Farm Sector: Managing risk, ambition, and reality

Dr B K Mukhopadhyay

(The author is a Professor of

Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

Particularly over the last decade, Indian agriculture has grown to be more robust with record production of food grains and oilseeds – and pretty consistently also. Evidence shows that there has been increased procurement, which consequently has added huge stocks of food grains in the granaries. India is one of the world's top producers of rice, wheat, milk, fruits, and vegetables. However, given that India is still home to a quarter of all undernourished people in the world and since on average almost half the total expenditure of about half the households is on food, increasing the efficiency of the farm-to-fork value chain is crucial for eliminating poverty and malnutrition. With new targets set and initiatives implemented, policymakers also need to take stock of reality before progressing with next level ambitions for the farm sector.

Setting a high target often also ends up being a laggard. Most of the plans lack the realistic touch since sectoral target fixing cannot ignore the spatial dimensions, regional peculiarities and related other sociological factors. More than often, the political push beck the economic positives. Rather economics is used for achieving political purposes. Not only is this the reality in India but in the entire developing world, and also as historical evidence suggests the case was similar in countries that are now developed. Either the projects are not taken up or even when the same is taken up the rate of progress remains at a palpably low level – cost escalation is rewarded!

What is more, projects completed are not subsequently followed up, supervised adequately as a result of which the same assignment is to be repeated within a short period involving more expenses and bureaucracy.

Learning to appreciate in-house potentialities

How many countries are there in the world that can produce grapes twice a year! The quality of many horticultural crops enables India to remain largely unbeatable in the global market. Despite the reality that competition has continued to remain pretty intense – getting hotter every minute – we can retain the markets for many agri-commodities. The flip side – we have to remain content with less than 1 per cent share in global trade in agri-commodities!

While there is no place for complacency, the time is also ripe for looking at the inhibiting factors. It is quite difficult to understand why pulses [main protein source for the vegetarians] output hovers around 13 – 18 million tonnes since the 1960s! It is still considered as a second-grade citizen – though there is no doubt that several programmes have been taken by the Government. Poor implementation continues to hit hard.

As the data would otherwise suggest, had we been one of the grain bowls [still the scope remains] by now we could have reaped large benefits from the rising international prices of the agri-commodities. The most important factor on this score is that demand for such commodities – especially the food grains - would never come down rather it is all set to go up over time. Population upsurge coupled with growing demand from industrial sectors could keep the demand factor at a reasonably high level. The Dongbei region of China has managed to do this for decades now.

Ultimately, the lead is to come from the two giants – India and China. The world has to depend on these two regions in the days to come. China has, of late, also has been stressing hard on this sector, clearly realizing those big industries alone or an export-led growth ultimately hinges heavily on how the food factor extends support.

For India, fortunately, this genre of negligence has not been there – the missing factor remained at not properly exploring the resources at a quicker pace. Had it been so, by now we could have ruled the world so far as many such commodities are concerned. A lot thus again depends on realistic assumptions/projections.

One has to become a dependent supplier to retain the market entry gained - sometimes exporting cotton in a bigger way while in the subsequent years almost aloof from exporting catering to only mills demand. The same thing prevailed for Onions.

Most of the least developed economies depend on a handful of such agri-commodities and by anyway if the export market is hit [like the recent recession] the export earnings suffer.

Agricultural Risks Management

Food security is such an area where no compromise can simply be made. Either one becomes self-sufficient in vital areas or suffer!

That is why the urgent need is there to go for a comprehensive set of efforts for farm development. For that matter needless to say the infrastructure holds the key. The loss incurred during the entire production process inclusive of the damage done in the unscientific threshing, rat menace, field loss, can be minimised. Without proper training imparted to the farmers as regards post-harvest technology not much can be expected on this score. Connectivity between the producing zone and the selling zones calls for immediate reinforcement. Buy-back arrangement is a good process provided the actual producer receives the (agreed) legitimate benefit in due course.

As mentioned above, evidently agricultural modernization has no alternatives. The question is regarding A) Availability of quality seeds, B) Bio-fertilisers' applications, and, finally C) Technological consolidation of holdings. The best water use process is another area that deserves attention. In this very context, scientific planning regarding the exploration of groundwater holds the key as indiscriminate usage gives rise to consequent medium- and long-term problems. Surface water utilization has also not been optimally done.

Some of these problems are so wide and deep, that every aspect requires individual care. Fortunately, India is blessed with several good agricultural universities, the person having the necessary knowledge backed by Government encouragement, plus skilled and entrepreneurial farmers. But where is the harm to learn more from the rich experiences in the West and countries like Israel? Water management is something that we have to learn from them, among others, for example.

The upshot is that whichever country that had not attached enough importance on this score had to bear the brunt – sometimes pretty severe due to the systemic nature of the problems. It is also a fact that overnight success is not more than wishful thinking. Systematic planning is the only way out. And for that matter, the tools of regional planning can be readily made use of. Regional peculiarities must be the starting point of any realistic decision-making on this score. Economic factors alone cannot give full-fledged guidance as the strength of non-economic factors counts for no less. There is always a gap between the cup and the leap. Initiating change has never been an easy matter and change-resisting factors count for it.

At the same time, it is to be seen also that mere allocation of funds does not serve the purpose. If the overall coordination is missing by a large measure – between the institutional lenders and other development wings like electrification, irrigation, roads, among others – not much can be achieved tinkering around the traditional modes.

Finally, research suggests that to become a strong force in the international markets - a robust production base is a prerequisite. If the produced items cannot be stored as per requirement and the stored items are not timely made use of [agri-goods - therefore, in time], a colossal range of potentialities would get lost inclusive of the huge investment incurred. A holistic overview is therefore required – besides focusing largely on output and productivity, raising rural living standards and improving market access along with supporting newer forms of agribusiness are critically important. Therefore, enhanced policy prescriptions could further strengthen research facilities, boost institutional capacity and partnership building, in addition to ensuring a continuous flow of knowledge exchange.