Dr B K Mukhopadhyay
In the developing block: not only being a supplier of food, raw materials and employment, the farm sector is expected to contribute to the exports wing in much better manner considering the need to bolster earnings vitally required for development fincing. Side by side, a prominent feature of agricultural commodity exports in many developing countries is that relatively few commodities account for a large share of total export earnings. Often they depend, and continue to depend, on a single agricultural commodity for their merchandise export revenues. Side by side, the sluggish demand for primary agricultural commodities and the recurring conditions of boom and slump in their exports have created problems for commodity-dependent economies. Unstable commodity prices and export earnings are well known to make development planning more difficult and to generate adverse short-term effects on income, investment and employment. What is more: with slow demand conditions, countries specializing in production of primary commodities can be expected to have a declining share in world trade unless they have a major cost or quality advantage over competitors.
Let us look at the ongoing situation taking the experiences and happenings in some of the sample developing economies.
Myanmar’s mango is a good example on this score. This time is not able to register a good show. Bad weather and poor quality controls have resulted in mango exports falling by more than 30 percent this year. As per current estimates the year-on-year decline was more than 16,000 tonnes. About 34,000 tonnes of mangoes had been exported this year earning about US$16 million, down from 50,000 tonnes last year. Mango season runs from April to July and the fruit is mostly exported to Chi via border trade, with other small shipments also sent to Malaysia, Singapore and Thailand. The most popular variety – sein ta lone (diamond) – is mainly grown in Mandalay Region and southern Shan State and has earned a good reputation intertiolly. The market is a tremendous one, but a number of problems inherent stand in the way. Myanmar can only meet about ten percent of the demand because it doesn’t produce enough high-quality fruit. Not only Myanmar, most of these economies suffer from traditiol approach. Such economies could export significantly more mangoes if it lifted its quality and value-added the product. Markets like Japan only want fruit that has been carefully processed. Re-exporting is another area by which others reap the benefit. Chi, Singapore and Malaysia buy mangoes from Myanmar, processes them and then re-exports the finished product.
Transportation problems are very common on this score. Farmers try to save money by overloading mangoes when they transport them, which damages the fruit and reduces their value. Besides, farmers also pick the fruit before they are fully ripe. Farmers sometimes rushed to harvest their crops when they hear a good price was available. Idequate cold storage facilities have been another bottleneck. Actually, the industry needs capital investment to develop processing factories and better transport networks.
Examples are not difficult to locate so far as Africa is concerned.
So far Gha is concerned cocoa plays the domint role. World cocoa production was around US$ 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 smallholder 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.
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 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: not only in India, but 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. From 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 world pool of ba production. Tamildu, 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 condition. 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 mentioning 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.
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.
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 sources 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 developing countries will become increasingly dependent on cereal imports in as much as by 2030 they could be producing only 86 percent of their own needs, with net imports amounting to some 265 million tonnes annually - almost three times present levels. Is the task within its capabilities?’ So, the challenges ahead are understood well. Developing world has to jumpstart to better the scerio. Potentialities galore!!
The upshot: farm sector planning calls for a shot in the arm. The potentialities are to be made use of in a planned manner so that the vast market could be tapped in a better manner and the indigenous demand is met adequately.
(The writer, a noted Magement Economist, an Intertiol Commentator on Business and Economic Affairs and Principal, Eminent College of Magement and Technology, Kolkata, can be reached at email@example.com)