All this may baffle many Indians. There is a mindset that assumes this is a nation of perpetual food scarcity, incapable of generating surpluses. There will also be surprise that India is exporting anything when food inflation is running at double digits. And India remains deficit in many areas. It imports nearly half of its cooking oil requirements and scours the globe every year for legumes and pulses to give its people their daily dal.
It is among the world’s five largest producers of poultry, eggs and dairy products but consumes everything it makes and more. What India has learnt in the past decade is that agricultural exports are an essential part of its food security. Food prices are largely driven by the cost of farm inputs like oil, gas and land. For farmers to make the necessary investments to keep increasing their yields, they need to sell at profitable prices.
India has two ways to ensure that farmers get that price – a politically determined and fiscally unsound minimum support price or market-based and profitable exports. The latter is obviously the better option. In addition, food prices in India are increasingly determined by global benchmarks. When India exports rice or sugar, it helps depress the world price which, in turn, keeps down domestic food inflation.
Perhaps most important is that the returns from exports, and the concomitant corporatisation of farming, have helped put an end to the chronic shortages that afflicted the industry. And nothing drives up prices or causes social pain as much as simple lack of supply. Cotton, for example, is a farm sector transformed by Bt technology, capital investments and exports. Production has boomed and prices have fallen – last year they dropped 17%.
The same could happen with sugar or dairy if state governments were prepared to free them from nonsensical market restrictions and allow the private sector more leeway. The other side of modern food security is to guarantee overseas supplies for foodstuffs India is unlikely to ever produce enough of. Thus pulses are probably best left to vast, machine harvested drylands in Canada and the United States. Food security today is not about self-sufficiency, it is about recognising that food is a global commodity and being a major force in that market.