At a guest lecture at IIMB, Ashok Vishandass, Member, CACP, draws attention to the Rs. 74,000-crore import of pulses and oilseeds in 2012-13
Dr. Ashok Vishandass, Member, Commission for Agricultural Costs and Prices (CACP), Government of India, was at IIM Bangalore on Tuesday (March 11) to address students on the Role of Agriculture in National Income and Agricultural Pricing in India. He answers questions on the rationale of MSP, the need for a yellow revolution in India and the buffer stock policy. Edited excerpts from the interview.
Food habits and dietary patterns in India are changing. What are the plans for providing rich protein diet, including pulses to the Indian Population?
As income levels increase, food habits of people change. This happens across time and space; it has happened in countries across the world. People move from cereals to pulses to other protein-rich food like beef (if you are non-vegetarian) depending upon a person's needs. In India, we have realized that pulses are where we need to do more in terms of domestic production because we are deficient - we are importing a lot of pulses. Last year, we imported pulses worth more than Rs. 11,000 crore. For vegetarians, pulses are very important. So, we need to focus on pulses. In the Commission for Agricultural Costs and Prices, our mandate is to look after 23 commodities - we recommend the minimum support price (MSP) of these 23 commodities. Pulses come under these 23 commodities. If you look at the last 3-4 years, our emphasis has been disproportionate (when compared to other crops) on pulses - we have been increasing MSP for pulses (compared to other crops). This is the signal the CACP is sending out.
What is the reason for the ever increasing minimum support prices for food grains?
I would like to put this in perspective. Prices are not arbitrarily decided. We consider several factors when we decide MSP. Last year, we did not increase wheat prices. There are a few instances when we have not increased prices. On the other hand, we did increase MSP on cereals. We wanted to give the right signal to the farmers as regards the right price. When the situation so warrants, then we increase MSP. It is all based on economic sense; it is not arbitrarily done. And when the situation warrants, why not extend the MSP to our own farmers instead of extending it to farmers of other countries by importing food grains!
What is the rationale of MSP?
When we decide the Minimum Support Price, we look at 5-6 factors. We consider the cost of production because farmers have to be taken care of; we consider the demand-supply pattern in the country; we consider the consumer - we have to execute a fine balancing act between the producers on one side and the consumers on the other; we consider domestic and international prices; and we consider terms of trade between agriculture and non-agriculture sectors. Hypothetically speaking, if MSP wasn't in existence, there are studies which have established that there wouldn't have been public stocks of a commodity and the private players would have jacked up the prices, forcing the consumer to pay dearly for it. When we decide MSP, then the public authorities such as the Food Corporation of India (FCI) procure the commodity and once they procure, then the private players know that the government has so much stock and understand that they cannot arbitrarily jack up the prices. To give an example, onion prices shot up recently. Onion is not under the domain of MSP.
In view of the falling crop area and fluctuating consumption of chemical fertilizers, how do we maintain high food production in India?
In my view, it is not important how much area is being cultivated; it is more important to note how much we are able to produce. To meet demand, we have to increase productivity. If we are able to produce more with fewer resources, then we are being efficient. We should use our resources - human resources, land and water - efficiently because resources thus saved can be used elsewhere. That is how productivity increases and cost of production goes down. Then we become competitive both in domestic and international markets. Once we become competitive, then farmers' income will also increase and this will reduce rural poverty. Increased productivity will have a cascading effect.
Is there a need for yellow revolution in India?
Sure. On the one hand, our granaries are overflowing with rice and wheat, but on the other we are battling a shortage of oilseeds and pulses. To illustrate the point, we imported pulses and oil seeds worth Rs 74,000 crore in 2012-13. We are short in oilseeds by 50 per cent of our consumption. This is something we have to address on priority. So, yes, yellow revolution is definitely required.
Green Revolution resulted in depleting water table in Punjab and excess use of pesticides has degraded the quality of soil. Any lessons learnt from that experience before implementing Green Revolution in North East?
My personal view is that everybody should not grow every crop. If you look at the agricultural history of Punjab, they were famous for sarson ka saag and makki ki roti. But they don't grow sarson ka saag or makki anymore. Why? Because we are not pricing water and power to reflect the scarcity of these resources. As the financial cost of natural resources is not reflected in the prices, so farmers do not take these factors on board. Agriculture is a private enterprise - farmers are free to grow what they want - but the Government can send a signal that such a crop is suitable for a certain area through various ways.
What is buffer stock policy?
As a principle, we must have buffer stock. The question arises not about whether we need buffer stocks but about how much of it we need. There are certain things that a country has to do despite the costs. Buffer stock is important to maintain the food security of the nation, but how much now that is being worked on by the Ministry of Food & Consumer Affairs.
Short Bio of the Speaker: Ashok Vishandass assumed the Office of the Member (Official) of Commission for Agricultural Costs and Prices (CACP) on June 14, 2011. He did M. Stat. (Mathematical Statistics, Gold Medalist), MA (Economics) with specialization in rural development from University of Manchester (U.K.), MBA (Financial Management) and Ph.D. (Agricultural Economics). His work experience and academic inclination bear a testimony to his keen interest in social sectors such as agriculture and rural development. He is elected Vice President of Indian Society of Agricultural Statistics (ISAS).
At a guest lecture at IIMB, Ashok Vishandass, Member, CACP, draws attention to the Rs. 74,000-crore import of pulses and oilseeds in 2012-13
Dr. Ashok Vishandass, Member, Commission for Agricultural Costs and Prices (CACP), Government of India, was at IIM Bangalore on Tuesday (March 11) to address students on the Role of Agriculture in National Income and Agricultural Pricing in India. He answers questions on the rationale of MSP, the need for a yellow revolution in India and the buffer stock policy. Edited excerpts from the interview.
Food habits and dietary patterns in India are changing. What are the plans for providing rich protein diet, including pulses to the Indian Population?
As income levels increase, food habits of people change. This happens across time and space; it has happened in countries across the world. People move from cereals to pulses to other protein-rich food like beef (if you are non-vegetarian) depending upon a person's needs. In India, we have realized that pulses are where we need to do more in terms of domestic production because we are deficient - we are importing a lot of pulses. Last year, we imported pulses worth more than Rs. 11,000 crore. For vegetarians, pulses are very important. So, we need to focus on pulses. In the Commission for Agricultural Costs and Prices, our mandate is to look after 23 commodities - we recommend the minimum support price (MSP) of these 23 commodities. Pulses come under these 23 commodities. If you look at the last 3-4 years, our emphasis has been disproportionate (when compared to other crops) on pulses - we have been increasing MSP for pulses (compared to other crops). This is the signal the CACP is sending out.
What is the reason for the ever increasing minimum support prices for food grains?
I would like to put this in perspective. Prices are not arbitrarily decided. We consider several factors when we decide MSP. Last year, we did not increase wheat prices. There are a few instances when we have not increased prices. On the other hand, we did increase MSP on cereals. We wanted to give the right signal to the farmers as regards the right price. When the situation so warrants, then we increase MSP. It is all based on economic sense; it is not arbitrarily done. And when the situation warrants, why not extend the MSP to our own farmers instead of extending it to farmers of other countries by importing food grains!
What is the rationale of MSP?
When we decide the Minimum Support Price, we look at 5-6 factors. We consider the cost of production because farmers have to be taken care of; we consider the demand-supply pattern in the country; we consider the consumer - we have to execute a fine balancing act between the producers on one side and the consumers on the other; we consider domestic and international prices; and we consider terms of trade between agriculture and non-agriculture sectors. Hypothetically speaking, if MSP wasn't in existence, there are studies which have established that there wouldn't have been public stocks of a commodity and the private players would have jacked up the prices, forcing the consumer to pay dearly for it. When we decide MSP, then the public authorities such as the Food Corporation of India (FCI) procure the commodity and once they procure, then the private players know that the government has so much stock and understand that they cannot arbitrarily jack up the prices. To give an example, onion prices shot up recently. Onion is not under the domain of MSP.
In view of the falling crop area and fluctuating consumption of chemical fertilizers, how do we maintain high food production in India?
In my view, it is not important how much area is being cultivated; it is more important to note how much we are able to produce. To meet demand, we have to increase productivity. If we are able to produce more with fewer resources, then we are being efficient. We should use our resources - human resources, land and water - efficiently because resources thus saved can be used elsewhere. That is how productivity increases and cost of production goes down. Then we become competitive both in domestic and international markets. Once we become competitive, then farmers' income will also increase and this will reduce rural poverty. Increased productivity will have a cascading effect.
Is there a need for yellow revolution in India?
Sure. On the one hand, our granaries are overflowing with rice and wheat, but on the other we are battling a shortage of oilseeds and pulses. To illustrate the point, we imported pulses and oil seeds worth Rs 74,000 crore in 2012-13. We are short in oilseeds by 50 per cent of our consumption. This is something we have to address on priority. So, yes, yellow revolution is definitely required.
Green Revolution resulted in depleting water table in Punjab and excess use of pesticides has degraded the quality of soil. Any lessons learnt from that experience before implementing Green Revolution in North East?
My personal view is that everybody should not grow every crop. If you look at the agricultural history of Punjab, they were famous for sarson ka saag and makki ki roti. But they don't grow sarson ka saag or makki anymore. Why? Because we are not pricing water and power to reflect the scarcity of these resources. As the financial cost of natural resources is not reflected in the prices, so farmers do not take these factors on board. Agriculture is a private enterprise - farmers are free to grow what they want - but the Government can send a signal that such a crop is suitable for a certain area through various ways.
What is buffer stock policy?
As a principle, we must have buffer stock. The question arises not about whether we need buffer stocks but about how much of it we need. There are certain things that a country has to do despite the costs. Buffer stock is important to maintain the food security of the nation, but how much now that is being worked on by the Ministry of Food & Consumer Affairs.
Short Bio of the Speaker: Ashok Vishandass assumed the Office of the Member (Official) of Commission for Agricultural Costs and Prices (CACP) on June 14, 2011. He did M. Stat. (Mathematical Statistics, Gold Medalist), MA (Economics) with specialization in rural development from University of Manchester (U.K.), MBA (Financial Management) and Ph.D. (Agricultural Economics). His work experience and academic inclination bear a testimony to his keen interest in social sectors such as agriculture and rural development. He is elected Vice President of Indian Society of Agricultural Statistics (ISAS).