The present rise in food prices (Courtesy: TK Arun, ET Bureau)

The conventional wisdom is that high food prices make the poor worse off. India’s growing prosperity and welfare schemes such as the employment guarantee scheme turn conventional wisdom on its head. When people who could never afford to eat their fill suddenly get purchasing power in their hand, the first thing they buy is more food, and better kinds of food. Because the poor are better off, food prices are going up.

In the eighties, the Soviet Union had a food crisis, when their grain output was double India’s, for a population that was one-third or so India’s. Why did India, with a per capita grain output that was about one-sixth the Soviet Union’s, not have a crisis, while the Soviet Union was pushing up world grain prices with panic buying? Because most Indians ate mostly grain, while most Soviet citizens ate mostly meat — in other words, they fed their grain to animals and ate the animals. This is how the bulk of the developed world lives.

Consumption patterns are changing in India, too, with people eating less of cereals and more of pulses, vegetables, milk, meat and eggs. Even the NSSO surveys that sadly underestimate total consumption and yield the horror tales of poverty that warm the cockles of reform critics’ hearts show that consumption across the board is undergoing a shift to higher value foods and processed foods. That shift raises the total food demand, even as people consume fewer calories, thanks to ever-diminishing dependence on manual labour.