298. Memorandum From Secretary of Agriculture Freeman to President Johnson1
SUBJECT
- Review of the India Food Situation
Official estimates of foodgrain production in India are still holding at 76 million tons. Grain imports from all sources are expected to average about a million tons monthly in March, April, and May.
Grain procurement and efforts at belt tightening are moving slowly. Rationing programs instituted thus far cover 34 million people or 7 percent of the total population. An additional 20 million may be added by June 1, bringing the total up to 11 percent. This will cover most of the major urban centers but very little of the country outside these centers.
The riots in Kerala protesting the lack of rice have subsided for the present, but scattered food protests and demonstrations are occurring elsewhere in India.
Dissatisfaction with food policies
At the annual convention of the Congress Party, the Government’s food production and distribution policies came under fire. Minister Subramaniam, as Minister of Food and Agriculture, bore the brunt of the attack.
At times the Party Leaders nearly lost control of the convention delegates who were loudly demanding the abolition of the food zones. Most of the criticism came from the deficit states, which this year out-number the food surplus states by about 3 to 1.
At one time Minister Subramaniam threatened to resign. This is not the first time he has used this threat, but there is probably a limit to the number of times this tactic can be effectively used. There is little doubt but that Subramaniam’s position has been weakened somewhat by the current crisis and the unrest and dissatisfaction it has generated.
Subramaniam appears to be fighting hard to implement the policies agreed upon in Rome. Despite the fact he got Cabinet and Parliament concurrence, he has been facing some strong opposition. At the annual convention of the Congress Party, Subramaniam was openly reprimanded by Congress Party Chief Kamaraj for having signed an overly generous agreement with an American firm permitting it to construct [Page 580] and operate a fertilizer plant. Subramaniam insisted that the Indian Government must live up to its agreement and he prevailed.
Subramaniam was also criticized by Kamaraj for the recent decision to permit foreign private investors to price and market their own fertilizer. Again he held his ground and won out. Kamarj later partially retracted his criticism of Subramaniam, saying that in fact this decision was made by the Government of India.
The 1966/67 crop
We are thinking ahead to the 1966/67 crop in India. Historical records indicate that crop production does not usually recover completely after a serious monsoon failure such as that experienced this past year, even if the next monsoon is a good one.
Reports of serious and worsening power shortages indicate water levels in irrigation reservoirs are far from optimal.
Scattered readings of soil moisture levels indicate these are far below normal throughout most of the Indian subcontinent.
Fertilizer supplies for 1966/67 crop
A third key factor affecting the 1966/67 crop and on which we already have some information is fertilizer supplies. As things now stand, supplies of all three major nutrients will be well below the levels for 1966/67 agreed upon in Rome.
Nitrogen fertilizer supplies are expected to range between 700,000 and 800,000 tons. This is up from the 550,000 tons used in 1965/66 but far short of the 1,000,000 ton level agreed upon in Rome. We do not have complete data on phosphate and potash supplies for 1966/67 but the shortfalls may be even greater than for nitrogen.
The Indians have used all of the $50 million loan you announced on December 10. They more than matched that loan with foreign exchange of their own as they had agreed they would. Even so, they are falling far short of targets. Several factors account for this.
Fertilizer prices have risen sharply over the past several months. Our $50 million loan did not go nearly as far as it would have a year or two ago.
World supplies of fertilizer raw materials, particularly sulphur, are in short supply. The inability to obtain adequate supplies of raw materials coupled with the failure to allocate enough foreign exchange for spare parts has prevented domestic plants from operating at anything near full capacity.
Getting fertilizer consumption up to target
It now seems quite clear that fertilizer consumption will be well below target in 1966/67 unless strong action is taken. We might very [Page 581] well press Mrs. Gandhi to find enough foreign exchange to get fertilizer consumption up to the agreed upon levels. It appears that Subramaniam could not carry the point alone again. From a political point of view, it would be very desirable to involve Mrs. Gandhi more directly in agricultural policy making. This would take some of the direct pressure off Subramaniam.
I recommend we use every way possible to get them to free enough of their own foreign exchange to get fertilizer consumption up to target. If this does not work, I would suggest we urge them to go again to some of the other advanced countries such as West Germany and Japan asking them to supply specific quantities of fertilizer on concessional terms so they can meet their consumption targets. These additional fertilizer needs would total about $100 million. After all, they did not have any great qualms about asking us for $750 million worth of foodgrains.
If we decide none of these will work, you might want to consider an additional $100 million loan to be used specifically for fertilizer, fertilizer raw materials and spare parts. One pound of fertilizer produces on the average 10 pounds of grain. Fertilizer supplied now will reduce the amount of grain we will be asked to contribute next year. If we let them off this year, it will be almost impossible to get them back on target in subsequent years.
Preparing for Mrs. Gandhi’s visit
Later this week I am sending Les Brown, my key India expert, to India to take a last reading of conditions there before Mrs. Gandhi comes here. He will take a close look at the progress, or lack of it, in getting new fertilizer plants under construction, and in carrying forward the Rome agreement.
Brown will also be investigating the feasibility of attempting to shift cotton land into the production of foodgrains in India. If this proves feasible, we could work off some of our heavy cotton stocks under P.L. 480 while reducing their import needs for U.S. wheat.
This proposition seems logical on the face of it, but will need to be examined in terms of the economic implications, particularly to the producers involved, as well as the political overtones.
The fact that Poage brought this up in an open hearing and that it got in the newspapers means it has already reached India. It may have created political problems for Subramaniam and will possibly create more if we try to move in this direction.
Nonetheless, I have discussed it with leaders in the cotton industry and also cotton Congressmen and Senators and we will thoroughly investigate it.
I will send you a complete up-to-date report when Brown returns.
- Source: Johnson Library, National Security File, Memos to the President, Walt W. Rostow, Vol. 21, 3/3/66–3/30/66. No classification marking.↩