By : S V Vaidyanathan

While onions have been hogging the limelight, inflation has been quietly doing its work with other vegetables. You highlight whatever is the most expendable, and after a lot of hue and cry, sacrifice it, and everyone is happy. Everyone wants onions, they get onions, and they are so happy that they forget chillies and dhaniya and edible oil. And these will continue to push up the inflation rate. But the need not necessarily be so. The media might forget, but the housewife balancing her precarious budget will not, as the government might learn through the ballot box in November.

Inflation is hydra-headed monster, which remained around five per cent till March this year has, in terms of wholesale price index, flared up to over 8 per cent. The consumer price index has shown a 12 per cent rise during the same period. There may be no causative relationship between the BJP's rule and the current inflation. But people are bound to point their accusing finger at the government. Growing dissatisfaction over the price rise could prove more costly to the BJP government and the party.

The present inflation differs both in character and nature from the usual type of inflation. It is neither a cost-push nor a demand-led inflation. It is the price of agricultural commodities and agro-processed food articles that leads the inflationary flare-up in the present case. Prices of onions, fresh vegetables, edible oil and dairy products have risen so high that some of these products have gone out of the common man's reach. The price of edible oil in Gujarat, the principal oil-producing state, has risen by 40 to 50 per cent during the six month period of March to September this year. Fresh vegetable sell at two to three times the price at which they sold during the same season last year. As against that, prices of consumer durables have remained stable or even declined. Similarly, prices of capital goods have shown no perceptible increase during this period. Inflations thus seems to remain confined to the produce of the agricultural sector.

That suggests we have to seek an explanation of the current inflationary crisis inthe performance of the agricultural sector. Not only agriculture growth has been tardy relatively to the growth of demand for its produce, but the growth has also been unbalanced. That has given rise to the phenomenon of accumulated surplus stocks of some crops, particularly wheat and rice, and growing shortage of others. This would not happen in a free market economy.

Market forces would make supply of a commodity adjust itself to its demand in the market. But agriculture sector in India has remained strictly state-controlled for the last four decades. Prices of some principal food and commercial crops are set by the government. Wheat, rice, cotton, sugarcane and oilseeds have all their procurement and support prices set every season by the Centre or the concerned State governments.

That is not all. The government provides generous subsidies to farmers on fertilisers, seed, irrigation water and electricity. Free movement of crops across the States is restricted and supplies of individual crops like cotton and oilseeds get bottled up in the producing states. Price setting by the government has come to be influenced more by political than economic considerations. As a result, agricultural production has come to be not only politicised but also highly stratified, inducing supply and price distortions between different crops. The inflationary situation that we are facing today, therefore, has its origin as much, if not more, in politics as in economics.

The food and agricultural policies are defended by politicians and policy-makers on three grounds: food security of the nation; helping the small and marginal farmers in their productive effort; and protecting the poor consumer against an abnormal price rise of essential commodities. On examination, none of these grounds would stand close scrutiny. Few would accept the argument that farm subsidies that cost the exchequer more than Rs 10,000 crore a year go really to the needy farmers. These are appropriated by the rich farmers who have political clout.

Nor would anyone buy the argument that the present public distribution system in wheat and rice helps the poor consumer. Its real beneficiaries are the rich farmers in the green revolution areas, the Food Corporation of India bureaucracy and the chain of public distribution shops across the country. The system has acquired political overtones as well. Thus Kerala, relatively richer state, gets a larger slice of food subsidies paid out by the centre in the form of supplying subsidied foodgrains for Public distribution them the relatively poor UP and Bihar.

The argument about providing food security through the public distribution system and exercising price controls is also hollow. So far as access to food supplies is concerned, it is already ensured by the fact that the country is self-sufficient in food production and governmental intervenion is not needed for that purpose. Food security in economic terms is another matter. It means that the vulnerable sections should be provided access to adequate supplies of food at affordable prices. A generalised public distribution system that we have at present is a highly wasteful method of providing food security. A better approach is to identify the real poor, give them food coupons as in advanced countries and let them buy food in the open market with these coupons.

If the future inflationary shocks are to be avoided the existing policy framework on agriculture and food security will have to be given a close look. The current crisis would turn out to be a blessing if it triggers rethinking on the policy framework now governing the farm sector. Attention may be drawn in this connection to another point. This is the subtle change in the demand pattern of agricultural produce that has taken place. In the urban areas at least, there is a definite shift in food expenditure of the people from foodgrains to nutritionally richer though expensive items like fresh vegetable, fruit, milk, butter, fish and meat. This is the result of growth of income which is reflected in improved standards of living. This shift relieves pressure on foodgrains prices but increases it on products of horticulture, animal husbandry and the agro-processing industry. The part played by the factor in bringing about the present inflationary crisis, called the onion inflation, cannot be discounted.

Two things are to be done to meet the present emergency. Adequate imports of items like onions that have run into short supply have to be arranged. The announcement that this is being done should have a salutary effect on prices since this puts speculators and would be hoarders on guard and prevents them from rigging the market by cornering the available supplies. Second, strict curbs have to be imposed on distributive trade. Swift and demonstrative action has to be taken against those found guilty of hoarding. There is an impression, perhaps wrong, that since the present ruling party draws most of its political support from the trading class, it cannot and will not act harshly against that class. That impression has to be removed through the demonstration of a strong will on the part of the government to act.

For the long term we have to think of means to keep inflation at bay in our growth process. Revival of that danger after the Indian economy recovers from the present recession is a strong possibility. It is that issues like containing fiscal deficit within manageable limits, exchange rate stability, regulation of money supply, proper interest rate policy, and preventing the emergence of severe imbalances at the macro level, will come alive again. Inflation is a monetary phenomenon. It arises out of budgetary mismanagement, unwarranted increase in unproductive public expenditure, undue expansion of money supply, and surge of illegitimate speculative activity. The key to keeping inflation under control lies in sound fiscal and monetary management. At present, the fiscal management of the country leaves much to be desired. (INAV)

Safeguarding the diversity of nature
to enhance food supply

By : Jatinder Pal Singh Gill

Bent Skowmand is not exactly a household name, but he has more to do with the welfare of the earth's 5.5 billion people than many heads of state. As a plant breeder of at CIMMYT, the internationally funded agricultural research station in El-Batan, Medico, Skovmand recently discovered a rare strain of wheat from eastern Turkey that is resistant to the Russian aphid, an invader that has so far cost American farmers $ 300 million. By using the Turkish strain to develop hearty new hybrid wheats, CIMMYT breeders may help growers outwit the aphid.

Unfortunately, the strains of crops which seem to have almost magical qualities, are becoming harder to find. As farmers go for the highest possible yields these days, they all want to use the same kind of seeds. Individual crops share more genetic material, and local varieties are vanishing. As the explosive growth of population causes more farmers to turn more forest land into fields, the world is losing a marvellous diversity of genetic material that has enabled the plant kingdom to overcome pests, blights and droughts throughout the ages.

Plant breeders have used this genetic diversity to help fuel the green revolution and keep agricultural production ahead of population growth. But as the raw material of the revolution disappears, the food supply becomes more vulnerable to catastrophe. For Skovmand, ''The world has become complacement about food. In the 1970s, the surprise was that India could feed itself. In the years to come, the surprise may be that India can no longer feed itself''.

The Malthusians, who believe that human fertility outstrips the ability to produce enough food, have consistently underestimated how much the technological wonders of the green revolution along with the ability of farmers to make good money growing crops, can spur food production. India's for example, where 1.5 million people died in a 1943 famine, became a grain exporter by 1977, even as it doubled its population.

The momentum of the green revolution has slowed dramatically, especially in parts of India, and Pakistan. In Punjab yields of rice and wheat have begun to flatten despite increasing reliance on fertilisers and better use of water. Elsewhere in Asia, rice researchers have failed to riase yield significantly for more than two decades.

One reason is that field have become poisoned with salts left behind when irrigation water evaporates. Looming in the future are the unknown agricultural impacts of global changes such as ozone depletion. The short-term is not too rosy either. The US corn and soyabean crops are suffering from a severe drought in the Midwest. How much longer, then can the world deliver adequate food to human numbers relentlessly expanding at the rate of 91 million a year?

The likelihood of major food shortfalls has doubled during the past decades. India relies heavily on one type of fast growing wheat, called sonalika, that is susceptible to several diseases. One epidemic in this crop could wipe out India's entire grain surplus. Plant breeders can provide India with wheat strains resistant to the pests but, ''this is not a battle you win just once''.

Most high-yielding wheats and rices derive their short, sturdy stature from just a few ancestors. While these genes may to tough, the genes transferred with them may contain a hidden vulnerability that could allow pests to lay waste to huge areas.

One promising solution to this problem is for breeders to draw genetic material from a wide variety of sources so that bugs and blights are forced to breach many type of defences. Crossing many varieties can then create the best possible mix of traits.

Although plant scientists rely on traditional crossbreeding, they are experimenting with actual genetic engineering. Eventually, they hope to take individual gens from one strain and put them into the cells of another. Researchers expect to isolate gens from plants that have found ways to cope with Ultraviolet radiation, drought, salty soils and other changes future crops may face as a result of mankind's meddling with the earth and atmosphere.

But such techniques will gradually have poorer results if the genetic scientists work keeps shrinking. When so many farmers switch to the popular strians, their wild ancestors and traditional crops can easily disappear.

Agriculture's main defence against the loss of diversity has been the establishment of seed banks, which collect and preserve crop stains. International agencies have helped set up a worldwide network of eight banks that hold myriad varieties of seeds for 25 important food crops. These international centrs serve as vital backstops for national seed collections.

Another strategy for preserving diversity is to encourage formers to maintain a variety of traditional crops. But the global movement of people into cities create tremendous pressures on farmers to grow uniform, easily transportable crops. By 2000, there will be about 400 cities with more than one million inhabitants each containing one-sixth of the world's population.

The rise of megacities in the developing world also thwarts agricultural policies. Mindful that governments get overthrown by city dwellers and not farmers, many Third World regimes artificially lower crops prices to placate their urban populations. In Egypt, livestock growers find it cheaper to feed their animals subsidised bread than to produce grain themselves.

Donald Winkelmann, director general, CIMMYT, notes that a decade ago, India's farmers could thrive even as wheat prices dropped, because production costs fell faster. Now it is harder to lower costs and, ''India may not be able to counter cheap food as it has in the past as an element of industrialisation'.

When it comes to predicting food prices and supplies, optimists have a better track record than pessimists. But few experts would deny that as the human population grows, threats to the food supply become more dangerous. And mankind is losing the weapons to fight those threats it allows the irreplaceable diversity of the plant kingdom to disappear. (INAV)