08 june 2012
A failed food system: India’s grain piles up, yet the poor go hungry
Ranwan, India: In this north Indian village, workers recently dismantled stacks of burned and mildewed rice while flies swarmed nearby over spoiled wheat. Local residents said the rice crop had been sitting along the side of a highway for several years and was now being sent to a distillery to be turned into liquor.
Just 180 miles to the south, in a slum on the outskirts of New Delhi, Leela Devi struggled to feed her family of four on meagre portions of flatbread and potatoes, which she said were all she could afford on her disability pension and the irregular wages of her day-labourer husband. Her family is among the estimated 250 million Indians who do not get enough to eat.
Such is the paradox of plenty in India’s food system. Spurred by agricultural innovation and generous farm subsidies, India now grows so much food that it has a bigger grain stockpile than any country except China, and it exports some of it to countries like Saudi Arabia and Australia. Yet one-fifth of its people are malnourished – double the rate of other developing countries like Vietnam and China – because of pervasive corruption, mismanagement and waste in the programs that are supposed to distribute food to the poor.
“The reason we are facing this problem is our refusal to distribute the grain that we buy from farmers to the people who need it,” said Biraj Patniak, a lawyer who advises India’s Supreme Court on food issues. “The only place that this grain deserves to be is in the stomachs of the people who are hungry.”
After years of neglect, the nation’s failed food policies have now become a subject of intense debate in New Delhi, with lawmakers, advocates for the poor, economists and the news media increasingly calling for an overhaul. The populist national government is considering legislation that would pour billions of additional dollars into the system and double the number of people served to two-thirds of the population. The proposed law would also allow the poor to buy more rice and wheat at lower prices.
Proponents say the new law, if written and executed well, could help ensure that nobody goes hungry in India, the world’s second-most populous country behind China. But critics say that without fundamental system reforms, the extra money will only deepen the nation’s budget deficit and further enrich the officials who routinely steal food from various levels of the distribution chain.
India’s food policy has two central goals: to provide farmers with higher and more consistent prices for their crops than they would get from the open market, and to sell food grains to the poor at lower prices than they would pay at private stores.
The federal government buys grain and stores it. Each state can take a certain amount of grain from these stocks based on how many of its residents are poor. The states deliver the grain to subsidized shops and decide which families get the ration cards that allow them to buy cheap wheat and rice there.
The sprawling system costs the government 750 billion rupees ($13.6 billion) a year, almost 1 per cent of India’s gross domestic product. Yet 21 per cent of the country’s 1.2 billion people remain undernourished, a proportion that has changed little in the last two decades despite an almost 50 per cent increase in food production, according to the International Food Policy Research Institute, a research group in Washington.
The new food security law could more than double the government’s outlays to 2 trillion rupees a year, according to some estimates.
Much of the extra money would go to buy more grain, even though the government already has a tremendous stockpile of wheat and rice – 71 million tons as of early May, up 20 per cent from a year earlier.
“India is paying the price of an unexpected success – our production of rice and wheat has surged and procurement has been better than ever,” said Kaushik Basu, the chief economic adviser to India’s Finance Ministry and a professor at Cornell University. “This success is showing up some of the gaps in our policy.”
The biggest gap is the inefficient, corrupt system used to get the food to those who need it. Just 41.4 per cent of the grain picked up by the states from federal warehouses reaches Indian homes, according to a recent World Bank study.
Critics say officials all along the chain, from warehouse managers to shopkeepers, steal food and sell it to traders, pocketing tidy, illicit profits.
Poor Indians who have ration cards often complain about both the quality and quantity of grain available at government stores, called fair price shops.
Other families do not even have ration cards because of the procedures – and often, bribes – required to get them. Some are denied because they cannot document their residence or income. And critics say more people would qualify if the income cutoff were raised; in New Delhi, it is 2,000 rupees ($36) a month, regardless of family size, a sum that many poor families spend on rent alone.
Ms. Devi, who lives in the Jagdamba Camp slum in south Delhi, said she was denied a ration card four years ago. She said her family’s steadiest income is a disability pension of 1,000 rupees a month she gets because of burns suffered in an accident a few years ago. While her husband sometimes earns up to 3,000 rupees a month as a labourer, she says she should be entitled to subsidized grain since they must often get by on 2,000 rupees or less.
“Sometimes, we just have to sit and wait,” she said. “My mother-in-law gets subsidized food and she gives me some when she can.”
Indian officials say they are addressing the system’s problems. Some states, like Tamil Nadu and Chhattisgarh, have made big improvements by using technology to track food and have made it easier for almost all households to get ration cards. Other states, like Bihar, have experimented with food stamps.
Reformers argue that India should move toward giving the poor cash or food stamps as the United States, Mexico and other countries have done. That would reduce corruption and mismanagement because the government would buy and store only enough grain to insure against bad harvests. And the poor would get more choices, said Ashok Gulati, chairman of the government’s Commission for Agricultural Costs and Prices.
“Why only wheat and rice? If he wants to have eggs, or fruits, or some vegetables, he should be given that option,” Mr. Gulati said. “You need to augment his income. Then, the distribution, you leave it to the private sector.”
But most officials say they are worried that if India switched to food stamps, men would trade them for liquor or tobacco, depriving their families of enough to eat.
“It has to improve, I have no doubt about it,” said K. V. Thomas, India’s minister for food, consumer affairs and public distribution. “But this is the only system that can work in our country.”
Officials say Parliament is likely to vote on a new food policy at the end of the year. In the meantime, the government is working on temporary solutions to its grain storage problems, putting up new silos and exporting more rice.
Still, much of it is likely to keep sitting on the side of the road here in Punjab.
“It’s painful to watch,” said Gurdeep Singh, a farmer from near Ranwan who recently sold his wheat harvest to the government. “The government is big and powerful. It should be able to put up a shed to store this crop.”