This article is stimulated by emotive and somewhat simplistic opinions expressed in sections of the media regarding the export of Indian wheat. Some have argued that India should be self-sufficient in all food, while others have suggested that India can be a breadbasket for the world.
Both arguments point to information gaps. There are several dimensions to consider for a composite and meaningful debate on Indian and global agriculture and food.
To respond to the first suggestion of self-sufficiency, involving trade restrictions and closed borders, it should be recalled that India imports 12-14 million tonnes of edible oil (cooking oil) and is the largest importer of edible oil in the world. To replace this large amount of edible oil with domestic production, India would have to give up the equivalent of more than 40 million tons of food grains, since land availability is finite and finite and any additional acreage in one culture must be replaced by another.
Why India Imports Edible Oil
We are discussing today that India exports between 8 and 10 million tonnes of wheat. Domestic wheat supply and demand are now almost equal and the much-vaunted accumulated surplus has been exhausted, leaving only the minimum strategic reserve required. Imagine that India lacks 40 million tonnes of grain if import substitution of vegetable oils were considered. There is not today and there will not be in the next decade enough cereals available in the world to fill this enormous deficit.
So why does India import so much edible oil? Natural endowments in Indonesia and Malaysia support oil palm plantations at a much lower cost than anywhere else in the world. The same is true for soybeans in South America, a monoculture sown directly on huge expanses of largely rain-fed land, with yields per hectare that are multiple of Indian (and Chinese) yields. This is why Brazilian and Argentine soybean oil is sent to China and India respectively. There is a great competitive advantage even after adding expensive ocean freight.
As said, since there are no new large tracts of agricultural land available for putting under the plow in India, additional acreage in any crop requires us to sacrifice the acreage of ‘another culture. The question then is which one to sacrifice? It must obviously be a vegetable product where we are not a globally competitive producer and which can be imported on a large scale, therefore edible oil.
Moving away from water-intensive rice to move forward
Another essential dimension is ecology and long-term sustainability. There is a clear need to discourage increases in water-intensive rice and sugarcane to conserve water and save our soils for future generations. Shifting land from rice to corn, coarse grains and pulses (which we import from as far away as Canada) is the way forward.
The response to the first suggestion partly responds to the second, India as the breadbasket of the world. India is one of the most intensively irrigated and cultivated countries in the world, but that comes at a cost in a country that is sorely short of water. Our skewed agricultural policy and misdirected subsidies have invariably created surpluses of rice and sugar, the two biggest consumers of water. It takes more than 3 tons of water to grow 1 kg of rice in northern India. The numbers for sugar are about the same. Maharashtra, a state with the poorest water resources, produces exportable sugar surpluses year after year, at a huge cost to the environment and long-term sustainability.
It should be remembered that the cradle of European civilization would be on the island of Crete, and not on the most fertile of the islands. The Minoans of Crete traded their surplus wool, olives and wine to support their civilization. Advocating for complete barriers to international trade and visualizing a utopia of global self-sufficiency is probably reflex and retrograde in a global economy, despite the current short-term distortion.
The vegetarian population to the advantage of India
A large vegetarian population has been to India’s great advantage. The conversion of grains into meat into calories on the plate is much less efficient than the direct human consumption of grains and vegetarian foods. China is rapidly rushing towards grain deficits caused by a rapid conversion to predominantly meat consumption, driven by cultural preferences and economic development. Fortunately, India is culturally largely vegetarian, and many of those who eat meat are limited by economic duress. This has helped India feed its burgeoning millions of people, despite yields plateauing and land being lost to urbanization.
Our country’s policy must also take into account that there is no technological breakthrough of crops on the horizon on a global scale, which will create a drastic change in the yields of one of our main cultures. Handy fruits with irrigation/mechanization/hybrids/traits/genetically modified organisms (GMOs) have already been picked. The last (and only) yield step change in any major crop in India was cotton with a new global technology over two decades ago.
Fertilizer subsidy exceeds health budget
Supply and demand constraints in India will not allow for large exportable surpluses now or in the near future. There is also the issue of politically sensitive indirect subsidies, ostensibly aimed at agriculture. In the current fiscal year, the fertilizer subsidy alone is estimated to be over ₹2 trillion, more than the national health budget. It is widely accepted that investments in capacity building are a much better expense than grants and concessions. This is a placeholder for a larger debate.
The writer was chairman of MSP’s oversight committee, Planning Commission, and is the former chairman of Cargill South Asia. Opinions expressed are personal