Food Security Bill explained - Part -1

Overview:

1. Global Hunger Index(GHI) : India ranks 67/81 countries in worst Food security category
2. Achievement of food grain security at the national level(by 70s) didn't percolate down to households (Domestic Production of food grains far exceed our nation's food demands).
3. Dimensions of FS according to FAO(Food and Agricultural Organization):
1. Availability (aspect of production)
2. Accessibility (Physical Access - aspect of distribution - TPDS) & Affordability (Economic Access - purchasing capacity of people - MGNREGA)
3. Absorption/Assimilation (Nutritional aspect which includes sanitation, health infra.) - Which aims at turning Food intake into Nutritional outcomes
4. Acceptability (Culturally accepted food)
5. Stability (in all the above 5 aspects)
4. FS at different levels: Global, National, Household, Individual. Household and Individual FS can be attained by gender sensitisation and empowering women community as they are the ones who mainly manage household level food distribution.
5. Food security Problem is less to do with food and more with health, technology adaptation, global cooperation, cultural constraints, Governance structures.
6. Urban Areas are more vulnerable:
1. They are dependent for food supplies on surrounding areas; If the infrastructure is damaged, they became unsustainable on food security front.
2. Undocumented poor (refugees); Identification of the poor for targeting is difficult.
7. FAO predicts one-third of all food produced in the world gets wasted amounting to a loss of $750B a year
1. Food in developing countries is wasted mostly due to poor harvesting techniques (Eg: Cereals in Asia, Latin America)
2. In high-income areas the primary cause of waste is careless consumer behaviour(Eg: Meat in Wealthy regions)

MSPs:

Overview:

1. 1966-67 : Introduced for the first time for Wheat in the wake of Green Revolution and extended harvest to save farmers from depleting profits
2. MSPs announced for 25 crops currently at the beginning of each season

Objectives:

1. to stabilise the prices of major food items
2. to ensure the remunerative prices for the farmers (protect the interests of farmers in the event of over-production)

Features:

1. Public action of linking Producers(through procurements at MSP) & Consumers (distribution at affordable prices)
2. Govt. recently modified the procedure of MSP to include the cost of crop insurance and thus ensuring better prices for farmers.
3. High MSP of Wheat and Rice has encouraged farmers to grow them more and more.

Functioning:

1. MSP is announced well ahead of the sowing season on the recommendations of Commission for Agricultural costs and Prices(CACP)
2. Central govt. is responsible for procurement, storage, transportation, and bulk allocation of food grains. Central govt. organises purchase operations through Public, Cooperative and other designated agencies (NAFED- National agri. cooperative marketing federation of India for oil seeds and pulses ,FCI, Cotton cooperation of India).
3. Central govt. has centrally designated agencies to undertake PSS(Price support Scheme) operations. The losses incurred,if any, are fully reimbursed by the govt.
4. It also implements MIS(Market intervention scheme) on the request of states/UTs for horticultural and agri. commodities, generally perishable in nature that are not covered under PSS.States/UTs bear 50% of the losses,if any.(25% in the case of NE states). H/W the loss is restricted to 25% of the total procurement value. Profit, if any, earned by the procuring agencies is retained by them. The MIS is implemented in order to protect the growers of these commodities from making distress sale in the event of bumper crop when the prices tend to fall below the economic level/cost of production

Buffer Stocks:

Overview:

1. Central pool with FCI : TPDS, Open market intervention to stabilize prices, to meet emergencies in the case of droughts/crop failures
2. Buffer norms are the minimum food grains the centre should have in the central pool at the beginning of each quarter
3. Need for better Buffer Stock Management :
1. Despite being leading agricultural producer, it is only 10^th largest global player (1.6% of the trade);
2. Fill the deficit with Grains : Exporting the surplus grains will bridge CAD and fiscal deficit; Need to act fast since global food prices are on decline; Proposal for creating regional stocks(say South Asia) after global food crisis; can earn $30-40B with predictable trade policy
4. Only for 2 crops : Rice and Wheat

PDS:

Procurement:

Functioning :

• Both central govts and state govts shared the responsibility of regulating PDS.
• Central govt. to procure, Transport, Storage, Bulk allocation to States as per the agreed norms and quantities
• State govt. is responsible for distributing the grains to consumers through the established network of Fair price shops and operational responsibilities(allocation and identification of BPL families, issue of ration cards, supervision and monitoring the functioning of FPS-Fair Price shops). 5 Lakh FPS through out India
• 1997 : Dual Pricing structure was introduced under TPDS : CIP (Central Issue Prices) : prices at which the Food Corporation of India (FCI) sells grain for the PDS to State governments
• Price for APL families = Economic cost (Costs of Procurement, Distribution, Storage)
• for BPL families = 50% of the economic cost (Economic costs - CIP is the subsidy borne by the Central govt.)
• Defects of PDS :
• Large scale Exclusion & Inclusion errors; Unable to accomplish timely revision of Beneficiaries list
• Ration card duplication(removal of Ghost ration cards) and leakages. Unclaimed ration(due to temporary migration) in states like AP is not carried over.
• Leaky nature of APL (Entitlements of APL by its nature is unclear and unstable. They are not entitlements, but adhoc handouts. Most of the APL quota goes straight to the black market). BPL quota is distributed properly to a largest extent even in districts like Korapat(Odisha), Chitrakoot (UP).
• Leakages to the tune of avg. 55% . But recent NSSO data shows that it came down to 30%; The National Sample Survey Office data shows that the leakages in PDS reduced from 54% in 2004-05 to 44% in 2007-08 and further down to 35% in 2011-12.
• Items covered under PDS : Rice, Wheat, Sugar, Kerosene constitute 86% of the PDS sale. Pulses less than 0.2% of PDS sale
• PDS not working well in states like Bihar b/c of leakages and lack of revenues to pay out of their pockets, which is different from the case of mineral rich states like Jharkhand and Chattisgarh.
• Many of the states fail to pick up the allocated food monthly from the central pool and distribute it to the seriously needy
• Economic viability of FPS so that tendency of leakages are reduced by resorting to malpractices.
• Leakages during transportation from Godown to FPS. States are advised to do door step delivery.Food Security Bill Proposes Doorstep Dilevery of Foodgrains and end to end Comupterisation of PDS
• Disparities between states : TN with 31000 fair price shops and Jharkhand with 14000; Justice Wadhwa cmt. suggested that there should be a FPS with-in a 3km radius for everyone.
• Bihar : PDS Rice is smuggled to Nepal for the purpose of manufacturing liquor
• Recent Initiatives: (Initiatives taken by state govts. proved to be more effective)
• To enable the last mile tracking whether the grains reached the beneficiaries some states adopted methods like issuing food coupons . The release of grain to a dealer is linked to the number of coupons he deposits after collecting them from cardholders when they buy their rations. Eg: Rajasthan and Bihar. It has been successful in Rajasthan.
• Smart cards, UID platform, ePOS(Point-of-sale) in pilot stages.
• Reduction in PDS prices : AP, Chattisgarh, TN, Odisha ,KA, Kerala, MP, Jharkhand, RJ
• Expanded coverage : in above mentioned states
• Introduction of pulses : HP, AP,CH, TN
• Edible oil : AP,HP,TN
• Transparency :
• GPS equipped trucks & easy-to-identify yellow trucks for delivery of PDS
• Painting of names of all beneficiaries on public and private walls to prevent "duplicates"
• Grievance redressal mechanisms

written by - A Sunil Kumar