This paper estimates instability for the aggregate of the crop sector as well as for the sub-sectors and important commodities at the national and state level.
Biofuels are globally considered sustainable and ecofriendly source of energy to enhance national energy security and decrease dependence on imported fossil fuels. During the past one decade, Government of India (GoI) has initiated several measures to augment production and use of biofuels.
The global economy has faced two serious but unconnected crises in quick succession during the past four years. The years 2007 and 2008 witnessed an unprecedented rise in food prices which forced the global community to pay more attention to the agricultural sector.
Agriculture is the core sector of Indian economy. The share of agriculture and allied sectors in total GDP presently is about 16 percent and it engages nearly 52 per cent of the national workforce. Agriculture therefore continues to remain the principal source of livelihood for the majority of households in India.
The main reason for the current surge in food prices is the supply shock due to the drought in 2009 and the carry-over effect of the low growth of food production in 2008-09. As the frequency of such shocks is expected to rise, India needs to have an effective food management strategy to deal with these episodes.
The deficiency and uneven distribution of rainfall during the 2009 monsoon has brought several issues to the fore: rising water demand from various sectors, regional effects of a drought and the failure of the India Meteorological Department to provide credible forecasts at the disaggregate level.
Agriculture growth and instability have remained the subject of intense debate in the agricultural economics literature in India. While the need for increasing agricultural production or growth are obvious, the increase in instability in agricultural production is considered adverse for several reasons.
Wheat stocks are rising again, well beyond the minimum required, and a large procurement is expected from the 2009-10 wheat marketing season that begins on 1 April. India appears set once again for yet another phase of rising stocks, mounting carrying costs, and a crisis of plenty.
This paper discusses the various factors that have been identified as responsible for the current global crisis in the availability of food and for the rise in prices of cereals. It argues that the crisis is different from the ones in the 1960s and 1970s in that there is now likely to be a permanent upward shift in real prices. It is important that developing countries place renewed emphasis on selfsufficiency to ensure food security, since they are unlikely to be able to afford expensive food imports.
