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Agriculture and Food Security PV Srinivasan IGIDR

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Outline What are Indias achievements in food security? (facts and figures: aggregate and micro) How does agriculture affect food security? Role of policies and institutions Interactions between policies and roles of agriculture

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Food security at the national level aggregate food availability and stability Cereal consumption Food prices Dependence on imports Availability of nutrients Stability in nutrient availability

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Per capita per diem nutrient intake calories (Kcal/day)proteins (grams/day) fats (grams/day) Rural 1993-94 215360.231.4 1999-2000 214959.136.1 RDA 24006040 Urban 1993-94 207157.242 1999-2000 207158.549.6 RDA 22006040

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Stability in the availability of nutrients 40 years, 1961-200020 years, 1981-2000 Probability of a shortfall in consumption below 95% of trend Coefficient of variation* Probability of a shortfall in consumption below 95% of trend Coefficient of variation* Calories8.2%3.617.0%5.2 Proteins20.5%6.122.7%6.7 Fats7.6%3.527.5%8.4

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Food security at the household level Trends in poverty Distribution and concentration of poverty Calorie consumption trends Sources of calories

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Cumulative distribution functions for MPCE- all temp self employed- non agriculture agricultural labor other labor self employed- agriculture 451499.000016.997982

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How does Agriculture affect food security? How does Agriculture affect food security? What are the main channels through which agriculture affects food security? Pecuniary externalities Non pecuniary externalities

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Pecuniary externalities economic access through employment and income generation productivity increase leading to lower prices and higher wages increased demand for non-agriculture products leading to greater employment in non- farm activities in rural and urban areas

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Non pecuniary externalities Increased stability Reduced inequalities Better nutrition, reduced decease burden and greater productivity

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Is self-sufficiency important? provides insurance against unexpected external events Is self sufficiency associated with greater consumption stability? Are food deficit regions calorie deficient?

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Does source of income matter for consumption behavior?

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Budget shares on Cereals

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Budget shares on Milk and Milk products

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Budget shares on Vegetables and fruits

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Budget share on all food items

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Does source of income matter? Are the responses of consumption to income changes different? Regression analysis Dependent variable: Calorie intake or per capita cons expenditure Independent variables: employed in agriculture/ non agriculture household income household size other relevant socio-economic factors and community- level variables

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Income elasticity of food expenditure by household groups CerealsPulsesMilk and milk produ cts Edible oils Meat, fish and eggs SugarVegetabl es All food Bottom 25% households Self employed in non agriculture 0.811.111.481.050.840.961.040.99 Agriculture labor0.761.051.40.941.131.071.030.96 Non - agriculture labor0.58*1.45*0.65*0.930.641.32*0.940.87* Self -employed agriculture 0.61*1.131.151.011.031.10.90.88* Others0.861.351.371.311.251.220.681.13 Top 25 % households Self employed in non agriculture 0.110.470.90.40.710.530.680.52 Agriculture labor0.24*0.360.45**0.330.510.540.38**0.39 Non - agriculture labor0.210.530.57**0.470.60.480.56*0.44 Self -employed agriculture 0.150.480.870.410.760.7**0.680.58* Others0.110.370.880.380.660.450.70.49

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Income elasticity of calories Total caloriesCerealsNon cereals Self employed- non agriculture0.400.120.92 Agricultural labor0.47**0.27**1.02** Other labor0.380.120.98 Self employed- agriculture0.430.180.95 Other income sources0.370.100.83**

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Role of policies and institutions Price support and price stabilization policies Social safety net policies: PDS, EGS, ICDS etc Input subsidies Public investment Self help groups and user associations

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PoliciesImpacts on Self sufficiencyStability in food production Stability in prices/ consumpti on Food Security (Economic and physical access to food) Exchange rate policies (e.g. currency devaluation)+??? Monetary policies: e.g. increase credit supply or reduce interest rates ++++ Fiscal policies: e.g. decrease in public expenditure---- Trade liberalization--?? Marketing policies: e.g. deregulation of domestic trade??++ Price support policies for agricultural output++++ Input subsidies: on electricity, water, fertilizers and credit++++ Public investment: irrigation, roads, marketing infrastructure, research and extension ++++ Public Distribution System (PDS) providing price subsidies to consumers on rice, wheat, sugar and edible oils ++++ Employment Guarantee in lean agricultural season and food for work programs for rural workers below poverty line ++++ Mid-Day Meals scheme (distribution of foodgrains or providing cooked meals in primary schools) ++++ Nutrition schemes such as ICDS (supplementary feeding of malnourished children, adolescent girls and pregnant and nursing mothers) ++++

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Policies that diminish the importance of self- sufficiency Policies that promote domestic and external trade through reduced transaction costs and transport costs (lead to reduction in the price-spread between surplus and deficit regions) strengthen the PDS in deficit regions by providing higher and better targeted subsidies Lesser dependence on buffer stocks, use of variable levies and greater role for markets in managing risk- commodity futures

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Policies enhancing positive externalities Investment in Ag research for poor areas and farmers and natural resource management Rationalize regressive input subsidies and increase public investment in poor areas new institutional mechanisms for effective cost recovery and rational use of inputs (irrigation water and power) Decentralized efforts and better institutional mechanisms to reduce leakages, improve targeting in PDS, JSGY, and EGS etc.

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Summing up Need to take a broader perspective Not just availability and stability in the aggregate Focus on economic access and cons stability Not just cereal security diversified diet Nutrition security Not just calorie intake- micro nutrients important Focus on malnourishment not just under nourishment

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Summing up Agriculture is important for food security Need for policy intervention Buffer stocks, price stab, PDS, EGS, other safety nets Public investment and ag research and extn should address needs of poor and marginal areas Self sufficiency important for strategic reasons, livelihood, presence of weak redistributive mechanisms Greater cons stability, leads to better nutrition intakes

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Summing up Source of income not important Differences in elasticities across hh types small But poor have higher calorie-income elasticities Need to increase their purchasing power Need to adopt policies that enhance positive externalities

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The End Thank You!