Agriculture Reference
In-Depth Information
Some recent studies make more plausible predictions. According to one
such study (Bansil 2003), total gross requirement of foodgrain is not likely to
exceed 241 million tons by 2020. That is, foodgrain production has to grow
by less than 2 million tons a year, or less than 1 percent, to meet the projected
demand. On the supply side, projections predict that the total supply of food-
grains will be around 248 million tons in the worst-case scenario and 290 mil-
lion tons in the best-case scenario (Kumar and Mittal 2003). In other words,
India may remain at least a marginal net exporter of rice and wheat in the com-
ing decades. Thus, it is unlikely that the country will enter the world market as
a large net buyer of grain on a regular basis in the foreseeable future. Further-
more, the thinness and volatility of the world grain market do not pose the same
degree of concerns as they did 40 years ago.
Ability to Participate in the International Market
One of the most significant drivers of Indian food policy was its limited ability
to participate in the international markets. In the 1960s, the country had very
little foreign currency reserves, and therefore, food security depended heavily
on India's political relationship with food aid donors. The severity of the prob-
lem is shown in Figure 3.1, which plots the value of cereal imports as a per-
centage of foreign currency reserves.
9
Three-year averages show that, except
for the period 1970-72, the total cereal import value exceeded foreign currency
reserves in India until about the mid-1970s (Table 3.3). These figures clearly
demonstrate the critical link between foreign currency reserves and food secu-
rity in the years when India adopted policies to increase production and attain
self-sufficiency in food.
India's experience in the mid-1960s, when the country was hit by two con-
secutive droughts, exemplifies how critical this link is. In 1966, the country
needed more than 10 million tons of food to feed its populations and had about
US$419 million in foreign currency reserves. Thus, spending the entire reserves
could buy only 6.76 million tons of wheat at current prices (US$62 per ton).
Therefore, when the United States called off food assistance under PL 480, the
situation quickly turned into a crisis.
10
India had to appeal to the United States
to reconsider food aid assistance. The United States eventually bailed out India
by supplying more than 8 million tons of food aid. This experience severely
strained national pride, and consequently, achieving food self-sufficiency be-
came the government's top priority, which it articulated in the fourth Five-Year
Plan.
9. Cereal import includes government imports, food aid, and other commercial imports. For-
eign currency reserves do not include gold value, special drawing rights, and funds with the IMF.
10. PL 480, Food for Peace, is “the basic legislation, which has been modified many times,
[that] establishes the U.S. policy of using the country's abundant agricultural resources and food
processing capabilities to enhance food security in the developing world through the provision of
culturally acceptable nutritious food commodities” (USAID 2000).
