Vegetable hocus-pocus in India

Which one of these two statements is false?

‘India has more than enough vegetables to feed its households, which need about 144 million tons per year’

‘There is a deficit of about 20 million tons in 2 out of 3 vegetable types India’s households need’

Which one you choose as false depends on whose interpretation of vegetable self-sufficiency you lean towards: the Ministry of Agriculture’s triumphant announcements of ever higher vegetable tonnage, or the data on crop quantities combined with current population and dietary needs (as I do here).

My answer is that the second of the two statements is nearly true whereas the first is entirely false. This is the explanation, and it is based on the data using which the startling graphic presented above was drawn.

In its ‘First Advance Estimates of Horticulture Crops’ for 2017-18, the Ministry of Agriculture has said that a record quantity of 180 million tons of vegetables has been cultivated.

This is no doubt a quantity record for vegetables. It apparently exceeds by a wide margin the quantity required to adequately provide all our households with vegetables for their daily meals. How many household would that be? My calculation, based on the projected increases in population and household contained in Census 2011, is about 270 million (or 27 crore) households in 2018, and with the mean size of the household being 4.8 members.

Such a typical household needs about 1.44 kilograms per day of vegetables as part of a well-balanced diet. Adjusting for the smaller portions eaten by children (up to 14 or 15 years old) and the elderly (from about 65 years old) and further adjusting for the losses and waste that take place from the time vegetables are brought to mandis till they cooked in kitchens, a total of about 144 million tons is needed to supply all our households for a year.

With 180 million tons cultivated and 144 million tons needed, we seem to have a surplus of some 36 million tons of vegetables.

Not so. This ‘surplus’ needs closer examination, which the chart guides you towards. As you see, the biggest circles belong to five vegetable categories: potato, tomato, other vegetables, onion, and brinjal.

What these biggest circles represent needs to be connected to what the National Institute of Nutrition has recommended as the required daily quantities of vegetables. And that is, not just 300 grams per day, but 50 grams of green leafy vegetables, 100 grams of roots and tubers and 150 grams of other vegetables. A household consuming the stipulated 1.44 kg/day of vegetables if those vegetables are a kilo of potatoes and 440 grams of tomatoes is not a household eating vegetables – it’s a household eating far too many potatoes and tomatoes.

The chart shows us dramatically how unbalanced the cultivation of vegetables has become in India. Nearly 40% of the total cultivated is onions and potatoes (70 mt). Add tomatoes and the three account for 51% of the total (93 mt). Add brinjal and the four account for 58% of the total (105 mt).

Our 270 million households should be buying, cooking and eating about 95 million tons of vegetables that are green and leafy, or are ‘other vegetables’. But in these two categories, we are growing no more than about 75 mt – which reveals a massive shortfall of 20 million tons.

This is the truth behind the tale of booming, record vegetable production. Those five big circles in the chart should never have been the sizes they are. Our households do not need an allocation of 500 grams of potatoes per day (no, Lays, Pringles, Doritos, Kurkure, Uncle Chipps, Bingo, Haldirams chips and wafers are not food).

What we need instead is for every taluka, tehsil, block and mandal to value and grow its local varieties of leafy greens, roots and tubers, shoots and stems, edible flowers and buds. That is what will bring back genuine vegetable nutrition and diversity.

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

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.

FAO food price index tops the 2008 peak

The UN Food and Agriculture Organization’s food price index has risen to 214.7 for December 2010, which is above its peak of 213.5 in June 2008.

This new peak, at a time when the price of crude oil is above USD 90 a barrel, is the strongest signal yet that global foodgrain supply has entered a critical phase. The FAO index has been rising steadily through the second half of 2010 – we discussed it here.

The cereal price index stands at 237.6 which is almost 40 points below the peak of 274.3 (in April 2008). The oils price index stands at 263 which is just under 20 points less than the peak of 282.6 (in June 2008). The dairy price index stands at 208.4 which is 60 points under the peak of 268.6 (in November 2007).

But the sugar and meat price indices are at all-time highs. The meat price index is now at 142.2 (in September 2008 it was 137.4 and its previous all-time high was 139.3 in September 1990). The sugar price index is now at 398.4 which is an extraordinary 180 points above its all-time high of 218 (in March 1990 – it was 207 at the maximum during 2008). The sugar price index crossed 300 in August 2008 and remained above 300 until March 2010, and again crossed 300 in September 2010.

Comparing three-month averages for the FAO food index and its main index components helps us understand how the 2010-11 food price crisis compares with its predecessor in 2007-08:

Food     Meat       Dairy     Cereals    Oils       Sugar
3-month avg
at 2008 Jun    210.4    129.5    240.8    271.7    273.9    173.9
3-month avg
at 2010 Dec    206.4    141.2    206.3    227.0    242.1    373.7

A Bloomberg report quotes FAO senior economist Abdolreza Abbassian: “One might expect prices to come down in spring, and this may be in fact the worst. But given how unexpected the weather events have been, I for one would not want to bet on anything along those lines.” The report said that concern about drought doing harm to Argentine harvests helped corn jump 52% in Chicago last year and soybeans to rise 34%. Prices also gained as China, the world’s largest soybean buyer, became a net corn importer. Wheat added 47% in 2010 as Russia, hit by its worst drought in a half-century, banned all cereal exports.

“Eyes will be on the Argentina corn crop,” Abbassian said. “There is still, unfortunately, a potential for grain prices to strengthen on the back of a lot of uncertainty. If anything goes wrong with the South American crop, there is plenty of room for them to increase further.” Potential damage to South American soybean and corn crops is of greater concern for world grain prices than harm to wheat in Australia caused by floods, according to the economist. Argentina and Brazil are the world’s second- and third-biggest corn and soybean exporters after the US. “The watch is definitely on South America for the next two weeks,” Abbassian said. “Given the very tight corn market, and demand from China for soybeans and the tight soybean market, if those commodities start to rise more, that will also lift wheat.”

Agrimoney has a report polling commodities fund managers in several financial centres worldwide for their views. What they say about the impact major forecasts, such as the World Agricultural Supply and Demand Estimates, have is worth paying close attention to. The WASDE report provides the US Department of Agriculture’s comprehensive forecasts of supply and demand for major US and global crops.

Reuters has reported that India’s food inflation rose for the fifth straight week to the highest in more than a year, reinforcing fears it has spilt over to broader prices and cementing expectations of a January interest rate hike. “But the spurt in prices of many basic foodstuffs has also raised questions over the government’s ability to control price rises through monetary policy, with poor infrastructure, hoarding and supply bottlenecks contributing to stubbornly-high food inflation.”

Unseasonal rains are officially blamed for pushing up prices of vegetables such as onions and tomatoes, but some commentators point instead to poor agricultural productivity and transport after years of few reforms and weak government investment. Onion prices, a key food staple for Indian families, rose over 23% percent over the week to December 25. The food price index rose 18.3% in the year to December 25 and the fuel price index climbed 11.6%. This compared with 14.4% and 11.6% annual rises the previous week.

The Wall Street Journal has said that food prices in India are continuing their sharp rise, increasing concerns among economists about a prolonged spell of high prices and adding pressure to the central bank to raise interest rates later this month. “The Reserve Bank of India next meets on Jan. 25 to consider an interest rate rise after pushing up rates six times in 2010 – one of the most aggressive tightenings of any central bank. But calls for a further move keep coming, most recently with the International Monetary Fund saying in a report released Thursday that rates need to be higher to curb inflation.

“The central bank will need to walk a fine line, however, since liquidity within the bank system is tight and further rate hikes could exacerbate that problem, economists said. Data from the Ministry of Commerce and Industry Thursday showed that the wholesale price index for food articles rose 2.5% in the week ended December 25 from the previous week. The year-on-year inflation rate for food surged to 18.32% from 14.44% the week before. It was the fifth straight week of rising food prices, which have been hovering at elevated levels in recent months.”

The food industry in India and its logic

Tractor on a road to the city, Kanpur district, Uttar Pradesh

The Economic & Political Weekly (EPW) 09 October 2010 issue carries a commentary I wrote as a backgrounder to the price rise of food staples. Here is part of the commentary:

On multiple fronts, the union government is proceeding to forge new compacts with the private sector food industry, whether global, regional or national. There is a new set of investors whose claims in the emerging food industry are being staked, and which are being encouraged by state governments eager to display their foreign direct investment (FDI)-friendliness. These are investors, promoters, asset management professionals who have learnt the patterns of the 2007-08 commodities (food included) boom and who are now well equipped to take positions, both financial and real, in the emerging food industry.

An indication of the size and scale of the national market for food (production, collection, processing, distribution, retail) being envisaged can be gauged from a “discussion paper” circulated by the Department of Industrial Policy and Promotion (DIPP) in July 2010. The paper, “Foreign Direct Investment (FDI) in Multi-brand Retail Trading”, has been circulated to “generate informed discussion on the subject” which will “enable the Government to take an appropriate policy decision at the appropriate time”. As this article shows, these decisions have already been taken and investment in the direction revealed by the paper has been rolling out for months.

Supported by the Ministry of Agriculture, the top echelons of India’s national agricultural research system and dedicated agricultural trade and investment bodies, the union government has tackled the arguments against FDI in retail by describing the “limitations” of current conditions in the Indian retail sector. That there has been a lack of investment in the logistics of the retail chain, leading to “an inefficient market mechanism”. The point is made that India is the second largest producer of fruit and vegetables in the world (about 180 million tonnes or mt) but has “very limited integrated cold-chain infrastructure” with only 5,386 stand-alone cold storages which together have a capacity of 23.6 mt. It points out that post-harvest losses of farm produce – especially fruits, vegetables and other perishables – have been estimated to be over Rs 1,00,000 crore per annum, 57% of which is due to “avoidable wastage and the rest due to avoidable costs of storage and commissions”.

A couple working in their paddy field, North Goa

From 2009, the Ministry of Agriculture’s approach to its subject has shifted perceptibly – from its stated protection of the interests of the farming household and the rural and urban consumer – towards the food industry. Employing the reasons listed above, all of which contain some reflection of actual conditions, the massive apparatus of the ministry and its appurtenant research system is now ushering in private participation and control of areas that were hitherto in the public domain. When read with the rapid movement of finance between the money markets and the commodity markets, with the extension of infrastructure and property conglomerates into the processed food “value chain” domain, and with new alliances between agricultural research institutes and market entrepreneurs, the outlook for India’s small and marginal farming households is bleak.

The concentration of funds, food handling and transport systems and growing corporate control from farm to fork can clearly be seen in an address by the Union Agriculture Minister, Sharad Pawar, at the Indian Council of Agricultural Research (ICAR) – Industry Meet on 28-29 July 2010. The meet focused on four theme areas: seed and planting material; diagnostics, vaccines and biotechnological products; farm implements and machinery; and post-harvest engineering and value addition.

Pawar said that the ministry recognises the role of the private sector in critical areas of agricultural research and human resource development. The conventional approach of public sector agricultural R&D has been to take responsibility for priority setting, resource mobilisation, research, development and dissemination. He then explained that agricultural extension, which has been neglected for several years now, is “no longer appropriate”. It is here that the impact of the Indo-US Agricultural Knowledge Initiative, now in its fifth year, can be recognised. The alternative, Pawar advised, is public-private partnerships through which public sector institutes (such as those in the ICAR network) can “leverage valuable private resources, expertise, or marketing networks that they otherwise lack”.

Coconut trees along a bund between field and stream, North Goa

This is the undisguised merchant reasoning behind the creation of “Business Planning and Development units” in five ICAR institutes (Indian Agricultural Research Institute, Indian Veterinary Research Institute, Central Institute for Research on Cotton Technology, National Institute of Research on Jute and Allied Fibre Technology, Central Institute of Fisheries Technology). These units will tackle intellectual property management, commercialisation of research, find investors and begin businesses. India’s national agricultural research system, therefore, has decided to now become a broker of its own output (publicly funded) and a speculator seeking profits from the country’s agricultural and food price crises.

If the Ministry of Agriculture has its way, rural India will be a patchwork not of villages and hamlets but of “intelligent agrologistic networks combining consolidation centres, agroparks (agroproduction and processing park) and rural transformation centres”, which is how the MTMs and their typical built-up footprints have been described by one enthusiastic bank. The techno-industrial idiom cannot conceal the union government’s intention to encourage a dangerous new dimension to urbanisation, by provisioning infrastructure to support an internal trade in agricultural products, and doing so by allocating a greater share of scarce funds to support favoured business and trading constituents rather than to the rural constituents who need it most, the smallholder farmer and local agro-ecosystems.

Supported by the vast and powerful machinery of the Ministry of Agriculture, emboldened by the global trading successes of commodity cartels which learned their tactics in the Multi Commodity Exchange of India (Mumbai), the National Commodity and Derivatives Exchange (Mumbai), and the National Multi Commodity Exchange of India (Ahmedabad), the new entrepreneurs in India’s agribusiness sector are promoting MTMs as potentially attracting “leading foreign retail chains to anchor and plan their supply chain at and through the agrofood parks” and exploiting the MTMs’ “township model approach to attract Indian MNCs and foreign food processing companies”.

India’s food price inflation in high gear

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

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!