Protect rural incomes to tackle the current food security threat

Source: The post is based on the article “Protect rural incomes to tackle the current food security threat” published in Live Mint on 14^th July 2023.

Syllabus: GS 3 – Agriculture – Issues of Buffer Stocks & Food Security

Relevance: concerns with rising food inflation

News: Recently, the National Statistical Office has released the retail inflation data.

What are the key highlights of the retail inflation data?

The data shows a moderate rise in inflation to 4.81% in June from 4.3% last month. However, despite the increase, this rate is within India’s tolerance band.

Further, food inflation has climbed to 4.49% from 2.96%, which is a cause for concern for the government.  

What has caused the rise in food inflation?

Analysis of consumer price index (CPI) data shows that the foodgrain group contributed the most to the rise in food inflation.

For instance, cereal inflation stands at 13%, with both rice and wheat experiencing 12% inflation. Arhar (tur), the dominant pulse item also shows inflation of 27%.

Therefore, the concern lies with the rising foodgrain inflation, particularly for cereals and pulses.

What are the concerns present with food grains?

Wheat: Wheat inflation has remained in double digits for over a year.The government was able to procure only 26 million tonnes of wheat against a target of 34 million tonnes, which shows less wheat supply in the market.

Wheat prices have remained high despite massive open market operations by the government before the procurement season. This brings concern that wheat supply may not be as high as projected.

As a result of low procurement this year and the last, wheat stocks are barely sufficient to meet the needs of the Public Distribution System (PDS). It leaves little scope for further market intervention.

Rice: Despite the government holding sufficient stocks, regional spread of the monsoon has raised concerns.

While there has been above -average rainfall in north-west India, there is a deficit in the rest of the country. This excess rainfall in northwestern India has caused floods which may affect rice crops.

Whereas a deficit in rainfall in eastern and peninsular India may result in lower output of rice in the kharif season.

Pulses: There are problems with pulses. Arhar sowing this year is lower by almost 10%. Even oilseeds sowing is down by more than 10%, with soybean sowing falling 14%.

What can be the implications of inflation in food grains?

The inflation in food grains may affect other food items like milk.

Further, as food grains have a significant weight in the consumption basket, the rising prices are likely to squeeze demand for other commodities. Therefore, government intervention is necessary to protect the income of farmers.

What measures can be taken by the government?

While food security interventions, such as the Public Distribution System (PDS), can provide some relief, a more comprehensive strategy is required to protect the rural economy.

This will require the government to step up public spending to generate demand in the economy, raise incomes and create non-farm employment.