Subsidies should be focused towards nutritious food production: Shenggen Fan, DG, IFPRI

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Updated: November 26, 2014 2:05:55 AM

US-based International Food Policy Research Institute (IFPRI) is part of a global network which looks into agriculture and food security issues in developing countries. Dr Shenggen Fan, director general of IFPRI, speaks to FE’s Sandip Das on the challenges faced by small farmers in India.

What would be your suggestion to the new government for rejuvenating the agriculture sector which employs a large chunk of the country’s population?

In India, as the economy is growing, the non-farm sector is booming. This provides a great opportunity for small holders to move out of the farming sector. Once they move out they can enjoy a high income and the farmers left behind can consolidate their operations through greater size of land holding. This we call the ‘Move out and Move up’ strategy. If farmers with small holdings get good opportunities in cities, they should move out and the government should facilitate that process. This transformation has happened in China. To do that, the government needs to ensure that such farmers have their rights over their land intact. Do not change ownership of land. Because after moving into cities, if the small holders want to return to agriculture they should be allowed their land as a social security net.

Indian conditions of farmers and size of landholding are diverse. How would the government approach this sensitive issue of shifting a chunk of population out of agriculture?

Both China and India have been growing at 8% annually in the last many years and even the current growth rate of around 5% is good. We will continue to see people moving out of villages to cities, to non-farm sectors, even overseas in a developing economy like India. The government needs to support those left behind in villages in managing bigger operations, so they can get enough income from the agriculture sector. The government should support these farmers in growing high value crops such as fruits and vegetables instead of rice and wheat.

Are you suggesting that India cut down its rice production as it has already emerged as the biggest exporter of rice in the world?

If India needs to focus on providing nutritional food to a large mass of people, it must change its policy of supporting farmers with minimum support price for growing only rice and wheat. This policy is biased in favour of cereals. Instead, the support price should be towards fruits, vegetables, dairy  and animal products. This bias should be removed and inefficient subsidies should be phased out. Fertiliser, water and power subsidies should be removed so that money saved by reducing subsidies can be invested in better marketing infrastructure, value chain and logistics for ensuring better distribution and marketing of fruits, vegetables, dairy and meat products. The subsidies should be focused towards more nutritious food production. Nutritional food is the key now because a country like India has enough cereal production to support a large number of people.

Nutritional growth of a large population helps in economic growth. The current policy does not pay enough attention to the nutritional aspect; it only provides attention to raising foodgrain output. The focus is on producing more rice and wheat and exporting it while a large number of children have stunted growth and women are malnourished because of nutritional deficiency. Even FAO data indicates there is a large population that does not have access to adequate foodgrain. There is the issue of hidden hunger. Lack of micro-nutrients and vitamins is equally damaging to human growth. And a large population does not get enough nutrition. Another challenge India faces is overnutrition.

You have also said India loses a chunk of GDP growth to malnutrition.

Proper nutrition aid productivity and health. India is losing 2-3% of GDP on the hunger issue. Studies have shown that every rupee invested in addressing undernourishment will give R30 to the economy. Addressing malnourishment is a rights, moral and economic issue.

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