Indian economy would benefit from better food safety - study

Using MAGNET, a macro-economic model developed at Wageningen Economic Research, the FBD burden in 2030 was estimated​​ taking into account an increasing population, GDP growth and urbanization in India.

About 100 million cases of foodborne diseases (FBD) were estimated for the country in 2011 but it is almost certainly an underestimation due to lack of accurate data.

This data comes from the World Health Organization (WHO) Foodborne Disease Epidemiology Reference Group (FERG) in 2015.

One out of nine people sick by 2030​

Researchers found the number of FBD cases is expected to rise from 100 million in 2011 to 150-177 million in 2030.

This means that by 2030, one out of nine people on average fall sick, up from one out of 12 in 2011.

However, rich rural and urban households will be disproportionally more affected, where every third person could fall sick from foodborne disease.

Given possible underestimation of the FBD burden, GDP gains could amount to $80bn, if the illness ratio is one in three instead of one in nine.

The growing FBD burden is attributed mostly to the GDP growth followed by population growth.

The GDP effect provokes a significant increase of meat consumption by 2030 (albeit from a low base relative to the rest of the world), which is a highly susceptible category for infectious food diseases.

Due to rising domestic demand and food prices the negligible share of exports will decline further.

FBD costs may reach between $7bn–$8.4bn in 2030 which represents a significant increase from the $3bn estimated in 2011.

The share of health care costs saved due to avoided FBD illnesses ranges between 2.7% - 3.2% (depending on the FDB assessment method).​

Type of household and income​

Between 58,000 up to 70,000 deaths annually could be expected from FBD diseases, depending on the assessment method used, with notable differences across household groups.

It is not guaranteed households with higher income are less prone to fall sick by FBDs.​

“On the contrary, due to their preference for more luxurious types of food such as meat, fruit and vegetables, richer households are paradoxically more affected than lower income households.​

“In view of the continuing process of urbanization and GDP growth, every third person in the rich urban household may be affected by FBD by 2030, which is notably more than the average one out of nine.”​

Avoiding FBD burden benefits richer households first but other households benefit indirectly as incomes rise and food prices go down.

Although there is growing recognition of the importance of food safety it is not reflected in India’s public funding priorities, said researchers.

One potential benefit from the increase of food safety would be to enhance export opportunities.

When looking at existing consumer preferences data does not indicate Indians are preferring imports because of food safety reasons. Empirical evidence on food scandals shows there impact are rather short-term.

Positive impact on economy​

The analysis shows investments in food safety can bring a positive impact on the Indian economy.

Favourable structural change, support of employment of skilled labour and growth of services are important positive effects of a food safety policy.

Higher income groups perform more skilled labour and a reduction of FBDs makes skilled labour-intensive sectors more competitive. Because costs of skilled labour decrease, government services become more accessible.  

It can be expected that if there was a well-functioning food safety system, labour supply would be on average 0.1% higher.

Although increases in labour supply result in a decline of wages, prices for land and capital go up, which compensates the income gap of rich households.

Investments in food safety become even more urgent to avoid an increase in foodborne disease burden undoing health benefits from the diet transition from staple foods to more nutritious items such as meat, fruits and vegetables.