Here is an unpleasant home truth: India is no longer growing enough food to feed its population. In fact, India is now the world’s second largest importer of oilseeds. Even as world food prices — especially foodgrains — have risen more rapidly in the last two years than they have in the last decade, supplies and buffer stocks are dwindling. Grain supplies are low, having dwindled to their lowest levels in years. Rice prices are globally at their highest levels in 20 years, and supplies at their lowest since the Eighties. True, India is not alone; food price inflation is a global phenomenon. And the causes include a variety of factors: weather that has caused droughts in Australia, creating a huge wheat shortage, rising oil prices that increase both the costs of transportation and fertilizers, the demand for bio-fuels like ethanol that diverts crop production from wheat and other cereals to maize and sugar and, finally, growing incomes in emerging markets that increase demand for more expensive meat.
Shortages caused by persistent droughts in Australia, freak floods in west Africa, a deep frost in China and warm weather in Europe, all have had an impact on food production and food price inflation. Earlier this year, global wheat prices were spiked by 25 per cent in a single day after Kazakhstan announced that it would impose controls over wheat exports so that it had enough to feed its own population. Rising oil prices (and transportation costs) and the demand for bio-fuels — in particular ethanol — are significant contributors to food price inflation. Increases in acreage for cultivating corn in the United States of America have been helped immensely by federal subsidies: about $1.90 a gallon of ethanol. Economic success also comes at a price. The demand for meat has grown, and so also the demand for cereals and wheat. In theory, rising food prices should increase acreage for these crops, boost production and bring prices down. But the International Food Policy Research Institute says that a 10 per cent increase in food prices results in just 1-2 per cent increase in supply. Agricultural productivity in India has been abysmal, largely because investments in agricultural infrastructure have been neglected. It takes years to produce results, so it is time to act now, and quickly. A second ‘green revolution’ will be a long time coming.