Structure of Food Crisis in Rural India

It is generally believed that since cultivation is undertaken in rural areas, the rural households do not face food stress and food price increase is not any issue. Surely, food production is a rural phenomenon but since upto one half of rural households are either land less or hold small and unproductive land, such households are subjected to sever food shortages. During the visits to rural areas in three states of Uttar Pradesh, Madhya Pradesh and Karnataka, it was possible to find out the barest minimum amount of income needed for a typical family to ensure food consumption (the kind of food which is normally consumed in rural areas) and meet other expenditures on minimum needs. This amount works out to be Rs. 31, 600 per annum; but a large number of rural households are unable to earn this sum, and there is a shortage ranging from Rs. 7,400 in MP, 6,400 in UP and 4,300 in Karnataka. The shortfall of Rs. 7,400 for a family of 5 members, for example, in MP is despite income accruing to the family from agriculture of Rs. 5,600, from wages of Rs. 7,500, sale of agricultural by products worth Rs. 2,000, from cattle Rs. 4,000, a total of 4,220 subsidy / cash transfers received from a number of public programs such as PDS, NREGA, ICDS, MMD and pension schemes, and also Rs.900 on average received in remittances. The multiplicity in source of income itself is a strategy to ensure adequate income receipts but the cost of living even rural areas is higher for over one third of households, if not more.

We also measured food eaten by all the family members a day before the date of visit to the households. Overall all the daily consumption of cereal per person is estimated to be 540 gm in urban and 462 gm in rural areas. As expected individuals in the working ages of 15-49 years large amounts with the exception of urban areas in UP and MP where those aged 50 + consume largest quantities. In urban areas, older men and women consume 219 grams of vegetable per capita and in rural areas all adults consume just about 162 grams. Although milk consumption is relatively high in urban areas, and amongst the older ages the amount consumed is a meagerly 75-85 ml and the average is around 55 ml in rural areas. It is only in Karnataka we found that children less than 14 year old are give relatively larger amounts of milk compared to adults which is encouraging. Further, we found that adult males who consume more, but female children consume relatively more than the boys is all states. There is no differential in consumption of food items amongst men and women in the working age group. However, again female children are found to consume more vegetables compared to the boys. It is only in case of milk that boys have better consumption compared with girls, and this can also be a reason for relatively lower intake of cereals and vegetables amongst boys.

Food Consumption a day previous to interview
by place of residence and age of individual

State All cereals (gm) All Vegetables (gm) Milk (ml)
0 to 14 15 to 49 50 + 0 to 14 15 to 49 50 + 0 to 14 15 to 49 50 +
Rural
All 347 493 462 117 163 162 61 53 71
UP 335 478 477 103 144 153 63 40 67
MP 376 587 548 111 159 151 55 56 77
Karnataka 310 396 392 155 188 178 71 64 71
Urban
All 314 487 540 137 190 219 85 75 77
UP 367 562 750 124 163 166 56 67 86
MP 373 580 635 135 176 209 60 78 78
Karnataka 292 420 407 158 218 261 98 55 55
Delhi 260 460 458 132 184 194 111 105 127
Source: Author’s estimates - food quantities are measured from 559 deprived households of UP, MP, Karnataka and Delhi
during September to November 2009.

In the following we narrate typologies which help in explaining behavioral differentials and other characteristics of residents with respect of response to food price increase. Broadly, people’s responses can be differentiated based on ‘perceptions’, ‘opportunities’, idiosyncratic shocks’, ‘social networks’ and ‘safety nets’ one experiences with.

Perception: The way quality of life is understood differ considerably between rural and urban areas, reflecting the exposure to the level of modernization, for example in urban areas which broadly vary according to size of town, and intensity and quality of public infrastructure and governance. Rural life style is sedentary and the one anchored upon contentment with limited demands if any. Such behavioral variation is both a virtue and a curse. ‘Virtue’ to the extent that it makes their limited life style manageable and perceptible desire to lead a content life; where as a ‘Curse’ when households are unable to benchmark or even understand the mechanisms to improve standard of life at a minimum or comfortable level as recognized by modern standards; for example minimum levels of schooling, basic levels of nutrition, health and hygienic conditions, housing and so on. Therefore, the food price response differs considerably as to variation in food habits and extent to which communities and households depend upon non-local markets to access culturally appropriate food products when not self-produced.

Opportunities: Large variations are noticed in terms of opportunities that the communities and households have not only for earning income but also to interact with markets. Rudimentary nature of local labor market often sustained based one exchange labor and non-monetized considerations at least in rural areas is causing labor mobility which can be characterized as migrant labor. One finds a considerable economic prosperity amongst households having at least one member as a labor migrant, but often one finds the whole families migrating out for short periods of 4-8 months, but also for much longer time periods. Most of the households in the urban periphery are migrants from rural out backs, and it appears they are pushed out of rural life both by expectations as well as economic stress, while some are able to capitalize upon their skills and education, most have fallen deeper in to poverty trap due to confrontation with urban monetized and somewhat standardized life and their inability to meet those expectations. What is clearly evident is a complex urban sociology and economy which in some places provides for a living and for a few others opportunities do not exist. Such situations are highly local but it would be possible to profile urban living standards through further research which is not common in the context of south Asia, especially India. Generally the poor both in rural and urban areas are afraid of market dependence to ensure supply of cereals and other basic food products.

Amongst the poorer rural households, average land holding is very low so is the land productivity; further they own few productive assets and lack irrigation. Over and above the drought caused during July-August 2009 have made all of such households vulnerable to food stress. The SC-families have smaller land holdings and land owned is of lower productivity which in fact was allotted by government agencies under different schemes. The net (of seeds) yield of the main crops of paddy and wheat was found to be around 6 quintals per acre, but due to draught paddy got damaged. The local wage work opportunities are far too low and wage rates range between Rs. 50 and Rs. 60/- per day of work.

Idiosyncratic Shocks: Households with deep food stress do have highly specified situations which differ as per the household situations, for example inability to sustain livestock due to sheer poverty, or inaccessibility to common property resource such as grazing lands or even lack of a member who can take care of cattle and so on. Female headed households do face difficulty in undertaking cultivation and therefore lease out land with low home grown food access which increase vulnerability. In both rural and urban areas ill-health causes extreme degree of idiosyncratic shocks causing conditions of food deficit and malnutrition. Strict adherence to cultural values in case of marriage, birth and death related ceremonies can push households into penury and in many cases irreversible thus exposing such households for extreme food stress.

Social Networks: Informal social networks are some of the most durable extensions of India family values which provide considerable amounts of safety nets. Rural areas across India are in advantageous situations where social networks do work in support to sustain food smoothening; but the situation in the urban peripheries is different due to unclear linkages, rather a breakdown of social networks. Lack of social environment in towns can be attributed to peripheral societies build upon migration often from rural areas. But another fact which accentuates the urban-anonymity and lack of networks is the fact that households in specified urban localities face situations which are equally stressful thus making social networks redundant. Such differential social typologies are crucial for withstanding extreme food related stress in India.

Safety nets: Often it is argued that since urban areas by definition have higher concentration of social, economic and market institutions the urban households do not require targeted safety nets. We do find that the rural areas have a relatively better coverage of safety nets of various kinds although; the efficacy and utilization vary between villages and also different types of households. But one finds absence of such safety net schemes in urban locales. On the other hand urban areas do have concentration of both social and physical infrastructure managed both by the public and private initiatives; but the poor living in fringes in towns and cities have limited access to them due to lack of their integration into the urban system. Often such families do not hold for example PDS cards, nor will they be listed as eligible beneficiaries for social protection schemes due to unclear domiciliary conditions. Such a situation was clearly noticeable in case of Delhi, but also in other larger towns/cities such as Kanpur in UP and Kolar in Karnataka.

Any reform in the public polices in India are affected not so much as to what and why but HOW to identify the right household, group of households, villages and communities. The above profiling of the poor will help policy makers to devise better methodologies for targeting the poverty alleviation programs.

Food prices and coping mechanism in India

Debates abound, in the recent months, as to the steep increase in inflation in India and a substantial contribution from the primary food articles. This obviously is a matter of great concern to the government, the civil society and consumers alike. Since food is consumed on a daily basis and most households undertake daily purchases, it is imperative to find out how poorer households cope with high food inflation and sustain their food consumption.

In the following we investigate: (1) whether the food inflation is accurately captured through the WPI- inflation monitoring; and (2) how do the households in rural and urban areas cope, so as to smoothen food consumption.

Prices: Inflation which is benchmarked on the wholesale price index underestimates the impact of food prices due to low weightage attached to the group of food products, for example, the food group as a whole has a weight of just over a quarter, and food grains have only a 5 % weight. In reality (estimated from household survey) these proportions are 51% and 19.2% in rural and 41% and 16% in urban areas. Therefore, food price increase is not adequately factored in inflation figures provided by government agencies. Given this situation, if the government claims that food price increase indeed is one of the factors for high inflation, it should mean an unprecedented and very high price increase in food articles indeed.

Further citizens normally take newspaper reporting seriously to make judgments about the food inflation. Often the retail market prices collected from urban neighborhoods do not correctly reflect prices due to large discrepancy with the wholesale market prices of the same food items. Further, for food items other than vegetables and fruits it is essential to take a short to medium (as opposed to immediate) term view by tracking prices say on a weekly, monthly and seasonal basis. This article gleams over monthly data for over 25 food items from 78 towns and cities spread all over India since April 2006 to October 2009 period. The size of the town/city is a good proxy for size of market as well as proximity to the source of supply, normally the rural areas. An interesting pattern emerges. Small town having less than one lakh population are the cheapest for unprocessed food items such as whole wheat, paddy and rice, unprocessed milk and so on. The processed food items such as wheat atta, polished rice and packed milk are found to be priced high in large towns above 25 lakh population. But the contrast is in wheat and atta. While wheat prices are least in small towns, wheat atta is priced highest in small towns compared with the larger ones. The wheat flour is priced between 40% to 50% higher than the whole wheat prices in small towns. Other processed food items also cost exorbitantly high in small towns and rural areas. However, towns with 1-5 lakh population are the cheapest for both rice and wheat in India suggesting that they maximize gains from nearness to source of supply, as well as possible scale economics in business and also because of location of processing industries. Rice price increases as size of town/city increase and thus affects the poor living in larger towns and cities the most. The price of pulses and sugar has recorded unprecedented increase during the 2009-10 periods and affects both rural and urban areas equally. There is a broad based increase in prices of food items in India and the momentum of this increase has built up during 2007-8 and is continuing during the 2010.

Coping Mechanisms: There are noteworthy rural-urban consumption differentials in India – rural households consume more of cereals so is the case for poorer households. Consumption of quality and value added foods are high in urban areas and amongst the richer households. Price wield large and dominant impact even on consumption of rice and wheat, generally considered price inelastic. Therefore, self production of these cereals has considerably strong impact on sustaining consumption. It is instructive to note that 36 % of wheat and 32% of rice requirement are met through self-grown agriculture. Another 11% of wheat and 14% of rice requirement is met by the Public Distribution System. Thus even in the rural areas one half of the all wheat and rice requirement is met by open market purchases. As expected 92% of wheat and 84 per cent of rice requirement of urban households is met by open markets, and only about 5 % wheat and 11% rice requirement is met of PDS in urban area.

Relatively poorer households try to depend less on markets but they fall short of home grown food at least in rural areas, consequently their dependence upon the PDS supply is large. One finds that PDS has reached rural areas and there is also a great demand for supplies. However, the PDS supply is irregular and insufficient due to state specific bureaucratic failure, leakage and large exclusion and inclusion errors in targeting. Urban areas show unfair distribution of BPL cards compared with rural parts although the mismatch is considerable in both place of residences. Further the targeted PDS program is poor in states where poverty is high such as Jharkhand, Uttar Pradesh, Bihar and Chhattisgarh.

It is essential to find out the share of expenditure on cereals to total food so as to find out how relative prices impact the poor. Cereal shares are about 35% in rural and 27 % in urban areas; but a disturbing fact is that relatively poor spend substantial higher shares on cereals compared to relatively richer. Therefore, any cereal price increase is going to impact the poor the most. Therefore, it is absolutely essential to keep a check on unusually high price rise of cereals from the consumers’ point of view, yet it is imperative that incentives are built so as to directly benefit the farmers who will sustain cultivation of cereals. Another aspect which provides deeper understanding is the fact that bottom 20 % (poorest) households spend almost all their disposable income in urban and 72 % higher than the disposable income in rural areas on food. This suggests that there is an urgent need to build food security for the rural poor much more than the urban poor although at the outset it appears that it is the urban poor who gets affected by the food price inflation.

In conclusion, it is essential to emphasize, that there has to be a prudent price management scheme for both wheat and rice in India. Further it is imperative that appropriate amount of income transfer is effected either through the PDS or food / cash vouchers schemes. The key is in the ability of the state to identify the poor dispassionately and through a systematic methodology. Keeping a close watch on market price of food items must become inherent part of public policy. It appears India is not yet amenable for free market in food products although experiments in crafting exclusive agricultural markets for exports and strengthening supply chains to organized and supermarkets can continue.