Over the last 15 years, India’s food and agriculture systems have been severely destabilized as a result of policies of economic globalisation and trade liberalization. Two aspects of this destabilization are the agrarian crisis and the rise in food prices. Both have their roots in the same processes of globalisation. However, the government treats each separately and independently, and every false solution makes the crisis deeper.
The agrarian crisis has emerged as a result of the withdrawal of the state from public investment in agriculture, public supply of seeds and inputs, public procurement for public distribution of food. These functions have been increasingly handed over to corporate players who work for profits, not the food security of the poor or the livelihood security of farmers.
The World Bank imposed Structural Adjustment Programme of 1991, and the Rules of WTO that came into force in 1995 have jointly worked to dismantle the public framework for food sovereignty and food security and the forced integration of India’s food and agriculture systems with the food and agricultural systems of rich countries.
This has resulted in deep agrarian crisis and an emerging food crisis, with farmers incomes crashing while food prices go through the rood. The food and agriculture ills the country faces are a direct result of policies of corporate globalisation. Yet it is the globalisation pill the government is offering as a cure for globalisation ills.
Prices of food started to rise as a result of India’s domestic market being connected to global markets, especially through the imports of edible oil and wheat. In the early days of globalisation, the agribusiness that dominates trade lowered prices to grab markets. This is what happened with the dumping of soya in the 1990s. Now that global corporations like Cargill have created import dependency, they are increasing prices. Price fixing is a common practise of MNCs.
In addition to price fixing there is speculation through futures trading. And climate change as well as diversion of foods to biofuels are also adding an upward pressure on international prices. The increase in international prices provides a perfect reason to focus on food sovereignty. It makes both political and economic sense to focus on self-reliance in food and agriculture.
While India was being made dependent on imports of food staples, Indian agriculture was being shifted to growing cash crops for exports. The agriculture export zones were a major policy thrust. While the government has banned export of pulses and non-basmati rice, its priority to diverting land to fruits and vegetables and cotton for exports continues. This too has impact on food security and food self-reliance. Vegetables prices have also gone up. Why is there a ban on exports of pulses and no ban on exports of vegetables? Is it because powerful countries like U.S want to control the market of pulses, including selling to India? And will India continue its policy of being a supplier of cheap vegetables to rich consumers in the North while the poor in India are denied food? Instead of decoupling the domestic food economy from the unstable, speculative global market, the government is strengthening the coupling, thus introducing major turbulence in both production and prices.
Low import duty of edible oil had already had negative impact on our coconut farmers, mustard farmers, soya and groundnut farmers. The government has further lowered customs duty, which will aggravate the agrarian crisis for edible oil growers and also harm public health because the imported genetically engineered soya oil and palm oil are not really edible oils, they are industrial oils introduced into the food system by global agribusiness.
A year and a half ago edible oils carried an import duty of 99.4%. In late March the Government brought down the duty of palm oil from 45% to 20%. This has now been cut to zero.
Basic Custom Prior to April 2008 Duty in percent From April 1, 2008
Crude Palm Oil 20 0
Refined Palm Oil 27.5 7.5
Crude Sunflower Oil 20 0
Refined Sunflower Oil 27.5 7.5
CrudeSoyabean Oil 40 0
Refined Soyabean Oil 45 7.5
(Business Line 2.4.08)
As a result of reduction of import duties on edible oils, the wholesale price of mustard oil came down from Rs. 80/kg to Rs. 68/- kg (Business Line 2.4.08). Since the duty cut has been announced just as the mustard is being harvested, mustard growers will face a deeper crisis than they are already facing.
Kerala Chief Minister, V.S. Achuthanandan has said that the Union Government’s decision to withdraw duty on edible oils would be a big blow to Kerala as it would bring down the price of coconut, a major farm produce of the state (Hindu 2.4.08).
Instead of protecting our rich biodiversity of oilseeds and our healthy indigenous edible oil, the government is destroying our biodiversity and oil seed farmers to make us dependent on bad oils which will in anyway not be available in the future because they will be used to produce biofuels for the cars of the rich.
Mr. Achuthanandan said the right way to contain the prices of essential commodities was to strengthen the public distribution system. However, this too the government is dismantling.
First the universal PDS was destroyed and replaced by the TPDS on grounds that this would reduce public expenditure on food subsidies. However, the food subsidy bill has kept going up even while larger numbers go hungry. The wheat allocation for BPL category households has dropped from 7.34 million tones in 2005-06 to 5.5 m.t. in 2006-07 to 1:735 m.t in 2007-08. BPL households earn less than Rs.330 a month.
The reduction in off take led to a build up to stocks with FCI. This was used to open up markets to private players. The APMC Acts were dismantled. Global giants like Cargill, ITC, Lever, AWB bought up food grains and drove the prices up. The center had also dismantled the essential Commodities Act, which prevented hoarding and speculation. While the Government puts ads against hoarding, private mandis allow leagalised hoarding and speculation.
The seeds of the price rise were sown with the corporatisation of India’s food markets. The artificial scarcity this created for the PDS system was then used as an excuse to import high cost low quality wheat, which further pushed up prices.
Increasing dependence on imports, will not solve the problem because international prices will keep going up under the triple pressure of speculation, climate change and biofuel and also because many countries Argentina, Ukraine and Russia have imposed export controls.
Neo liberal economist Bibek Debroy has welcomed the food crisis "the food crisis may finally catalyse agro reforms" he says in his article "No Time for Field Theories" (Indian Express 2.4.08). "Liberalisation and integration bring domestic prices closer to global prices.
Hence, Indian consumers will pay more for agro products, but pay less for manufactured products. That’s the reform argument".
However, most poor Indians who are earning less than Rs. 20/- a day only spend on food – not on fridges and A.C’s. They can only loose with rising food prices. What economists like Debroy forget is that globalisation links prices, but wages grow more unequal. Rising prices with lower incomes for the poor translates into hunger and famine. While Debroy might celebrate the rising prices of food in India due to integration of our food economy with the corporate controlled global food economy, the people of India are not celebrating. With 90% of the incomes of the poor, and 45 – 55% incomes of the average Indian going to food, the globalisation recipe does not work in a period of global rise in food prices.
The agrarian crisis and the rise in food prices have the same roots in globalisation policies, which have promoted the corporate interest and discounted the rights of farmers and consumers. These policies have been based on India growing export crops such as cotton and vegetables, and importing food staples such as wheat and edible oils. They have been based on dismantling the public systems on which agriculture and food security rests. The food crisis cannot be solved by pushing more trade liberalization and further undermining our food security and food sovereignty.
The solution to bringing food prices under control and ending farmers indebtedness and suicides are same – the promotion of food sovereignty based on maximizing nutrition per acre while lowering input costs, as well as on localization of distribution chains.
Globalisation ills need a localization pill. Not more globalisation.