Presentation delivered by Dre. Ashok Gulati (Indian Council for Research on International Economic Relations, India) at Borlaug Summit on Wheat for Food Security. March 25 - 28, 2014, Ciudad Obregon, Mexico. http://www.borlaug100.org

1. Ashok Gulati
Chair Professor for Agriculture
Indian Council for Research on International Economic Relations (ICRIER)
(formerly Chairman of Commission for Agricultural Costs and Prices, (CACP))
Borlaug Summit on Wheat for Food Security,
March 25-28, 2014, Mexico

2.  Who could imagine even 5 years back
 That India could be exporting 22 million
tonnes (mt) of cereals in 2012-13, and about
18-20 mt in 2013-14, a total of more than
40 mt in two years that it has never done in
its history of more than 3000 years!
 That India could be the largest exporter of
rice in the world in 2012-13 as well as in
2013-14

3. 2.4
5.0
8.8 8.1 8.0
5.4
5.5
9.7
6.5
5.0
5.7
12.0
22.1
20.4
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0
5
10
15
20
25
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14(Est)
MillionTonnes
Rice Wheat Maize Others Value of Exports (US$ Bn)

4. 0
10
20
30
40
50
60
70
80
90
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
MillionTonnes
Rice Wheat Norm

5.  India imported more than 6 mt of wheat
 And in October 2007 imposed ban on exports
of wheat and common rice in the wake of
rising global food prices
 How did this turn around from panic and
deficit of grain to surplus stocks and massive
exports took place in just five years?

6.  India launched National Food Security Mission
(NFSM) in 2007 to produce additional 20 mt
of food grains (10mt rice, 8 mt wheat and 2
mt pulses) in five years…
 Focused on delivery of better seeds, farm
practices, and other technologies…largely in
central, east, and southern India
 Result: Foodgrain production increased by 42
mt in 2011-12 over 2006-07 level.

7.  Technology on its own could not have succeeded
if the price environment was not favorable
 Minimum support prices (MSPs) of wheat and
paddy were raised in a big way (by more than
30% in 2008-09 over 2007-08 marketing years)
 This led to a major change in the incentive
structure for wheat and rice, and gave robust
results…

8. 0
200
400
600
800
1000
1200
1400
1600
INRperquintal
MSP(Common Paddy) MSP(wheat)

9. Convergence of FAO food price index (2002-04=100) and
Indian Food price index (2004-05=100)
0
50
100
150
200
250
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
IndexValues
WPI-Food FAO-Food

10. 691.2
593.7
495.9
446.3
411.1
317.3
298.0
390.1
284.8
223.8
100
200
300
400
500
600
700
Thailand
Philippines
China-Japonica
China-Indica
Indonesia
India
Vietnam
China
Pakistan
India
MSP(US$)/MT
MSP of Rice and Wheat for Selected Countries
(US$/MT)- 2013
Rice Price US$/MT Wheat Price US $/MT

11.  The key lesson from what has happened in
India since 2007-08 is that price policy plays
a critical role
 Farmers can respond to price signals by
adopting better technology (seeds and
farming practices) raising overall production
and productivity
 This is the same strategy that was adopted at
the time of Green revolution in late 1960s.

12. 4
6
8
10
12
14
16
18
2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13
MillionTonnes
Wheat Production in Punjab and Madhya Pradesh since 2000/01
MP Punjab

13.  Focus shifting from production to distribution
 Entitlement approach under Life Cycle
 National Food Security Act (NFSA) passed in Sept
2013.
 Envisages distributing 61.2 mt of cereals at
highly subsidized price (roughly at one-tenth the
economic cost (Rs 3/2/1 per kg of rice/wheat and coarse grains;
5 kgs per person per month to priority HHs; and 35 kgs/HH
under AAY scheme…total covering 67% of total population)

14.  Direct fiscal cost roughly $18-20 billion p.a at
current exchange rates (adding indirect costs will
make it $30 billion)
 Existing public delivery system high leaky (PDS
leakage around 40%)
 Massive government intervention in procurement,
storage and distribution of cereals will drive away
private sector…expensive
 Cereal centric policies will slow down
diversification towards high value crops

15.  Only time will tell whether it becomes a
model for developing world or remains a
muddle
 Basic flaw is the design of policy: trying to
achieve equity objectives through price policy
rather than income policy…
 International best practices suggest
conditional cash transfers as they don’t
muddle with grain markets

16.  High stocks in India (and China) could keep
world prices of wheat and rice high;
 Erratic entry and exit of India from global rice
and wheat trade will bring in additional
uncertainty in global prices
 Better option will be greater integration with
world markets with exports and imports
open, and keeping duties at low levels

17.  Thanx for inviting me
 And Best Compliments for organizing this
great event!
 Jai Kissan and Jai Vigyan! (Salutation to the
farmers and Scientists around the World!)