December 12, 1990

Bal Dattatraya Award Lecture

Prof. Bal Dattatraya Award Lecture 1990

Food Aid and International Agricultural Development:

The Agenda for the 1990s


V kurien


National Dairy Development Board

Anand 388 001

New Delhi December 12, 1990

When I first heard from Prof. MM Sharma that the Indian National Science Academy proposed to honour me by conferring on me the Bal Dattatraya Lecture Award, I was delighted. However, I must admit that my happiness was tinged with apprehension. I have wondered since if I really deserve the honour. Even today, I must confess that I feel somewhat dwarfed in the presence of such a distinguished gather of scientists and scholar.

For, I am not a scientist myself although I had wanted to become one 40 years ago. As a matter of fact, I was well on my way to becoming one, and a pretty good one at that. But life has its secret ways of nudging one in unforeseen directions. And soon after returning from abroad with American degrees, I found myself mixed up with the farmers of Kheda. My scientific career was thus summarily terminated; and instead of spending my life in laboratories and classrooms, I ended up working for farmers.

I have never regretted this. And, to be frank, given a choice, I would not trade one bit of a life devoted to the service of farmers for a lifetime as a scientist. In point of fact, I believe that I have been able to do more for science as well as for development by helping farmers to create organisational structures that put modern science and technology – the main instruments of development – in the hands of the people.

Therefore, it is that, when I received this invitation from Prof. Usha Luthra, I was wondering what could a man like me say to a group of eminent scientists which they may find significant. After much debate, I decided for the wiser course: rather than talking about science on which most of you know more than I do, I might talk on the linkages between food aid and economic development, a subject which I perhaps know more than most of you do.

1. The Rise of an ‘Indian’ Dairy Movement

In the years after India’s independence, the government of India experimented with a number of different approaches to developing our national dairy industry. There were milk colonies, government dairies, intensive cattle development programmes, key village schemes. It seemed, however, that all these programmes succeeded in increasing was the number of bureaucrats employed to run them. As time passed, our milk production stagnated and per capita consumption of milk began to decline at a precipitous rate.

On this rather bleak landscape there was one notable exception: this was a cooperative enterprise started by some men of vision, ability and principle, an enterprise that linked the tremendous productive genius of our farmers to professional management and modern technology. It was my good fortune to be associated with this enterprise from an early stage.

In 1964 our second Prime Minister, Shri Lal Bahadur Shastri, visited this enterprise in the small town of Anand in Gujarat. He spoke with the farmers, looked at their fields and at their animals. What he concluded was that what had made Anand a success was the fact that the farmers themselves had control over their cooperative and that they had the wisdom to employ competent professional to manage the enterprise for them. He, therefore, decided that we should try to create Anands throughout India. To this end the National Dairy Development Board of India was created.

When we started out in 1965, we had a reasonably clear idea of how to proceed with the creation of Anands. But we had few resources with which to work. It soon became clear that the bureaucrats and technocrats who controlled all those government dairies, milk schemes, cattle development programmes and veterinary departments were not at all anxious to surrender their empire to work for a bunch of farmers. At the same time, we were becoming increasingly concerned as e watched mountains of butter and skim milk powder growing in Europe. It would only be a matter of time before those mountains were exported to India. Had that happened it would have tolled the death knell for our nascent dairy industry.

Fortunately, some men of vision collaborated with us to transform those mountains from a threat to an asset: initially with the support of the World Food Programme and then directly with the European Economic Community we were able to use food aid as an investment in the revival of dairying in India.

That investment of food aid, later combined with World Bank assistance has produced results. Today more than six million families participate in a dairy cooperative structure that covers much of India. Milk production has increased substantially as has our per capita consumption of milk and milk products. In 1989, our production had reached a level where we could decline dairy commodities as food aid; we shall again decline such assistance this year. Save in the event of severe natural calamity, we hope that we have now reached the point where we shall no longer require such donations. In fact, I suppose that it is no secret that this year we have made a modest entry in the export market.

More important than increasing the availability of milk, Operation Flood has meant a reliable source of income for millions of our rural people. For many, dairying has become their primary employment. In fact, the success of the cooperatives has increased employment in every area of the dairy industry, from equipment manufacture to marketing of products. I believe today that milk stands second only to rice as a source of agricultural based income in India.

The success of Operation Flood in dairying has led to its adaptation and application to oilseeds, horticulture and even forestry. Although these are still in a relatively early stage, the results are also quite encouraging. In fact, all our experience has convinced us that food aid can-and-should-be used as an investment.

2. Food Aid as an Investment

Donors generally approach food aid with a mixture of interests and motives. Certainly there are humanitarian concerns involved – the desire to alleviate the misery and suffering of one’s fellow men, a motive that may also reflect a sense of guilt over having contributed to creating the conditions in which those fellow men suffer. Donors also use food aid to bolder their political relationships with the recipient; as a means of disposing the surpluses created by their own farmers; and as a strategy to develop future markets. It is hoped that today’s recipient of largesse may become tomorrow’s buyer of the same product. I think you will find all of these interests incorporated in the legislation that various donor countries have enacted on the subject of food aid. Recipients, too, approach food aid with a variety of motivations. In some instances, faced by natural or man-made crises, food aid is requested in order to save the lives of those affected. In other instance abundant supplies of food aid mask the failure of a government’s agricultural policies and help to constrain what might otherwise become very high food prices – particularly in the urban areas – which seem to be the focus of concern for most governments; quite possibly because politicians and bureaucrats generally live in cities. Another motive in seeking and accepting food aid is to provide nutrition to what we might call the weaker sections of a population, those urban and rural poor who cannot afford an adequate and balanced diet.

These various donor and recipient interests tend to be expressed primarily in two types of food aid programmes; emergency assistance and humanitarian relief.

In the case of emergency relief, food may be a vital necessity to stave off the results of natural disasters such as droughts, floods, earthquakes, cyclones and the like. In countries which live on the thin edge of survival, such assistance can prove the difference between life and death for thousand, or even millions, of those affected.

Food aid may also have practical and humanitarian importance in the medium and long-term alleviation of hunger and malnutrition. Here, too, it may be vital to the well being of its beneficiaries.

However, laudable as such programmes may appear, and as politically defensible as they are for the donor governments concerned, there would appear to be mounting evidence that the results are not all that is desired – whether viewed from the perspective of the donor or the receipt.

First, we have seen that large supplies of food, whether as emergency relief or humanitarian assistance, can often trigger a cycle of dependency. Because the food is readily available – both to the hungry and to the governments who are responsible for the hungry – inadequate efforts are made to identify and correct the problems that require external assistance in the first place. I am told that today in India – and I expect in other parts of the world as well – the children and even the grandchildren of the original “beneficiaries” of feeding programmes continue to rely on such donations.

Second, the easy availability of free or heavily subsidised food will depress domestic prices to the point where it is no longer feasible for the local farmer to compete. As you can imagine, this simply exacerbates the problem that triggered the need for food aid in the first place.

Third, we are told that there are instances where consumer preferences for donated cereals and processed foods have displaced local foods from the diet, again at the cost of local self-reliance.

I believe that there have been any number of studies done by economists and social scientists (may the tribe perish – they are never there, where the action is), studies that have highlighted these types of problems with the use of food aid for emergency relief and humanitarian assistance. Despite these, the lion’s share of such assistance continues to be directed to these uses.

There is a third use of food aid: food as an investment in the production, processing and marketing of food. In this way, I suggested, food could be used to eliminate the need for such aid in the future.

However, I must add a note of caution. Using commodities as an investment in development is not a panacea. Our experience has made it clear that there are number of important conditions that must be observed if such an approach is to prove a success.

The first condition is that we create producer – owned and controlled structures. These enterprises return a far greater share of the consumer price to the farmer. They build markets, supply inputs and create value-added processing.

All this happens because the farmers’ productive capacity is linked with professional management in cooperative organizations that have staked out a place in the market. Put bluntly, these structures force other in the dairy business to compete fairly and they turn the terms of trade in favour of the rural producer.

When producers have such structures at their command, we know that they have the means – and the will – to ensure that the results of science and technology reach all those who will benefit. It is only when such structures exist that farmers gain the confidence necessary to stimulate their investment to increased productivity. It is only when such structures exist that farmers can demand – not beg for – the services and inputs they need to realise returns on that investment.

Let me share the greatest lesson we have learned : we must respect and trust our farmers. They may not be educated, or even literate, but they possess uncommon sense and even uncommon wisdom. Time and again they have shown the ability to rise above narrow self-interest to act together in pursuit of a greater good. Programmes and projects that are designed and managed from the top down – that call farmers “targets” – and that ignore the untapped capacity of rural producers to manage their own affairs, such programmes invariably fall short of their goals. Those that respect the right of the farmer to manage his own affairs cannot fail.

It is not enough, however, to use food aid as an investment and to promote farmer-controlled enterprise. Such structures must operate in a social, economic and political environment, one that may extend well beyond national boundaries. Therefore, a concerted effort must be made to ensure that this environment includes the programmes and policies that encourage and support development. Pricing, import and export regulations, taxation, investment terms and conditions are among the many such policies that must be coordinated in an overall approach in support of food aid.

The donor, too, has a role to play in ensuring the success of food aid as an investment.

The first point concerns quality. Unlike emergency relief and humanitarian programmes, food aid as an investment requires that consumers pay for the food. In order to ensure that local prices and not depressed, the consumer must pay as much as he would if the food was produced locally. This means that the quality of the commodity must justify such prices: in other words, food aid for investment must be of the finest quality.

Second, building an industry from basic infrastructure to production through marketing takes time. It takes even longer if a strong producer – owned structure is to serve as the foundation. This requires donors to think in terms of time frames quite different from those to which they are accustomed. A programme of Operation flood’s magnitude may require two decades; others, somewhat less ambitious, may require only seven, ten or twelve years. What is critical is the continuity of the support. Once commodity assistance is provided, it must be committed for the duration. This means that food aid as an investment must be insulated from short-term problems of supply and from political exigencies.

3. Food Aid as Development Investment : Constraints

Twelve years ago I suggested that the overriding objective of all aid should be to eliminate the need for aid and that the use of food aid as an investment would seem to be the most likely way to achieve that objective. I then asked, “Why is it that food aid has rather seldom been used as an investment?”

I wish that, today, I would say that food aid is now widely used as an investment. Regrettably, I cannot. While we have successfully used food aid as an investment for Operation flood, and with other commodities, there would seem to be few other examples of such uses of food aid elsewhere in the world, or even in India. This is despite the fact that each year we receive visitors from every corner of the world, visitors who want to attempt what we have achieved in Anand. Each year we receive invitations from these countries and, to the extend we can, we send our officers to provide advice. But without food as a resource, little can be achieved. So, in 1990, I must again ask why food aid is not widely used as an investment?

One explanation that come to mind is that our very success in using food aid may have caused donors to have second thoughts. Several donor countries not only explicitly include market development as a rationale in their food aid legislation, they have also placed restrictions on economic and commodity assistance that might help the recipient to become self-reliant or, heavens forbid, a competitor. So I must ask myself the question: has India by making a success of food aid – that is, by eliminating the need for such aid – prejudiced the chances of other countries to do the same.

A second explanation that has been advanced is that the great mountains of butter and skim milk powder are no longer there. Government programmes to buy herds, to limit acreage, to penalise productivity, have all combined to bring supply into close balance with demand, sufficiently close to end surpluses and, if you will, nudge prices up a bit. While there is no denying that such programmes have been implemented, there is apparently also no denying the will of the farmer to produce. And so, I am told, once again mountains of butter and powder are beginning to rise.

A third explanation is that foreign assistance is never popular with domestic political constituencies and that it is far easier to convince a sceptical public of the need to support programmes to feed starving people than to explain and defend the intricacies of food as an investment. There are few politicians willing to honestly admit to the fact that all official development assistance represents only a small fraction of total resource transfers between rich and poor nations and that the flow of those transfers continues to move from poor to rich.

4. An Agenda for the 1990’s

Whatever be the reasons, I believe that we must take a broader and longer view. We can no longer afford to do otherwise.

We have enjoyed a decade of “almost enough”. Just enough to cause complacency. If there has been a bit of hunger in the Sahel, then we have patched it up by holding a few concerts and sending a few shiploads of food.

We are now looking at a far more difficult decade, one that will cause many a rude awakening. The world faces a grace agenda: poverty, hunger, re-emergence of oil as a source of crisis, deteriorating environments, growing populations, new and dreadful diseases.

There is hunger in today’s world. If India is self-sufficient in cereals, it is because a significant portion of our population can afford to buy very little. The same must be true of many other countries. Even in the industrial nations the hungry exist in growing numbers.

Yet, in the face of hunger we see the government of some of our most productive nations adopting policies and programmes to reduce production of food. Commodities available for donation, and even for sale, have diminished. This has not only reduced world supplies, it has caused hardship to the producers and consumers of the very countries that have adopted such polices.

What must be the effect on the farmer who is told not to achieve excellence, who is bribed to do less than his best? Knowing, as I do, the enormous benefits that result when food is used as an investment, I feel all the more strongly that to restrict production in a world with hunger is wrong – even immoral.

And, I might add, it is ill-considered and short-sighted.

Agriculture is important to the economies of even the most advanced nations. The export of agricultural products is critical to the health of the economies of countries like Canada and Australia. Many of these nations have “invested” a great deal in building commercial markets through commodity assistance. Yet, by creating and reinforcing dependency, they have ensured that the recipients of their support remain unable to afford the products they wish to sell.

To compound the problem we see national governments spending vast sums to take land and animals out of production. This has driven up the price of their commodities. So they spend even greater sums to bring the price down to compete with other exporters who have done precisely the same things. And the next thing we know the IMF and World Bank start talking about “comparative advantage” and telling us to liberalise and rationalise our economy! Comparative advantage, it seems, is having the resources to subsidise producer and export prices.

So we have a situation today where the poor nations of the world are gripped in a cycle of poverty and debt which is unwittingly reinforced by the policies and programmes of the wealthy. But the wealthy find that in order to sell to the poor, they have to either subsidise the price or simply donate more – either action simply reinforcing the same cycle of poverty with the only difference being that each year the number of poor grows, increasing the misery and raising the cost of its alleviation, Where does it all end?

Today the per capita consumption of butter in Europe and the Soviet Union is more than four kilograms annually. Pakistan’s citizens consume just less than three kilograms annually. Pakistan’s citizens consume just less than three kilograms per head: Canadians and Americans consume around two kilograms: we Indians divide our butter up at the rate of about one kilogram for each of our 844 million. The rest of the world consumes, on an average, about 340 grams per capita annually.

I can only assume that if the3.3 billion people who consume that 340 grams could afford to do so, they might wish to use a bit more butter – let’s say a kilogram each? To meet that increased demand would require a little less than 2.2 million tons of butter, almost double the current world trade in the commodity. Instead of squabbling over who gets what share of today’s market, should the nations of the world not be finding the ways to ensure that tomorrow’s market is far larger? The “surplus” of world dairy commodities is only a surplus as long as much of the world’s population can’t afford those products. It is, therefore, in everyone’s interest that they be able to afford them, and as rapidly as possible. By using today’s agricultural surplus as food aid for investment, it should be possible to help build the agricultural economies of those vast sections of our world that are poor, advancing the day when they become buyers instead of borrowers or beggars.

Unfortunately today there are ominous clouds on the horizon. There are those who believe that the rapprochement between East and West signals a decision to realign the North against the South. In a world with finite resources and growing populations, those of short-sighted vision may try to erect a fortress to protect their disproportionate share of the world’s wealth, a share that was often garnered through exploitation and the expropriation of other nations and peoples.

Such a confrontation between North and south would be both tragic and unnecessary. Particularly when we still possess sufficient time and resources to rebuild the economies of the world’s poor nations, helping them to become self-reliant partners in a far stronger world economy. Food aid, as an investment, should be a major strategy in that effort.

It is said that the dairymen of the industrial nations are very effective lobbyists. How else to explain how to explain how a handful of men and women have managed to ensure that their governments protect and advance their interests, often at substantial costs to the national exchequer? Let me then propose that these skills be employed on behalf of the world’s poor, not simply to alleviate their suffering, but to enable them to become productive members of a stronger world economy, a world economy where production need not be restricted because three billion consumers cannot afford to buy what they need.

Food aid has played a very important, indeed a critical role in the development of India’s dairy industry. Food aid can and should play an equally important role in building the dairy industries of other Asian countries, in Africa and Latin America. During the generation that it will take to achieve this goal, this food aid will offer an outlet for the productive capacity of the major dairying nations. It will provide the time, if needed for a gradual, orderly and rational restructuring of those nations’ dairy industries – not the brutal, chaotic and immoral measures we have seen in the last few years. The costs will be marginal; the returns beyond measure. This then should be the agenda for the nations of the world as we approach the 21st century:

Let our goal be the ability of each nation to feed itself. By that I don’t mean that each nation needs to produce all that it consumes, but that each will produce enough to ensure that what is not available can be purchased. Nor do I mean that a nation is feeding itself when large segments of its population can afford only the barest minimum. A nation is feeding itself when the nutritional requirements of all its men, women and children – especially its children – are fully met.

Let those among us that have – or which can produce a surplus – sit together with those that are as yet unable to fully feed themselves, and let us evolve a plan in which surplus food will be used as an investment to increase the production and productivity of those presently in need. Let us plan, produce and channel surplus to meet the requirements of countries in need – not haphazardly dispose of the occasional excess.

Let us plan and commit resources over the span of a generation, sufficient time to ensure genuinely sustainable results.

Let us jointly examine and agree upon the types of policies and programmes that serve a world in need, not the interests of a few. Let us agree that food aid investment serves the interests of both donors and recipients and commit ourselves to the highest standards of quality, continuity and integrity – not only in commodities but in all our efforts.

In the past, though support of Operation Flood, the world’s dairy industry has pioneered the use of food as investment. Le that pioneering step be but the first of many in which the world’s dairymen show the world the way to use the fruits of our labour to benefit mankind. On our part, we in India are prepared to commit our experience, our human resources, and to the extent we can, our own commodities, to achieve this goal. This is the way we would like to salute those who helped us herald the white revolution in India.