President Bush blames India for global food crisis!

A little while ago, I saw a TV news headline that said that US President George Bush has linked the current world food shortage/rising food prices to India’s growing prosperity and its large middle class. At a very global, macro-economic level, it is true that as India’s economic power increases due to faster growth relative to nations such as the US, its currency strengthens vis-a-vis the US$, its forex reserves increase, its BOP position becomes more favourable (to India). Consequently, the purchasing power of the Rupee too rises- and India can afford to spen more on foodgrain or edible oil import.

But India’s growing economic clout in world markets is only one part of the equation. Supply of foodgrains has been hit because of drought in Australia (a major wheat producer), growing urbanization in India as well as in other developing countries (which means less land is available for growing food), the trend to diverting corn and other crops for production of ethanol and other biofuels and a general reduction in farm productivity. There is also a move by farmers to grow other cash crops that yield higher profits per unit land than conventional foodgrains such as rice, wheat and corn.

There is also the issue of waste- whether in India, because of a poor supply chain (poor warehouse facilities), or in the US, where average portion sizes tend to be large (not to mention “Texas sized portions”), resulting in a fair amount of waste. In energy-starved societies like India, even refrigerated food sometimes tends to spoil, leading to waste.

Therefore, all told, the argument that India is somehow solely responsible for the current global food crisis is laughable at best and a flawed thought process at worst. But to be fair, I think President Bush was not trying to point an accusatory finger at India. He was only highlighting the other side of globalization.