NEW DELHI (Reuters) - India will be self-sufficient in production of staple foods until 2025 and there are signs it could act as soon this month to improve distribution — key to ensuring its half a billion poor have enough to eat, a food expert says.
As Asian economies grapple with soaring inflation, driven by higher prices for food and fuel, governments are looking at levers such as export bans and lowering import duties to ensure their voters can afford to eat.
India recently imposed an export ban on onions and cut import duties on the vegetable as prices soared when rains hit harvests.
But such moves may not be necessary and could even be counter-productive, Ashok Gulati, Asia director for the International Food Policy Research Institute, told Reuters.
“The likelihood is that India will remain self-sufficient for the next 10-15 years in basic staples and hopefully a marginal surplus. So there is no panic,” he said in an interview at a conference on agriculture and nutrition.
India has nearly 20 million tonnes of wheat stockpiled and 28 million tonnes of rice — well above targets for both staples.
But the coalition government of Prime Minister Manmohan Singh is still worried about malnutrition and wants to introduce subsidised grains for the poor.
Both India and Asian rival China need to ensure availability of staples, Gulati said, because the size of their demand could skew international markets.
“Both countries are so large that they simply cannot afford to rely to a large extent on external markets for their basic staples, rice and wheat,” he said.
In 2009, India’s monsoon rains were so poor that the country had to turn to international markets for sugar imports, spurring prices to record highs.
But distribution, rather than production, remains the key issue for India, Gulati said, and the recent mini-crisis around onions could prompt the government to take action here.
“Governments act when there is a crisis. So this crisis may turn into an opportunity to change. At least the right noises are coming out of this,” he said.
Earlier this month, Singh called for a “paradigm shift” to improve availability of foods domestically and Gulati echoed the view that distribution networks needed upgrading, especially as Indians shift their diet towards perishable fruit and vegetables.
“You need to invest in facilities that can store them and increase their shelf life. That is where investments are needed and where the laws have to be cleaned up,” he said.
As much as 40 percent of India’s fruit and vegetable production is wasted because of poor networks and a lack of cold storage facilities, with much product still sold on flat-bottomed carts by smallholders even in the centre of cities such as Delhi.
Gulati said the government could move as early as the next budget, due on Feb. 28, to bring incentives to the sector.
“If you clean up the laws, this country doesn’t have a dearth of entrepreneurs and investors ... I am sure they are preparing some policy paper on that to change ... it could be as early as this month in the budget,” he said.
He said the government should look at increasing incomes of its half a billion poor who live on less than $1.25 per day, rather than handing out free or subsidised grain.
“Our view is the best way is to mainstream these people into high productivity activities so that their incomes go up,” he said. “But that takes a little time and therefore in the short term you may have to keep feeding them,” he said.
IFPRI would favour cash transfers on a targeted basis, such as for specific foods or for children, rather than subsidising foods or intervening on exports and imports, he added.
With many of India’s poor spending up to 60 percent of incomes on food, price volatility is a much more important issue than in the United States, for example, where only 10 percent of average incomes goes on groceries.
And he added that health issues had to be addressed at the same time as ensuring people could afford to eat.
“Nutrition also depends on hygiene. You may be feeding the child but if the water is not clean it’s washed away in diarrhoea.”