India: Looking Under the Hood of the Food v. Fuel Debate
In Davos, Indian officials talked about the diversion of food for biofuels as a dangerous trend that could affect world food security. Responding to this claim, the Hindu Business Line ran an article recently blaming the Indian Government for soaring food inflation, not biofuels.
With the global financial crisis, the food versus fuel debate has largely slipped to the background as world leaders mount efforts to restore markets and stimulate job creation. It seems that while the Asian region was less affected than other regions, India’s deficits limited the country’s ability to respond. Inflationary pressure is making the situation worse.
On top of this, the article explains that India is facing a near-crisis situation with unabated food inflation and “the Government is at its wit’s end, having failed to effectively contain the bull-run in the food market.”
The article contends that the Indian government is largely to blame for this situation, not biofuels. Policies that neglect agriculture, limit public investment, and ignore the farm sector have led to rising food costs. The author suggests that the Indian government should attempt to fix internal problems before lecturing world governments about biofuels policies.
In the U.S., EU, and other developed countries where the agricultural industry receives generous support, higher food prices generally lead to improved supplies. In India, this maxim has not held true. Part of the problem is that the degree of freedom that farmers have is limited. There is always a limit to their capacity to produce more because of the risks associated with agriculture under Indian conditions, which include: fragmented landholding, weak input delivery system, high dependence on rainfall, limited irrigation facilities, antiquated agronomic practices, wholly inadequate rural infrastructure, decline in public investment…
Biofuels will be an important component of India’s future fuel supply. Domestic demand for oil and gas is on the rise. According to the country’s Ministry of Petroleum, demand for oil and gas is likely to increase from 186.54 million tonnes of oil equivalent (mmtoe) in 2009-10 to 233.58 mmtoe in 2011-12. Although it is a refining hub, oil scarcity and climate obligations coupled with growing demand will likely force India to pursue biofuels.
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Image: Flickr/Diganta Talukdar
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