ASSESSING INDIA’S FOOD SUPPLY SITUATION USING A FOOD BALANCE SHEET AND COVID-19-SENSITIVE MARKERS

Assessing India’s food supply situation using a food balance sheet and COVID-19-sensitive markers

How is India coping when it comes to domestic food production and food supply chains? What are our vulnerabilities with international trade being disrupted with COVID-19? Which states and commodities are more susceptible to changes in the labor or capital markets or infrastructural bottlenecks? In this piece, the authors take two approaches to answer these questions. First, they use a Food Balance Sheet approach to show that India is performing reasonably well on most essential commodities but could experience shortfalls in pulses and edible oil if trade disruptions occur. Second, they develop an index that records the susceptibility of individual states to COVID-19. Keeping domestic and international supply chains moving smoothly should be a key priority for Indian policymakers. – Kalyani Raghunathan, series co-editor and Research Fellow at IFPRI

Shutterstock/ Sumit Saraswat

At the onset of the COVID-19 pandemic and associated economic crises worldwide, the UN Security Council warned of famines “of biblical proportions”. Given India’s large and predominantly poor population, COVID-19 could pose a great challenge to food security. In this post, we assess the impacts of the pandemic on food security in India, looking at essential commodities such as cereals, pulses and edible oil. These commodities are identified as essential by the government and are included in food kits distributed by public programs for COVID-19 relief.

By highlighting supply chain issues (over supply), we argue that COVID-19 has brought about a fundamental change in the way food availability is viewed, one that goes beyond the conventional focus on weather and the area, production, and yield (APY) paradigm of crops. The role of the labor market, particularly of migrants and casual laborers in agriculture, along with working capital, and of services like cold storage and warehouse systems have emerged as crucial determinants of food security. Moreover, where import penetration is high, as in edible oil, international trade issues need to be taken into consideration.

Updating India’s Food Balance Sheet

The latest existing Food Balance Sheet^[i] (FBS) for India was for 2017, and we update it to 2020. We first assess essential commodities and consider all broad components of the FBS including stock, production, export, import, and consumption. In Table 1, net availability is equal to the sum of net production, net trade (export – import) and stock of essential commodities for 2019-2020. We use estimates of total consumption of essential commodities from the 68^th round of the National Sample Survey Organization’s Consumption-Expenditure Survey, 2011-12 (NSSO-CES), and using these, calculate the net surplus/deficit of each essential commodity for the following year. Apart from cereals, the FBS also includes pulses and edible oil, of which India is a net importer, and perishables such as potatoes and onions. It also accounts for aggregate food requirements from COVID-19 relief packages, including the food kit systems. Finally, we look at the FBS with and without international trade since COVID-19 could potentially disrupt exports and imports.

Table 1: FBS of essential commodities in India (in million metric tons) – 2020

Source: Stock data from FCI March 1, 2020; Production data as on February 18, 2020; Export and Import for 2018-2019; Consumption unit level data for 2011-2012; Stock and production for vegetables from Operation Greens for 2018-2019; and Export and Import from DGCIA and APEDA for 2018-19.

Based on the updated FBS for 2020, India seems to be in a comfortable position for rice (a surplus of 27.1 million metric tons, MMT), wheat (53.2 MMT), onion (11.6 MMT), sugar (25.4 MMT), potato (29.5 MMT) and milk (77.8 MMT). In fact, India appears to be in a propitious position to export a fraction of its surplus to other countries, which may benefit India’s food security through higher farm income. In contrast, there may be stock shortages for high import dependency commodities, such as edible oil and pulses, owing to import restrictions or trade disruptions. As a net importer of pulses and edible oil, trade disruptions in these items can adversely affect food security. There is some heterogeneity within categories as well: while pulses like pigeon pea and lentil might face domestic shortages, quantities of other pulses like green gram, chickpea, and black gram will likely be sufficient even if trade disruptions continue for a year.

Susceptibility of food supply to COVID-19

Next, we look at factors that emerge or change because of the pandemic and determine availability at location- and commodity-levels. To do this, we develop a COVID-19 Supply Susceptibility Index (COSSI), that quantifies some of the potential supply chain constraints that could come from labor markets (e.g. casual labor/migrants, share of agricultural workers in total number of workers), farmer’s illiquidity, and lack of infrastructure (e.g. cold storage). Given the pandemic, we argue that these markers determine the extent of supply side vulnerability from COVID-19.

In developing the COSSI, we pay special attention to foods that are labor intensive and affected by seasonality or require continual harvesting. The timing of the COVID-19 outbreak and harvesting period of the rabi season overlapped, affecting harvest preparation and transportation. Further labor shortages due to migration or restrictions on movement could affect the whole food system. Most food processing units in India generally employ labor intensive methods and lack automation. Thus, the ripple effects of labor shortages could permeate the entire food system from farming to input supply, processing, transport and marketing (wholesale and retail).

The COSSI is based on the normalized values of 13 markers and includes core production determinants such as cropped area, irrigated area, state-wise procurement of cereals as well as supply chain determinants such as warehouse density, cold storage density and Agricultural Produce Marketing Committee (APMC) & rural haat density. The value of COSSI ranges from 30 to 66, with an average value of 55. Higher values indicate higher supply susceptibility. As shown in Figure 1, there is large inter-state variation in COSSI, ranging from 30 (in Punjab) to 66 (in Jharkhand). 16 out of 28 states have COSSI values greater than the average.

The COSSI supply determinants interactively regulate the overall supply situation. For example, on comparing the components of the COSSI between Punjab (30.2) and Maharashtra (61.4), it is clear that Punjab has better infrastructure and market density and has transported more grains than Maharashtra during lockdown. Maharashtra, has less irrigated area and is highly dependent on seasonal migrants for most crops, making it more susceptible to COVID-19 related disruptions. States in eastern India have high COSSI due to poor infrastructure and low share of irrigated area. This information could help policymakers identify the level and drivers of susceptibility in their state.

We also created an interactive dashboard summarizing COSSI values across states. This provides crop-specific susceptibility with data visuals, allowing users to access the entire crop by location and COVID-19 supply susceptibility.

Figure 1: COSSI values for Indian states

*Darker color indicates a higher COSSI value, i.e. higher food supply susceptibility

Conclusions

At the country-wide level, our updated FBS shows that food availability may not be a pressing issue for most essential commodities in the short- to medium-term, even with trade disruptions, with the exception of pulses and edible oil. We develop a supply side susceptibility measure based on potential supply chain constraints. States that are more dependent on casual labor (a proxy for migrant labor), such as Maharashtra, are more supply susceptible. States like Punjab with better infrastructure and market density are less supply susceptible. Labor shortage is a major determinant of supply susceptibility. Among food groups, cereals employ more mechanized production techniques, and therefore may be less affected by COVID-19. In contrast, commodities that are heavily dependent on seasonal migrants for harvesting, such as sugarcane, may be more affected.

Our study has three key policy implications. First, to avoid food shortages, it is imperative that India keeps food supply chains moving both domestically and internationally.  Second, restricting trade at any level would worsen the food supply situation, as with banana and pomegranate. Third, since India relies on labor intensive production and casual/migrant labor, improving storage facilities and protecting workers are some of the ways that can help keep supplies intact. The main revelation from COVID is that a greater focus on supply chain factors beyond production and productivity is the need of the hour to ensure food security for India’s 1.3 billion people.

Sunil Saroj is a Senior Research Analyst at IFPRI’s New Delhi office. Mamata Pradhan is a Research Collaborator with IFPRI. Devesh Roy is a Senior Research Fellow with the CGIAR Research Program on Agriculture for Nutrition and Health (A4NH).The analysis and opinions expressed in this piece are solely those of the authors.

This blog has been published as a part of the International Food Policy Research Institute (IFPRI), South Asia, blog series on analyzing the impacts of the COVID-19’s pandemic on the sub-national, national, and regional food and nutrition security, poverty, and development. To read the complete blog series click here

[1] The Food Balance Sheet for a country is akin to a household food budget, reflecting inlay and outlay on a subset of food commodities.