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Developing world: Farm sector still the saviour

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  29 Dec 2015 12:00 AM GMT

By Dr B K Mukhopadhyay

Can the fact be denied which is crystal clear that the contribution of the farm sector has been going up in the real sense, if the holistic view is taken? Let us take a quick look at the recent experiences of some of the developing economies.

Myanmar’s mango is a good example on this score. Mango season runs from April to July and the fruit is mostly exported to Chi via border trade, with other small shipments also sent to Malaysia, Singapore and Thailand. The most popular variety – sein ta lone (diamond) – is mainly grown in Mandalay Region and southern Shan State and has earned a good reputation intertiolly.

The market is a tremendous one, but a number of problems inherent stand in the way. Myanmar can only meet about ten percent of the demand because it doesn’t produce enough high-quality fruit. Not only Myanmar, most of these economies suffer from a traditiol approach. Such economies could export significantly more mangoes if it lifted its quality and value-added the product. Markets like Japan only want fruit that has been carefully processed. Re-exporting is another area by which others reap the benefit. Chi, Singapore and Malaysia buy mangoes from Myanmar, process them and then re-export the finished product.

Transportation problems are very common on this score. Farmers try to save money by overloading mangoes when they transport them, which damages the fruit and reduces their value. Besides, farmers also pick the fruit before they are fully ripe. Farmers sometimes rush to harvest their crops when they hear a good price is available. An idequate cold storage facility has been another bottleneck. Actually, the industry needs capital investment to develop processing factories and better transport networks.

Africa: Coming Up?

Examples are not difficult to locate so far as Africa is concerned. So far Gha is concerned cocoa plays the domint role. World cocoa production was around US$ 10 billion. Ivory Coast, the world’s leading producer of cocoa with 2.4 Mha under cocoa, and Gha, the second after Ivory Coast (1.5 Mha) between them produce around 53 percent of the world’s cocoa. More than half of the world’s chocolate comes from the cocoa plantations of Gha and Côte d’Ivoire, where hundreds of thousands of small farmers supply lucrative fair-trade markets in developed countries. Gha produces high-quality cocoa that earns a premium price on the world market. Cocoa is an important cash crop in some such economies - contributing 7.5 percent of GDP in Côte d’Ivoire and 3.4 percent in Gha in 2008. It accounts for as much as 70-100 percent of household incomes of cocoa farmers in Gha.

Gha, though is on track to achieve its one million metric tonnes of cocoa target in the last quarter of the year, yet will face some gloomy days ahead. Increasing temperatures will lead to massive declines in cocoa production by 2030 in Gha and Cote d’Ivoire, both in West Africa.

The CIAT’s [Colombia-based Intertiol Centre for Tropical Agriculture] new report – the first of its kind about the likely effects of climate change on cocoa production in the region - anticipated that areas of cocoa suitability will begin to decline by 2030, as average temperatures increase by one degree Celsius. It also disclosed that an expected annual temperature rise of more than two degrees Celsius by 2050 will leave not only Gha, but many of West Africa’s cocoa-producing areas, also too hot for chocolate. Warmer conditions mean the heat-sensitive cocoa trees will struggle to get enough water during the growing season, curtailing the development of cocoa pods containing the prized cocoa bean –the key ingredient in chocolate production, according to the report.

By 2050, a rise of 2.3 degrees Celsius will drastically affect production in lowland regions, including the Western Brong-Ahafo. Cocoa trees are expected to struggle as the region’s dry season becomes increasingly intense. Over a third of Gha’s economy is agricultural. Products range from bas, cassava (tapioca), cocoa, coffee, corn and peanuts to timber. Two of Gha’s major exports, gold and cocoa enjoyed unprecedented high prices last year. In addition, Gha experienced a record bumper crop of cocoa. These factors helped increase Gha’s exports .Gha now plans to boost its exports by selling cassava, textiles and palm oil in foreign markets. Gha's economic and trade health depends on whether it can maintain its robust export growth at a rate that exceeds oil price increases. This is more likely if gold and cocoa prices stay high, and if Gha can introduce more of its products and services to foreign markets. Cocoa has to continue with its vital contributions.

Ba: Potentialities High

Ba is again one such commodity where the business scope is a big one for a number of developing economies provided they are competent enough to grab the situation. Bas are the fifth largest agricultural commodity in world trade after cereals, sugar, coffee, milk and cocoa. The contribution of ba to GDP of agriculture in India is around 3 per cent. It also provides livelihood security to millions of people in primary producing areas, trade and processing. Especially, global emerging trend is indicative of a paradigm shift in dietary needs of the people with rise in income, which, in turn, calls for more horticultural produce and thus there is the need for more emphasis on ba. It is also one of the main fruits in intertiol trade. In terms of volume it stands first among exported fruits, and second after citrus fruits in terms of value. The global production of ba is of the order of around 71 million tonnes, cultivated in about 4.5 million hectare. What is more it also provides a source of livelihood and income to the small and margil farmers in the developing world. In the world today the major ba exporting countries are Ecuador, Colombia, Costa Rica and Philippines and the major importing countries are USA, Belgium, Germany and United Kingdom. The emerging belt -India, Ecuador, Brazil and Chi alone produce half of total bas of the world.

According to FAO estimates, India occupies the highest area under ba in the world. It may be noted here that around 11 percent of the total global area under ba belongs to India. India ranks first in ba production, contributing about 23 percent in the world pool of ba production. Tamil du, Maharashtra, Kartaka, Gujarat, Andhra Pradesh, Assam and Madhya Pradesh are the major ba producing states of India.

The main advantage of this fruit is its availability round the year. This tropical crop is grown throughout the year under humid weather conditions. What is pertinent to note on this score is the very fact that productivity per hectare in India is more than twice that of the world. Special mention may be made here: Maharashtra - the largest producer of ba in the country with around 27 percent of total Indian production - has the highest productivity, about 420 percent higher than that of the world average and 225 percent higher than that of the country’s average.

In spite of these facts it is regrettable that though nearly 23 percent of total world output is produced in India, the export of this item has been negligible when compared to a number of countries. Presently, the exports of Indian Ba are mainly to UAE, Saudi Arabia, besides Kuwait, Bahrain, Oman and Qatar. Other major importers of this fruit from India are Nepal, USA, Iran, Maldives, UK, Cada and Bangladesh.

So far Bangladesh is concerned agricultural trade has been an important contributor to improved food security and price stability. Efforts are on there to expand the scope of intertiol trade in agricultural products. Bangladesh has been successful in exporting cereals and high-value products [e.g. shrimp and fish] in part as a result of preferential trade agreements. Policy reforms backed by investments could further eble Bangladesh to bolster exports in these areas while meeting relevant quality and safety standards, among others.

What is more: non- tariff barriers (known as NTBs that refer to any measure other than a tariff that restricts or distorts trade) are becoming increasingly important determints of agricultural trade. Though the least developed countries (LDCs) have been enjoying preferential market access to the developed country markets such as those of the European Union as well as Australia, Cada, Japan and the United States of America and though preferential market access has reduced the tariff barriers for most of the agricultural products exported by LDCs, yet the prevalence of NTBs are limiting exports from the preference-receiving countries.

FAO has rightly opined: ‘the 1990s saw a decline in the growth of world cereal consumption. This was due not to limits in production capacity but rather due to slower growth in demand, partly caused by exceptiol and largely transient factors.

Growth in consumption will resume, leading to growing dependence on imports in developing countries. The potential exists for traditiol and new exporters to fill this gap, but problems of food security and environmental degradation will need to be addressed. Cereals are still by far the world's most important source of food, both for direct human consumption and indirectly, as inputs to livestock production. What happens in the cereal sector is therefore crucial to world food supplies. Since the mid-1960s the world has maged to raise cereal production by almost a billion tonnes. Over the next 30 years it must do so again’.

( The Writer, a noted Magement Economist and an Intertiol Commentator on Business and Economic Affairs, Director, Netaji Subhas Institute of Business Magement, can be reached at m.bibhas@gmail.com)

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