Policy vs. Poverty
6 May 2008 Offering a perspective on last week’s column, one FCI reader wrote to describe India’s experience of the rice lock-up, noting that the month-long boycott on rice exports in India has resulted in “Indians, perticularly from south India- Andhra Pradesh are at spending $20 dollars for 20 lbs. at present, and the same we used to get for $8 last year.” He continues, adding that “As it it rightly mentioned by you, the cost of inputs gone up and thus the farmers in rice areas are not much taking interest to boost up their yields, since they get the recovery not with any margins or sometimes even at loss. The govt also plays lot of misdeeds which are further responsible for lesser areas of rice and yields,” as the gap between producer and consumer in rice prices is more than 200%; and, he argued, both sides could gain from a more equitable system.
Policy issues also created a confused situation in terms of the pending US Farm Bill. India, long in league with Brazil and other countries in the movement to stop the US and other countries from offering subsidies which artificially lower crop prices and make it difficult for developing nations to earn living wages. However, recent reports have noted an Indian official as stating that subsidies in the US could create many benefits in the current crop situation, as an artificial deflation of food prices would help slow down inflation in India and elsewhere, and make food more affordable for the world’s poor.
Of course there are no clear answers to the dilemma. Advancements are being made in food production technology, and there is room for yield improvements in many rice growing regions. At the same time, food crops are still locked in a three-way fight for acreage: food vs. fuel vs. fiber — and don’t count the latter out just yet; as supplies dwindle and demand remains solid or grows, cotton price increases could join in the tug-of-war.
The industry is right to welcome the price increases in agricultural products as a whole. But there still could be a lot of jockeying for position and continued instability in the types and amounts of the crops grown as the world market learns to adjust to the newer, higher value environment of twenty-first century agriculture.
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