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Challenge to farm sector

B. Yerram Raju

THE Seattle riots, the street shows at Genoa at G-8 meet, the tensions arising from the change in trade perspectives of Europe and the US -- the two major trading blocs -- are all pointers to the Doha WTO meet being not-so-smooth. The US got assurances f rom China, whose entry is almost certain, for its own trade protection. When a developed country, threatened with a cut in its market share, has taken pains to safeguard its market, should not India prepare well?

First, India has to equip the primary and secondary sectors to meet the standards of international markets. How does the Indian farmer cope with diverse demands? The last two decades witnessed inefficient and excessive use of chemical fertilisers and ins ecticides that has raised issues of food safety. While the GDP contribution of agriculture declined from 51 per cent in 1954 to 24.8 per cent in 1999-2000, the number of people dependent on agriculture has not. Productivity of any and every crop is eithe r half or less than half the global average.

It is a fact that all developed countries have been heavily subsidising their agriculture and small and medium enterprises (SMEs) because the contribution of these sectors to their GDP is low. In five decades of misdirected subsidies and a none-too-blame less administrative machinery dispensing them, with barely three per cent of gross revenue surpluses remaining for developmental expenditure, India does not have the money to keep subsidy coming. It is this appalling situation that is unnerving the India n farmer.

States rich and abundant in natural resources -- Bihar, Madhya Pradesh, Eastern Uttar Pradesh, Assam and Meghalaya, Orissa, and so on -- are eclipsed from development interventions at the farmer level because of political uncertainty, and problems on the ground. These States need to be brought into the production mainstream, to tap the ready export market.

Rice, wheat, maize, jowar, ragi, bajra all can have related agro-based industries, for both off-season and round the year employment. But these would require utilisation of appropriate post-harvest technologies. At the micro level, installation of techno logies and provision of infrastructure facilities, such as power at uniform voltage, packaging, and so on, become critical. At the macro level, branding and co-branding of products that to sell both in the domestic and export markets will become extremel y important.

The country can develop competence in pisciculture/aquaculture. However, there are standards for many of these sectors. Therefore, it is important to set up testing laboratories at the landing sites and develop a vigilance mechanism to prevent imports of set-up standard products. At the same time, it should be possible to export large quantities. This would call for investments in specific packaging, safe and appropriate containers, and good local transport facilities with cold storage vans.

The sudden surpluses of grain have not found an outlet despite all the incentives offered to the States. Farmers' associations that are at a nascent stage of development, have to, therefore, assume the role of export-traders.

Recently, a farmer association leader, addressing the former Chairman of the WTO Task Force, Mr Sharad Joshi, raised an important question: ``The Fifth Pay Commission doled out Rs 80,000 crore in a cash-starved economy to the organised labour. What did t he nation get in return? If a portion of it were to be given to the farm sector through properly directed subsidies, as in the developed nations, the Indian farmer would have given back in value-addition at least 40-50 per cent of what they got.''

The capital market is caught in scams. Banks are awash with non-performing assets. The tax administration is inefficient. Neither the equity nor the debt market is not immediately capable of delivering results. The liberalisation of the financial sector did not make them efficient. Productive capital resources went to recapitalise the bankrupt outfits. Financial institutions and banks are not dispensing credit where it was most needed; but in areas of convenience. The nation has to find resources to mak e the primary sector competitive in such depressing scenario.

India has a minuscule 1.1 per cent share of the world exports. It faces the threat of imports, especially post-WTO. The Indian farmer has the ability to meet the emerging needs of the economy, but provided he is given the wherewithal and infrastructure s upport.

As things stand, the farmer is unsure of his future. If he increases his production and productivity through higher resource-use efficiency, where will he store his surpluses until a market is found? When and how will he achieve the value-addition requir ed by the external market? The WTO offers tremendous opportunities but India has to brace up on many fronts to take advantage of them.

(The author is Chairman, Agriculture and Rural Development Area, Administrative Staff College of India, Hyderabad.)