Why Should Food Cost 30% Of Income?

 

You read it right, on average, most of us spend up to 30% of income on food. In the developed world, this figure is in the range of 6% - 15%.

For wider economic participation of its population and to improve overall living standards, the food bill must make a much smaller hole into one’s pocket!

While meat products also constitute a significant part of the food chain, I am limiting the scope of this article to vegetarian food products.

 The Facts

With over 50% of its land arable, India is the leader in the world in terms of arable land as a % of the total landmass. In terms of actual volume, with over 15 lakh square kilometers, India has the largest stock of arable land. Overall, India holds just under 10% of the world’s total arable landmass.

*India is the second-largest producer of fruits and vegetables in the world, second only to China.

*India is the world’s largest dairy producer.

*India is the world’s 2^nd largest rice producer and 3^rd largest wheat producer.

So, we have the land and produce abundant quantities!

 

The Problems

Low Yield

Wastage

 

Low Yield

The overall agricultural productivity is determined by both amount of land employed and yield per unit of land employed. With the fast-growing population pressures, more and more otherwise arable land is converted for non-agricultural purposes. Thus, the Yield factor is of paramount importance. Unfortunately, the farm yield rates in India are way lower to global averages. There are many legacy issues contributing to this situation. India stands at 27^th position globally for rice yield and 19^th position for wheat yield.

Over 50% of cropped area is purely rain-fed. Thus, if one monsoon fails, the yield for that year is disrupted. A more scientific approach to make use of rainwater and to channel it towards efficient irrigation purposes is the need of the day.

Uneconomic landholding is another major contributor. The average agricultural landholding in the country is less than 5 acres. About 25% of the landholding is around 1 acre or less. These landowners while tilling their lands individually will never be able to afford the latest and scientific farming techniques to improve the yield of their crops and conservation of resources. This further leads to a decline in soil fertility and further deteriorates the long-term yield factor of the land. A vicious cycle keeps going, where the produce is not great, the soil deteriorates, the farmer does not earn much and cannot reinvest into the betterment of things.

For example, with a pledge of ‘Twice the produce with half the resources’, over the last two decades, the small country of Netherlands is doing wonders. It is today a net exporter of agricultural produce. It managed to achieve this implementing modern farming techniques and the most efficient use of resources.

 

Wastage

India wastes 50% - 70% of its fresh fruits and vegetables. This straightway results in potential doubling up of prices for the consumer. 

But what about non-perishables such as cereals and pulses? Oh yes, we do waste a lot of them too…anything from 10%-20% of staples, especially rice and wheat go rotten in sub-standard storage facilities of the government agencies.

The story is no different in the case of dairy too... we waste more than one-third of the total produce.

These levels of wastage are just inexcusable! The adverse effect on the consumer’s pockets is one thing. We need to also consider the wastage of natural resources and human efforts.

 

The Solutions

China and Japan has almost double the rice yield rate of India. Thus, if we match the rice yield rate of China and Japan, we need to employ only half of the currently employed land for rice farming.  Now, extend this logic to the farming of wheat and other grains. Now imagine, for the volumes, we are currently producing and consuming, how much less land will be needed, and how many fewer people need to work on farms.

(40% of our workforce is in the agricultural sector, which contributes under 15%-20% to the Gross Domestic Product (GDP). So, when some workforce is freed up from agriculture sector, it is available to be trained and employed in other sectors, eventually making higher contributions to the overall economic activity.)

Uneconomic landholding structures resulting in the unaffordability of better farming techniques and equipment that ensure the conservation of soil fertility and boosting of yield need to be addressed in a comprehensive way. There is a disruptive change of sorts currently underway in this respect……..

Collective Farming! By bringing together small landholdings, Collective Farming can efficiently address and eliminate most of the legacy ills of the farming community. With scale, the affordability and adoption of the latest and sustainable farming techniques and equipment will happen. This will result not only in the improvement of yield rates but also in the long-term health of the land and conservation of resources.

In addition to Collective Farming, farmers are imbibing entrepreneurial spirit and exploring forward integration opportunities across the supply chain. A local and regional ‘Farm to Fork’ ecosystem will not only boost the income levels of the farmers but also bring down prices for the end consumer.

The Cold Chain ecosystem in our country can currently cater to less than 20% of the perishable foods produced. No wonder we end up wasting such huge amounts of perishable foods and pay higher prices for what survives. There are various incentives and schemes sponsored by the government to boost the expansion of the Cold Chain ecosystem but there is still a long way to go. Adequate Cold Chain facilities are a must to reduce and eliminate wastage of perishable foods.

Thus, the two factors of Yield and Wastage, if addressed comprehensively, together will bring down the overall cost of food, dramatically. The disposable income available to an average consumer will increase and it will lead to more savings and participation in other segments of the economy. 

Additionally, the recent bills passed by the Lok Sabha (Lower House of the Parliament) will give the freedom to farmers to sell their produce directly to food processors anywhere in the country, which will go a long way eradicating the highly corrupt and deep nexus of regional politicians and middlemen traders. This will only make the 'Farm to Fork' food supply chain more efficient and economical while helping realize long overdue 'One Nation One Market' transformation as far as agriculture and farm produce are concerned!

 

 

References

https://beef2live.com/story-countries-arable-land-world-0-108929

https://www.yourarticlelibrary.com/agriculture/7-reasons-for-low-productivity-in-india-agriculture/42317

https://www.livemint.com/Opinion/nw9JKiPrDPpqCuWfmoibPN/Indias-agricultural-yield-suffers-from-low-productivity.html

https://www.nationalgeographic.com/magazine/2017/09/holland-agriculture-sustainable-farming/

https://www.weforum.org/agenda/2016/12/this-map-shows-how-much-each-country-spends-on-food/