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BW Businessworld

From Plough To Plate

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Even as panicking nations are tinkering with policy in a bid to curb the price rise and meet possible shortages (India alone changed policy four times in recent months), experts say the only way forward is to invest more in agriculture research and technology, and expand aid to rural infrastructure.
At a workshop in Delhi to explore alternative future for agricultural knowledge, science and technology (AKST), jointly organised by the NCAER and IFPRI (International Food Policy Research Institute), economists and agriculture specialists cited a lot of statistics to make their points.

Mark W. Rosegrant, director, Environment and Production Technology, Division, IFPRI, a Washington-based think-tank pulled out numbers to show how countries that had invested a lot in agriculture technology (mostly in the developed West) recorded significantly higher yield growth in cereals using relatively smaller land areas.
Using computer modelling, IFPRI has simulated what food prices will be like in 2050. The scenario mapping exercise is especially relevant to India and China and aims to provide policy makers options for action.
In a business-as-usual scenario -– that is keeping baseline figures taking account of the biofuel boom, climate change and rapid growth on demand side - food prices could really skyrocket. If you take the first two variables out (that is, in an environment without biofuel boom and climate change), the food price increase doesn’t look so high. In fact, interestingly, according to IFPRI simulations climate change appears to have a worse impact on agricultural productivity and prices more than the biofuel boom.
At the same time, keeping these two variables as they are but in a very high AKST environment, the simulated prices of wheat actually declined in 2050. Conversely, in a low AKST environment, the price of wheat shot up by nearly six times (from $100/mt in 2000 to around $600/mt in 2050. In a business-as-usual scenario, global wheat price almost doubled.
According to Rosegrant, even nutrition benefits are available in a high AKST environment as calorie availability will grow. The simulations show that in a high AKST environment, there is greater reduction in the number of malnourished children.

Closer home, within India, IFPRI pulled out statistics to show that investing in technology can certainly help boost agricultural incomes and aid farm sector growth. Dr Ashok Gulati, director Asia, IFPRI, used the example of Gujarat, where the annual average rate of growth in agriculture and allied GDP was 12.8 per cent in the period between 2002-03 and 2006-07 as compared to a strong agricultural state like Punjab which recorded 2.5 per cent growth. And what made the significant difference? According to Gulati, a biotechnology fuelled crop -- BT cotton.
Looking across crops, the average annual percent growth rate of cotton was 13.2 per cent as against just 1.5 per cent for rice and 1.1 per cent for wheat in the period between 2002-03 to 2007-08. Again, according to Gulati, clearly technology is the differentiator.
Attacking the “subsidy” based policy of the Indian government, Gulati threw another set of statistics to prove his case - measuring returns on investments and subsidies in terms of agricultural GDP growth (Rs per Re spending). The return derived through investments on agricultural R&D was 9.5 per cent in the 1990s while returns through the fertiliser subsidy route was a mere 0.85 per cent.
However, merely allocating more money to R&D cannot solve the problem. The key lies in adoption of the technology. Also, India’s agriculture research organisations need a huge dose of institutional reforms before they can help replicate another green revolution. A concern voiced by former planning commission member Professor G.S. Bhalla is what happens if the technology investment and adoption is driven by the vested interests of multinationals. (In high income countries, rate of growth of public spend on agricultural R&D is -2 per cent, showing how it is private sector driven.)
And, technology alone cannot solve the issue – as pointed out by many, it needs assured markets, good roads, irrigation facilities. A fact being re-iterated at many forums today. In a report early this year, for instance, the World Bank pointed out that Indian agriculture has the potential of reducing rural poverty. But this will require greater investments to increase farmer yields and profitability and in rural infrastructure such as irrigation, roads, power and markets. All said and done, it’s clear that Indian agriculture needs a serious recast.
Clearly, from plough to plate is a challenging path ahead – and given the political compulsions of governments, it’s debatable whether the policy suggestions thrown by food scientists and economists will be heeded.


Trading Raspberries For Rice?

Should our farmers sow mango rather than maize, raspberries instead of rice and watermelon for wheat? Well, not quite those examples. But some experts feel that a diversification into high value crops rather than pursuing a food grain focused approach could yield better incomes and growth in agriculture.
Ashok Gulati, director Asia of Washington based think-tank IFPRI (International Food Policy Research Institute) says that a grain led strategy is unlikely to pull up the growth and incomes in agriculture. Instead, investing in high value agriculture (HVA could turbo charge farm sector growth.
Pointing out how India’s agriculture has recorded GDP growth of 2.5 per cent in the last five years (it would be 4.9 per cent if you do not include the severe drought year of 2002-03 is his controversial contention), while the population rate of growth has stabilized at 1.6 per cent, Gulati says there is clearly no mismatch in supply and demand. Indeed, if you take into account the buffer stock of over 22 million tonnes (plus an additional reserve supply that the government is planning to procure), then our food security is certainly not a matter of concern.
Globally, the trend everywhere is that with rising affluence consumption pattern moves to high value commodities – meat, fruit, vegetables, milk. Ditto in Asia. According to Gulati, increasing westernization of diets is causing a shift in the Asian platter from cereal-based to high-value food commodities, including meat, fish, eggs, milk, fruits and vegetables. FAO (Food and Agriculture Organisation) statistics in eight Asian countries that include India and China show that per capita consumption of all these commodities grew at a rapid rate even as grain consumption dwindled by 0.4 per cent.
Of course, this line of thinking comes under fire from many, notably Prof G.K. Chadha, member, economic advisory council to the prime minister, also present at the workshop, who pulled out his own set of statistics to show how the 30 per cent of the population below the poverty line is still very much grain dependent. Also, while agriculture may have overall recorded 2.5 per cent rate of growth, foodgrain production in the country has actually dwindled alarmingly. It could dwindle further as recent surveys show that nearly 40 per cent farmers want to move out of agriculture.
Gulati agrees that success in HVA will require a different policy vision, different types of investments and even different institutions. But the rural business hubs created by private sector players like ITC, Reliance, etc., which are bringing farmers closer to the end markets – could actually spell the structural shift needed in India.

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