K.K. Datta

Differential effects of rising food prices on Indian households differing in income

Rapidly growing population and rising incomes are placing great pressures on food security in India. Rising food prices can further increase food insecurity. This paper uses National Sample Survey Office (NSSO) data on household consumption expenditure covering the years 2009–2010 in order to analyse the effects that food price rises have on calorie and protein intake in India. The differences in food prices between rural and urban areas can be attributed to the Public Distribution Service (PDS) and price spread while price differences across income groups are due to quality and provide an opportunity for value-addition as incomes are growing. The consumption of reduced calories and proteins but greater amounts of fats by the majority of the population in urban regions calls for government intervention. Protein intake is more affected by price rise than calorie intake, which indicates that there may be a quality-quantity trade-off, especially in poorer households. Ordinary Least Squares (OLS) shows that the negative impact of food price rises on consumption is greater on the more affluent as they have the capacity to cut calorie intake. The highly negative effects of higher prices for milk and pulses on calorie intake emphasise the need for their stability. Quantile regressions within income groups show high negative impacts of price increases in pulses on poorer urban households, but these decrease while moving from lower to higher quantiles: this observation calls for location specific inclusion of pulses in PDS. Milk prices show more or less the same impact across the quantiles for all income groups, except the Highest Income Group (HIG – highest quartile).

Policy Intervention in West Bengal Agriculture: Role of Diversification

This chapter argues that besides producing food grains, the Eastern India has great potential to produce several high value commodities like horticulture, livestock and fisheries to accelerate the growth of agricultural output. However, one of the key impediments to fostering the agricultural growth in this region is the small and marginal production unit of the majority of the farmers. The small scale of production unit can produce these high value commodities with high to moderate production efficiency, but poor marketing efficiency. Farming units are usually confronted with many unpredictable uncertainties ranging from climatic vagaries to market price fluctuations. The degree of uncertainty is greater for the small and marginal landholders, where the farmers do not have access to basic information on various risks including loss of assets and income. Keeping in view of the opportunities and prospects of agricultural growth, the paper focuses on the ways and means of agricultural development in West Bengal, which may help to accelerate the rural income and household level food and nutritional security. Farming in West Bengal is individual-driven and unorganized, with the average size of holding being 0.82 ha, much lower than the national average of 1.33 ha. Therefore, individual farmers, with very small marketable surplus of produce, have to pay market price for all farm inputs and other basic utilities and consumable items. There is, therefore, a need to organize a vastly unorganized farming community in such a way as to help them to gain from the market economy. Smallholders are competitive in high value agricultural activities, because of the availability of family labour and their ability to compete in local markets. However, as production and marketing systems evolve, support to smallholders to provide efficient input services, links to output markets and risk mitigation measures will be important, if they are to provide higher value products. Innovative public support and links to the private sector will be required for the poor to adapt and benefit from the emerging systems.