Sunday, June 14, 2009

Rethinking the Public Distribution System

This article in today's LA Times discusses the potential threat of stem rust on wheat, the world's most widely grown crop. Painting scary stories like this article does - it claims up to 80% of the world's wheat production could be taken out - helps sell newspapers, but such stories are occasionally right. It also highlights the world's dependence on a handful of key crops.

In India, these crops are wheat and rice. This is not by accident, but arose out of the development of India's agricultural policies, particularly it's subsidization of wheat and rice through the Public Distribution System.

In the United States you have a similar subsidization of these two crops, but also corn. Because of cheap subsidized corn the American food industry has remade America's, and the world's (middle class), diet - we eat corn-fed animals, in corn-based buns, and drink corn syrup sodas - McDonald's, Dominos, Subway, Pizza Hut are all products and exports of this policy. Mind you, it's not a particularly good policy for a country suffering from chronic obesity in much of its population.

In India, the issues are a bit different, but the policies are similarly misaligned with its most pressing problems. Here the chief issue is basic food security. There is a large population suffering from not only malnutrition, but also protein deficiency (which arguably is the largest malnutrition problem in India right now and reportedly getting worse). Meanwhile, water shortages are putting increasing pressure on farmers and crop yields threatening India's agricultural base.

The Public Distribution System just doesn't seem to match up to these challenges. Wheat and particularly rice are two of the most water intensive staple crops you can grow, yet the government promotes them across the country even where there are water shortages. Neither has much protein in it, especially compared to pulses or coarse grains, but when the government does subsidize another crop it is sugar (which is even worse).

Now including pulses and coarse grains, which also generally use less water, in the Public Distribution System is not without some potential negative repercussions. Some of these crops are more likely to fail than rice or wheat leaving a poor farmer in a pretty dire situation, but as we can see from worries over stem rust no crop is immune from potentially devestating failures and one can design policies so either farmers are insured against these risks or the poorest farmers are incentivized towards more robust crops. Some argue that the PDS with its well-documented inefficiencies should just be scrapped and the government should go in for money transfers to the poor. I'm not going to get into this debate here, but for now and the foreseeable future PDS is with us so we might as well make it work better and I personally think subsidization of certain crops does make sense for poor countries and even rich ones.

For those interested in learning more here is an article in the Mint from a couple years ago on increasing protein deficiency in rural India, a debate in Parliament from some time back on including pulses in PDS, and an article from InfoChange on the water usage of crops in India. Here's the right to food website's section on PDS, although it mostly focuses on implementation and uptake problems and proposed solutions. Unfortunately, given the scope of the problem and the huge numbers of people it effects there isn't as much written about the PDS as there should be, especially in the popular media. The challenges are pressing though and the potential for improvement wide. Hopefully, this will be an issue the new government takes up with renewed vigour.
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