Resources Research

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Posts Tagged ‘Ministry of Consumer Affairs

India’s 2008 food flows mystery

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CPI for Agricultural Labour data from 2007-10 March and FAO food index data over the same period

CPI for Agricultural Labour data from 2007-10 March and FAO food index data over the same period

My working experience with a central agriculture ministry programme (the NAIP – National Agricultural Innovation Project) has left me with some impressions of the perspective of the central institutional approach to agriculture, and these aren’t encouraging. My finding is (although I have little access to academic output on agriculture which is not crop science):

1. We in India lack an independent food retail price gathering and monitoring network. The data gathered by the Ministry of Agriculture (through its Directorate of Economics and Statistics) and by the Ministry of Consumer Affairs, Food and Public Distribution use different formats and schedules. Validating these is a huge task, and that is the reason why the unit level (place, food item, time) extraction becomes so very cumbersome.

2. We have even less knowledge (outside the commercial circuit) of the flows of agricultural produce: (a) From mandis to urban centres. Large transfers of foodgrains are logged by Indian Railways, but at district level, we have very little reliable data of the flows of cereals, pulses, vegetables and fruit, within district centres and outside; (b) From mandis (and contract farms, now strengthened by a draft national agriculture produce marketing committee act, APMC) to the food processing industry, and to commercial storage depots for use by either food processing sector and by the agri commodities exchanges.

3. Agriculture continues to be seen by central and state governments mainly as an APY (area, production, yield) activity, only rarely as a livelihood activity for a rural household (institutes such as Crida buck this trend, but we need more of them). That is why our organised state-level assessments are also still APY-centric (with a few scattered instances of enlightenment in the form of recognition of conservation agriculture). This is frustrating at a systemic level, because for example the Planning Commission has at hand any number of NGO and commissioned studies and assessments that place cultivation as a socio-cultural livelihood activity.

I’d say there that are technology answers to points 1 and 2 (see how commercial ventures like Nokia Lifetools, Reuters Market Light, Hariyali Kisan Bazar have used tech) but point 3 needs a lot of work.

This chart that I’ve made shows why. It uses the consumer price index (CPI) for Agricultural Labour data from 2007-10 March and FAO food index data over the same period. The eight states I’ve chosen (Haryana, Karnataka, Punjab, West Bengal, Maharashtra, Rajasthan, Tamil Nadu, Andhra Pradesh) recorded the highest increases among large states of CPI-AL over the period.

The FAO indices climb steeply till around Feb 2008. By December 2008 the FAO cereal index is back to the level it was at in August 2007. For that time the CPI-AL 8-state rise is relatively gradual and disconnected from the FAO trend. Between around Jan 2009 and July 2009 both FAO indices show some volatility in the 100-125% band. The 8 states’ CPI-AL however continue their rising trend. Only in December 2009 is there evidence of some congruence between the FAO set and the 8 states CPI-AL set, although the FAO pair are 105-120% up from March 2007 and the all-India CPI-AL is more than 135% up.

The big question for us is: what happened with food movements in India between 2007 July and 2008 November, when India and FAO data diverged so dramatically, and then from 2009 May onward, when the movements showed some similarity, although at different levels of the comparative index? Do the agricultural commodities markets hold the answer?

India’s food price inflation in high gear

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There has been no shortage since November of news reports and analyses about the food inflation. The 19% annual rise in fact masks widespread individual urban centres’ price shocks and individual food item trends. I have tried to unpack the year-on-year ‘national’ food inflation number using data from the Ministry Of Consumer Affairs, Food and Public Distribution – Department Of Consumer Affairs (Price Monitoring Cell). My guess is that this data is an under-estimate but is useful for spotting trends.

I collected prices for the 36 cities tracked by the PM Cell, monthly from 2007 December. Based on a small basket of staples (rice, wheat, atta, tur dal, sugar, gud, tea, milk, potato, onion, salt) a crude index shows that in 33 out of 36 cities, the 24 month (07 Dec to 09 Dec) rise in prices of items in this basket is more than 24%, and that in 23 cities it is more than 50%.

Food inflation 2009 over 2007 in Indian cities

Food inflation 2009 over 2007 in Indian cities

About price increases in rural settlements I can find no organised information at all, although direct experience in western Maharashtra, Karnataka and Goa tells me that a staples basket can cost up to 2-3% more than in urban areas. (Agmarknet collects and maintains detailed mandi prices for farm produce but there is no comparable effort for rural retail food staples.)

The National Sample Survey 61st Round (2004 July-2005 June) on ‘Household Consumer Expenditure in India’ put down the finding that out of every rupee that the average rural Indian spent on household consumption, 55 paise was spent on food and mainly:
18 paise was spent on cereals
8 paise on milk & milk products
6 paise on vegetables
5 paise on sugar, salt & spices
5 paise on beverages, refreshments, processed food, purchased cooked meals, etc

Of the non-food expenditure 10 paise was spent on fuel for cooking and lighting.

I have tried to maintain this weightage in my calculation, but it is really no more than a crude reckoning because I haven’t been able to spend the time to clean up the publicly available data – querying the website database of Dacnet (Dept of Agriculture and Cooperation) or FCAMin returns report formats that are terribly messy, even though they contain useful data. (Although I think there may be differences even between these for the same foods and same date ranges.)

Based on what I have seen and heard on the field in Karnataka, Goa and western Maharashtra (and learnt about Gujarat and eastern UP from others) the available food basket seems to be shrinking (the so-called ‘coarse’ cereal group is conspicuously less), and where families have young and teenaged children there is pressure to buy processed and packaged snack foods (which is really a blight in our small rural markets). There are all sorts of oddities about the form that food takes in these markets – the price of a 50 gram pack of biscuits for example (Parle Glucose is the standard) has hardly moved in the last 3-4 years yet at the same point-of-purchase end, look at the way the prices of ground wheat have moved.

Then there’s fuel and transport to account for, more about which you’ll find here. This question needs much more work in 2010 to strengthen some of the reliable data we have with updates, and to try to build in what we see and hear and sense from conversations with those who live and work in all those tahsils and talukas and blocks and mandals. I feel very strongly that we are lacking in our data the presence and impact of the many linkages that connect and influence the rural farming/labour household. Many of the measures we have have served us well but I think need to be supplemented – how to integrate the lessons and findings from the comprehensive National Family Health Survey, the Sarva Shiksha Abhiyan, the many studies into the income-providing measures of NREGA.

Even though we worry about what the rural/urban poor household must spend on, the attraction to buy mobile phones amazes me. I have met young men who earn around Rs 4,000 a month but who have bought Samsung mobile phones costing Rs 5,000! Imagine spending more than a month’s income on a phone, I asked them, but they saw nothing worrying about their expenditure. Retailers who sell mobile phones used to keep the low cost and hardy Nokia phones which 3 years ago cost around Rs 1,700-1,800 (mine is still working), but not any longer, or they work at discouraging those who ask for the relatively cheaper phones. Much more than the hundred-dollar laptop we need the thousand-rupee mobile phone.

The image is of a chart I made for the project group I work with (part of the National Agricultural Innovation Project, it’s called Agropedia and you can read more about it here). This chart helps point to some patterns (you can download the hi-res image here). I’m curious for example about Gujarat, whose grain and commodity traders have a long and murky history of hoarding. The North-Eastern cities could be insulated to some extent from the regional transport subsidy (road and rail). Cities in the Deccan are relatively better off than North Indian cities. The big difference between Chandigarh and Mandi is puzzling.

In his hugely interesting paper, ‘India And The Great Divergence: Assessing The Efficiency Of Grain Markets In 18th and 19th Century India‘, Roman Studer (University of Oxford, Discussion Papers in Economic and Social History, Number 68, November 2007) has written: “Prior to the mid-nineteenth century, the grain trade in India was essentially local, while more distant markets remained fragmented. This is not to say that no grain was traded over longer distances, but the extent was very limited, as the prices from some 36 cities all over India still exhibited various characteristics of isolated markets.”

“First, annual price fluctuations were extremely high. Second, differences in price levels between markets were very pronounced and persisted until well into the nineteenth century. Third, apart from neighbouring villages or cities, price series from different markets did not show comovements at all.” Studer looked at century-old data, but we still have 36 cities to tell us about staple food retail prices! Also, the three characteristics he mentions can be seen today too.

Happy New Year!