Restrictions improve grain management

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Inflation may touch 10% by end MarchInflation up at 0.83% on higher food pricesHoarding drives food inflation by 16.32%Inflation a matter of concern: FM

: are low.

More importantly, food has transformed from something that nourishes and provides secure livelihoods into a commodity for speculation and bargaining, with markets becoming integrated. Recent studies show that globally a large percentage of wheat traded in the world’s biggest commodity markets are controlled by investment funds. The government took all measures to align the Indian food economy with the global marketplace and the reforms since 2002 were intended for this. To add to the problems, the government permitted speculative futures trading in essential commodities with a notification in April 2003.

An oft-cited reason for dismantling restriction on stocks is that they are a surplus over what people voluntarily wish to consume, representing a problem of plenty, as people voluntarily reduce their intake of cereals and instead consume animal products (milk, eggs, chicken etc) as their income rises. Associating stocks to demand-side factors, especially with dietary change toward higher-quality food, might be a short-sighted approach as the production of meat and dairy products requires large amounts of grain in the form of livestock feed. In order to produce a single kg of beef, it may take as much as 7 kg of grain. Hence, as caloric intake shifts to more protein, in the long run, more and more grain is demanded for the same amount of calories for consumption.

The basic arguments to curtail the accumulation of private stocks is that they result in greater inequality of access to food in society because during an inflationary period, there is a cut in purchasing power among poorer sections of the population. Moreover, the implementation of targeting food subsidy has not been effective compared with the earlier system of unconditional and universal access by households to the public distribution system. This leads to a situation of institutional denial to the poor of access to cheap food leading to increasing hunger.