India needs to frame an optimal agri-food policy to address both short-run and long-term challenges.
How does one design an optimal agri-food policy?
it should be able to produce enough food, feed and fibre for its large population. In this regard, the best step is to invest in R&D for agriculture, and its extension from laboratories to farms and irrigation facilities. It is believed that developing countries should invest at least one per cent of their agri-GDP in agri-R&D and extension. India invests about half.
It should do so in a manner that not only protects the environment — soil, water, air, and biodiversity — but achieves higher production with global competitiveness. This can be done by switching from the highly subsidised input price policy (power, water, fertilisers) and MSP/FRP policy for paddy, wheat and sugarcane, to more income support policies linked to saving water, soil and air quality.
It should enable seamless movement of food from farm to fork, keeping marketing costs low, save on food losses in supply chains and provide safe and fresh food to consumers. This segment has been crying for reforms for decades, especially with respect to bringing about efficiency in agri-marketing and lowering transaction costs.
And, finally, consumers should get safe and nutritious food at affordable prices. The public distribution of food, through PDS, that relies on rice and wheat, and that too at more than 90 per cent subsidy over costs of procurement, stocking and distribution, is not helping much.
The Finance Minister will do an honest job if she puts the full food subsidy bill in the central budget rather than putting it under the carpet of FCI borrowings. But, more importantly, beneficiaries of subsidised rice and wheat need to be given a choice to opt for cash equivalent to MSP plus 25 per cent.
Source: The Indian Express