Exit FCI, enter Cargill

By Vandana Shiva

The Food Security system put in place during the Green Revolution is now being dismantled because it is ecologically and financially unsustainable.

In 1965, the Food Corporation of India was established on World Bank advice as a key element of an uneconomic, resource wasteful, capital-intensive, subsidised and centralised food production and distribution system referred to as the Green Revolution. Other aspects were the Agriculture Price Commission and the Public Distribution System (PDS).

In the 1990s, the World Bank required the dismantling of the system it had created as a part of its economic reform and trade liberalisation package. It also opened up India's food and agriculture system to MNCs like Cargill and Monsanto. Cargill is also involved in the seed and fertiliser industry.

Our food supply is now being put in the hands of this Grain Giant by dismantling the public procurement and distribution system put up in the Green Revolution period. The policy priority is now for moving from State monopolies to corporate monopolies. It is ``Exit FCI, enter Cargill.'' The huge stocks held by FCI are the main justification for allowing private traders in procurement, storage and distribution of foodgrain. The FCI has been referred to as a leviathan which must be dismantled. However, if size is the concern, we should be examining Cargill which could rapidly replace FCI as a grain monopoly under the present policy dispensation.

Pseudo surpluses

The foodgrain stocks held by public agencies are more than 42 million tonnes. The large stocks are now being used to allow entry of private traders and MNCs like Cargill in grain procurement. The stocks do not reflect real surpluses but pseudo surpluses. They are indicators of two distortions in the centralised food system built on World Bank and Rockefeller advice in the 1960s and referred to as the Green Revolution.

At the level of production, the rice and wheat stocks are pseudo surpluses because they reflect increases in production of wheat and rice, but do not reflect decrease in the production of pulses, oilseeds, millets and maize, all of which are necessary for food security. A shift from diversity to monocultures would of course register an increase in monoculture output but would eclipse the decline in diverse outputs.

In Punjab, the area under rice has increased from 227,000 in 1960-61 to 2,250,000 hectares in 1999-2000, a ten-fold increase. The area under wheat increased from 1,400,000 in 1960- 61 to 3,300,000 hectares in 1999-2000, a three-fold increase. The area under pulses in the same period has decreased from 903,000 to 69,000 hectares, a ten-fold decrease. Gram went down from 6,634,000 in 1966-67 to 560 hectares in 1985-86, which is more than a ten-fold decline. The area under maize went down from 327,000 to 185,000 hectares. Area under oilseeds has also decreased. In the case of ground nut - from 67,000 to 10,000 hectares, linseed from 4000 to 1000 hectares. Area under millets and coarse grains have also declined.

Based on rice and wheat monocultures, Punjab's contribution to the Central Pool has increased from 16% during 1970-71 to 43% in 1998-99 in the case of rice. In the case wheat, it went up from 74% in 1970-71 to 80% in 1998-97, and has dropped to 49% in 1999- 2000.

This decline in wheat contributions is a consequence of FCI procuring less wheat, and it is procuring less because of growing stocks which are caused by the poor buying less food. Hence, the growing food stocks are also a pseudo surplus in the sense that they reflect the decreasing purchasing power and entitlements of the poor.

This high-cost system was kept afloat with World Bank loans for Government subsidies. Now that World Bank is dismantling the public support and subsidy system, the Green Revolution model of short-term food security is coming apart.

The PDS was the subsidized food system that allowed food produced at high costs through Green Revolution technologies to reach consumers at low prices. Part of the World Bank reform package was dismantling the PDS to reduce Government expenditure on food subsidies which has gone up to Rs. 9,300 crores in 1999- 2000 from Rs. 5,166 crore in the mid 90s.

Meantime, offtake has declined dramatically - from 8.52 metric tonnes wheat in 1996-1997 to 4.99 metric tonnes in 1999-2000. People are buying less because the food is costlier. In the 2000- 2001 budget, prices of staples were increased.

The Central issue price for wheat which had increased from Rs. 450 per quintal in January 1995 to Rs. 682 per quintal on 1st April 1999, shot up again to Rs. 900 per quintal, a 100% of increase over a one-year period. As a result, PDS offtake has declined.

The high-support price given to farmers is often cited as the primary reason for the rising food prices and hence decreasing offtake from the PDS. However, the support prices are high as the cost of production is high in chemical-intensive agriculture. In many crops, the costs have become higher than the support price and farmers have been pushed into a negative economy reflected in debts, suicides and kidney sales. The distortions in our food system cannot be removed without addressing the economic implications of capital and chemical- intensive agriculture for farmers and consumers.

Options for the future

India has two options to deal with the mess that the Green Revolution legacy of high-cost production and Centralised food distribution has left us with. One is to move to higher costs and higher levels of Centralised control by handing over the Centralised food procurement functions of FCI to Global Grain Giants like Cargill or create a diversified, decentralised food system under people's control.

The World Bank-driven policy option is to allow Cargill to take over the wheat trade. Cargill would control seeds and fertilisers, it would provide credit, extension services and marketing support to buy back their produce. These contracts with farmers often stipulate that the farmer cannot sell the produce to anyone else. Such bonded labour systems of contract farming are now being introduced in India through the New Agriculture Policy. Cargill started to procure wheat in 1999, beginning with 3891 quintals. Interestingly, all Punjab Government records list Cargill as Kargil.

Cargill has taken full advantage of the Kargil war and the emotional wave it generated. It launched its branded, packaged atta, ``Nature Fresh'' during Kargil victory week in August. Women's groups launched their ``Cargill, Quit India'' campaign on 9th August, Quit India day, and the National Alliance of Women's Food Rights is working to create awareness that the ``Cargill War'' on our food system is a bigger security threat than the Kargil war of 1999.

The exit of FCI and entry of Cargill as a procurement monopoly would not solve the crisis of capital-intensive food production and centralized food distribution, it would aggravate it. High- cost production and high-cost packaging of `atta' could only reach the consumer by exploitation of farmers. This is clearly stated as the strategy of MNCs like Cargill in the FAIDA report prepared by McKinsey Corporation.

(The writer is Director, Research Foundation for Science, Technology and Ecology, New Delhi)

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