Poor farm technology cause of food inflation: Report

?Food products currently achieve less than 60% of potential yield?

On Friday, when the Central Statistics Office released data showing consumer inflation for vegetables, fruits and eggs were all in double digits, a report released at the same time showed why this trend was unlikely to ease off soon.

The report noted that agriculture, basically food products presently achieves less than 60 per cent of the potential yield for most crops due to poor technology adoption and weak links between farmers and food processing industry, across India.

Yet a the same time Indians are now spending much more on high value foods with consumption shifting from plant to animal based protein as disposable incomes rise.

The demand-supply asymmetry has become structural that can only be met through radical increase in the production of certain high value foods such as soya bean, potato, mango, banana, and poultry, notes the joint report by the Confederation of Indian Industry and McKinsey & Company, FAIDA.

?It is now imperative that India upgrade its agricultural practices and techniques, as well as well as accelerate growth in allied business fields such as food processing, in order to support the country?s consumption demand changes over the next 20 years,? said Adil Zainulbhai, India chairman of McKinsey.

Lead author of the report Barnik Mitra said the report suggests setting up of a farm gate to market infrastructure authority which will incentivise setting up of infrastructure like national cold chains.

He acknowledged this will need centre and state coordination but did not comment if it was a means to by pass the Agricultural Produce Marketing Committee Act of each state government that restrict the options for farmers.

The key to the changes was making more agro-crops run through the value addition chain. Only if food processing, currently handling less than 10 per cent of the total agricultural output reached close to 20 per cent could there be improvements in farm gate income over the decade which in turn could double the income of farmers, the report suggests.

Zainulbhai said they had focussed on the five crops selected in the Faida report based on the feedback received from the state governments. Mitra said along with onion, brinjal and tomatoes these were among the top ten non-cereal food products that India could harvest.

?If India is to realise its vision of becoming a global powerhouse in food and agriculture, it needs a second Green Revolution,? says Rakesh B Mittal, past chairman, CII National Council on Agriculture said at the release. According to the report India must shift from a programmes and schemes approach to a mission mode, to create an enabling environment to attract large scale private sector investments in agriculture.

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First published on: 13-04-2013 at 09:02 IST