decision-making processes to allocate resources among sectors, regions, and socio-economic groups, and also helps assess the ‘inclusiveness’ of economic growth.

The NSSO has issued its report on the level and pattern of consumer expenditure in India, a voluminous report based on information collected during July 2009 to June 2010 from 7,428 villages and 5,263 urban blocks spread over the entire country. Two different schedules were used to collect information on consumer expenditure, the first being canvassed in 100,855 households and the second in 100,794 households. Key findings follow:

Level of consumption
* Using the MMRP (Modified Mixed Reference Period) method of measurement of MPCE (Monthly Per Capita Consumer Expenditure), average MPCE in 2009-10 was estimated as Rs 1,053.64 in rural India and Rs 1,984.46 in urban India.
* The poorest 10% of India’s rural population had an average MPCE of Rs 453. The poorest 10% of the urban population had an average MPCE of Rs 599.
* The top 10% of the rural  population, ranked by MPCE, had an average MPCE of Rs 2,517 – about 5.6 times that of the bottom 10%. The top 10% of the urban population had an average MPCE of Rs 5,863 – about 9.8 times that of the bottom 10%.
* Among the major states, Kerala (Rs 1,835) had the highest rural MPCE. It was followed by Punjab (Rs 1,649) and Haryana (Rs 1,510). In all other major states, average rural MPCE was between Rs 750 and Rs 1,250.
* Average rural MPCE was lowest in Bihar and Chhattisgarh (around Rs 780), and also low in Orissa and Jharkhand (around Rs 820), as well as in Uttar Pradesh and Madhya Pradesh (around Rs 900).
* Maharashtra (Rs 2,437) and Kerala (Rs 2,413) were the two major States with the highest MPCE in the urban sector, followed  by Haryana (Rs 2,321). Urban MPCE was lowest in Bihar (Rs 1,238).
* The median level of MPCE was Rs 895 in rural India and Rs 1,502 in urban India.
* In the 22-year period from 1987-88 to 2009-10, real MPCE measured by the Uniform Reference Period method was estimated to have grown by only 19% in rural India, but by as much as 42% in urban India. The growth in real urban MPCE over the 16-year period between 1993-94 and 2009-10 was about 34%.
* Measured by the Mixed Reference Period method, real MPCE grew by about 19% in rural India during the 16-year-period from 1993-94 to 2009-10, and by as much as 37½% in urban India over the same period.

Monthly per capita expenditure in India's states for the urban population. Source: NSSO, Report No.538

Pattern of consumption
* Using the MMRP (Modified Mixed Reference Period) method of MPCE measurement, food was estimated to account for about 57% of the value of the average rural Indian’s household consumption during 2009-10. This included 14% for cereals and cereal substitutes, a little less than 8% for milk and milk products, and 8% on vegetables. Among non-food item categories, fuel for cooking and lighting accounted for about 8%, clothing and footwear for 6%, medical expenses for a little over 5%, conveyance and education for about 3.5% each, other consumer services for 4%, and consumer durables for 3.5%.
* For the average urban Indian, over 44% of the value of household consumption was accounted for by food, including 8% by cereals and 7% by milk and its products.
* The share of most of the food item groups in total consumption expenditure was higher in rural India than in urban India, fruits and processed food being exceptions. For non-food item groups, the share was usually higher in urban India. The most noticeable differences were in case of cereals (urban share: 8%, rural share: 13.8%), rent (urban: 6%, rural share: 0.5%) and education (urban: 8%, rural: 3.6%).
* In the major states, the share of food in rural MPCE varied from 46% for Kerala and 48% for Punjab to 64% in Assam and 65% in Bihar. In the  urban sector it varied from 40-41% in Kerala and Maharashtra to 52% in Jharkhand and 53% in Bihar and Assam.
* The share of cereals in total expenditure in rural India varied across the major states from 7% in Punjab and Haryana to 21% in Assam and Bihar. In urban India, the share varied from 6% for Haryana, Punjab and Kerala to 13% in Assam and 15% in Bihar.
* The budget share of cereals was 23-24% for the bottom decile class of rural India but fell with rise in MPCE to about 7-8% for the top decile class. In urban India the share of cereals fell from 18-19% for the bottom decile class to 3-4% for the top decile class.
* The budget share of milk and milk products in rural household consumer expenditure was seen to rise with MPCE level from 3-4% in the bottom decile class to 9% in the ninth decile class. For urban India, however, the share was higher for the middle third of the population than for the highest decile classes.
* The share of fuel and light in household consumer expenditure was around 10-11% for the bottom decile class in both sectors. With rise in MPCE it was seen to fall to about 6% in the top decile class for rural India and 5% for urban India.

Quantity of cereal consumption
* Average cereal consumption per person per month was 11.3 kg in rural India and 9.4 kg in urban India.
* In rural India, average monthly per capita cereal consumption was around 10.2 kg for the poorest 10% of the population. With rise in MPCE it was seen to increase, quickly at first, to reach 11 kg in the third decile class, and then more slowly. It was above 12 kg for the top two decile classes. In urban India, per capita cereal consumption was seen to increase from under 9.5 kg to about 9.7 kg per month over the first five decile classes but then to fall, finally plunging to 8.6 kg for the top decile class of population.
* Over the 16-year period from 1993-94 to 2009-10, estimated monthly per capita cereal consumption (which does not include cereal content of purchased processed food) fell from 13.4 kg to 11.35 kg in rural India and from 10.6 kg to 9.39 kg in urban India. The fall was spread over all major states.

FAO 2011 October Food Index down, food prices still up, what’s going on?

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FAO has released its Food Price Index for October 2011, saying the index has dropped dropped to an 11-month low, declining 4 percent, or nine points, to 216 points from September. Indeed the index has dropped, declined and has certainly not risen. But does this mean food prices for the poor in many countries, for labour, for informal workers, for cultivators too – has the cost of food dropped for any of them?

The answer is a flat and unequivocal ‘No’. FAO has said so too: “Nonetheless prices still remain generally higher than last year and very volatile.” At the same time, the Rome-based food agency has said that the “drop was triggered by sharp declines in international prices of cereals, oils, sugar and dairy products”.

The FAO has said that an “improved supply outlook for a number of commodities and uncertainty about global economic prospects is putting downward pressure on international prices, although to some extent this has been offset by strong underlying demand in emerging countries where economic growth remains robust”.

Once again, the FAO is speaking in two or more voices. It should stop doing so. A very small drop in its food price index does not – repeat, does not – indicate that prices for food staples in the world’s towns and cities has dropped and people can afford to buy and cook a square meal a day for themselves and their children. Not so at all.

I am going to contrast what FAO has said about its October food price index with very recent reportage about food and food price conditions in various parts of the world.

FAO: “In the case of cereals, where a record harvest is expected in 2011, the general picture points to prices staying relatively firm, although at reduced levels, well into 2012. International cereal prices have declined in recent months, with the FAO Cereal Price Index registering an eleven month-low of 232 points in October. But nonetheless cereal prices, on average, remain 5 percent higher than last year’s already high level.”

Business Week reported that rising food prices in Djibouti have left 88 percent of the nation’s rural population dependent on food aid, the Famine Early Warning Systems Network said. A ban on charcoal and firewood production, which provides about half of the income of poor people in the country’s southeast region, may further increase hunger, the Washington- based agency, known as Fewsnet, said in an e-mailed statement today. Average monthly food costs for a poor urban family are about 33,907 Djibouti francs ($191), about 12,550 francs more than the average household income, Fewsnet said. Urban residents in the Horn of Africa nation don’t receive food aid, it said.

FAO: “According to [FAO’s November 2011] Food Outlook prices generally remain ‘extremely volatile’, moving in tandem with unstable financial and equity markets. ‘Fluctuations in exchange rates and uncertainties in energy markets are also contributing to sharp price swings in agricultural markets,’ FAO Grains Analyst Abdolreza Abbassian noted.”

A Reuters AlertNet report quoted Brendan Cox, Save the Children’s policy and advocacy director, having said that rising food prices are making it impossible for some families to put a decent meal on the table, and that the G20 meeting [currently under way in Cannes, France] must use this summit to agree an action plan to address the food crisis. Malnutrition contributes to nearly a third of child deaths. One in three children in the developing world are stunted, leaving them weak and less likely to do well at school or find a job. Prices of staples like rice and wheat have increased by a quarter globally and maize by three quarters, Save the Children says. Some countries have been particularly hard hit. In Bangladesh the price of wheat increased by 45 percent in the second half of 2010. In new research, Save the Children analysed the relationship between rising food prices and child deaths. It concluded that a rise in cereal prices – up 40 percent between 2009 and 2011 – could put 400,000 children’s lives at risk.

FAO: “Most agricultural commodity prices could thus remain below their recent highs in the months ahead, according to FAO’s biannual Food Outlook report also published today.  The publication reports on and analyzes developments in global food and feed markets. In the case of cereals, where a record harvest is expected in 2011, the general picture points to prices staying relatively firm, although at reduced levels, well into 2012.”

IRIN News reported that food production is expected to be lower than usual in parts of western Niger, Chad’s Sahelian zone, southern Mauritania, western Mali, eastern Burkina Faso, northern Senegal and Nigeria, according to a report by the World Food Programme (WFP) and the Food and Agriculture Organization (FAO), and a separate assessment by USAID’s food security monitor Fews Net. “We are worried because these irregular rainfalls have occurred in very vulnerable areas where people’s resilience is already very weakened,” said livelihoods specialist at WFP Jean-Martin Bauer. Many Sahelian households live in a state of chronic food insecurity, he said. “They are the ones with no access to land, lost livestock, without able-bodied men who can find work in cities – they are particularly affected by a decrease in production.” A government-NGO April 2011 study in 14 agro-pastoral departments of Niger noted that pastoralists with small herds lost on average 90 percent of their livestock in the 2009-2010 drought, while those with large herds lost one quarter. Those who had lost the bulk of their assets have already reduced the quality and quantity of food they are consuming.

FAO: “Food Outlook forecast 2011 cereal production at a record 2 325 million tonnes,  3.7 percent above the previous year. The overall increase comprises a 6.0 percent rise in wheat production, and increases of 2.6 percent for coarse grains and 3.4 percent for rice. Globally, annual cereal food consumption is expected to keep pace with population growth, remaining steady at about 153 kg per person.”

The Business Line reported that in India, food inflation inched up to 11.43 per cent in mid-October, sharply higher than the previous week’s annual rise of 10.6 per cent, mainly on account of the statistical base effect of the previous year. Inflation in the case of non-food items and the fuels group, however, eased during the latest reported week. According to data released by the Government on Thursday, an increase in the year-on-year price levels of vegetables and pulses contributed to the surge in the annual WPI-based food inflation for the week ended October 15, apart from the base effect. Sequentially food inflation was up 0.25 per cent.

FAO: “The continuing decline in the monthly value of the FAO Cereal Price Index reflects this year’s prospect for a strong production recovery and slow economic growth in many developed countries weighing on overall demand, particularly from the feed and biofuels sectors.”

Al Ahram reported that Egyptian household budgets had mixed news in September with prices for some basic foods tumbling month-on-month and others showing small climbs, according to state statistics agency CAPMAS. Figures released this week show the price of local unpacked rice fell 15.6 per cent to LE4.96 per kilo between August and September 2011. It was the commodity’s first decline in nearly a year, although the per kilo price remains 68 per cent higher than the LE2.95 that rice cost in October 2010. Chicken also fell 5.8 per cent to LE16.26 per kilo between August and September. Other staples, however, continued to rise; the price of potatoes climbed 14 per cent to LE4.89 per kilo, while a kilo of tomatoes gained a monthly 14.8 per cent to cost LE4.65.