Agricultural scenario 2012-13

By Dr Aamer Irshad

LAST year, the agricultural sector achieved a growth rate of 3.1 per cent against the target of 3.4 per cent.

Low production of wheat and some minor crops was the main cause of missed targets despite better harvests of some major

crops like cotton, sugarcane and maize along with satisfactory performance by the livestock sector.

Bad weather and floods predominantly remained the major causes of lower agricultural output.

In the same year, GDP growth was recorded at 3.7 per cent , lower than actual target of 4.2 per cent but above the revised target of 3.6 per cent and also the three per cent in 2010-11.

The positive correlation of agricultural GDP with the overall GDP suggests that agriculture is a significant factor in determining the economy’s performance. Keeping in view the thrust of growth of agriculture sector, a target of 4.1 per cent was fixed for this

year.

The targeted growth was based on the expected contributions by the major crops ( four per cent ), minor crops (4.5 )), livestock (4.2), fisheries (two) and forestry (two per cent).

The projections for major crops were based on the output of 25.5 million tonnes wheat, 6.9 million tonnes rice, 59 million tonnes sugarcane, 14.5 million bales of cotton, and 4.3 million tonnes of maize. The assumption was based largely on the level of production already achieved along with the performance over the last three years. Minor crops such as gram, onion and sunflower remained extraordinarily low because of unfavourable weather conditions last year. It was expected that performance of minor crops will revive and contribute positively towards the overall agricultural GDP.

For the crop sector, key contributing factors, including weather conditions, have remained comparatively better. Agriculture credit disbursement is increasing along with availability and use of fertiliser and improved seed. Plant protection measures and farm mechanisation are improving.

The underlying assumptions for the livestock sector, whose contribution in agricultural GDP (55 per cent) is more than the crop sector, are that its performance has been very steady being less prone to vagaries of weather.

The sector has achieved growth of about four per cent for the last many years. The poultry sector also witnessed sustained high growth rates well above six per cent annually.

A big push in growth rate of livestock is, however, not possible due to peculiar nature of the activities and gestation period required for an activity to become productive. The resilience of the livestock supports growth even in worst natural calamities.

Target for fisheries and forestry growth has been fixed at two per cent. The share of both is negligible in agricultural GDP and hence to the overall economy.

In Kharif (or summer) season, major crops like cotton, rice and sugarcane are grown. Wheat is only the major crop of Rabi or winter season.

The Kharif season is already over. Provisional production data available from Suparco indicate that about 13.9 million cotton bales of standard weight (170 Kg) will be produced this year. The production of sugarcane and rice can be anticipated at 68.5 and 7.2 million tonnes respectively.

If the production of minor crops is assumed normal and the livestock sector follows the fixed growth pattern i.e. around 4.1 per cent per year, wheat remains the only decisive factor to determine the actual agricultural GDP for 2012-13.

With the available data of cotton, rice, sugarcane and anticipated achievement of livestock sector, the performance of agricultural GDP may be viewed in two scenarios depending upon the production of wheat crop in ensuing season. In one instance, if wheat harvest meets the target of 25.5 million tonnes, the agricultural GDP will record a growth rate of 4.6 per cent.

However, if it misses the target by one million tones, the agricultural GDP will comfortably surpass the target figure of four per cent.

Wheat productivity largely depends on weather conditions along with the availability of critical inputs in the coming Rabi season. Weather is single most important factor in wheat production. Pre-Rabi rains provide moisture for timely sowing in rain-fed wheat growing areas which contribute to around 15 per cent towards overall production.

Likewise rains during the growth period of wheat especially in December, February and March are very significant. Intensity and duration of frost, fog and temperature in the later part of the wheat plant life are very decisive. Because of the non filling of Mangla reservoir up to the level of last year i.e. 1210 feet, comparatively less irrigation water will become available for wheat crop but it may not affect the overall productivity, being strongly linked with other factors of production. The factors under human control such as timely sowing with certified seed, balanced fertiliser use, and good crop husbandry will also have significant impact on wheat production.

Presently, the agricultural outlook appears positive. Policy and overall sector environment suggests a healthy growth in agriculture sector. Due to strong vertical and horizontal linkages of agriculture with the country’s economy, a high level of economic activity is expected. Most importantly, food security will be ensured for the ongoing as well as for the year to come.

Heavy dependence of overall GDP on agriculture also suggests a better overall economic performance .

The writer is Chief, food and agriculture, Planning Commission

Original Article Here

Ethiopia: Institute Inaugurates Modern Agricultural Laboratory

Addis Ababa — The Ethiopian Institute of Agricultural Research yesterday inaugurated Agricultural Quality Research Laboratory. The renovated crop testing laboratory will improve the quality of agricultural products making the country competitive in the international market.

Inaugurating the laboratory, Agriculture Minister Deribew Tefera said that, it was almost two years ago today that the Ministry opened the first agricultural products quality Monitoring and Testing Laboratory to be the country's main quality laboratory for coffee and other agricultural commodities. The lab was established in collaboration with Digata Industries and Development Partners, UNDP and JICA.

"The renovation and remodeling of this laboratory is also conceived with the basic theme of quality where all agricultural research is to begin with data quality objectives framework that takes into account the quality criteria of destination markets or internationally acknowledged quality standards. We will continue aligning our human resources and institutional processes to fulfill our development objectives and our principal goal of eradicating poverty through transformed agricultural sector," the Minister added.

Institute Public Relations Head Deresse Teshome told journalists that the institute equipped itself with a modern sample crops technology museum which allows stakeholders and investors to access accurate information on agricultural products in Ethiopia.

It was indicated that the renovation also included the training of laboratory technicians and researchers in quality management and the application of latest standard procedures. By the end of the national Growth and Transformation Plan period (2014/15), Ethiopia expects to generate 6.58 billion USD revenue from the export of 3.81 million tonnes of agricultural products. As it is known, agriculture is the cornerstone of the Ethiopian economy and accounts for 41 per cent of the GDP, close to 80 per cent of export earnings and employs 80 per cent of the country's labour force.

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Making sense of sustainable agricultural intensification

By Cecilia Schubert

As world food demand increases, so too does demand for farmland. Agricultural expansion threatens valuable forests and biodiversity, contributing to climate change and destroying precious ecosystems. Seeing as a country’s GDP growth from agriculture generates at least twice as much poverty reduction than any other sector, and 40 percent of the world’s population is engaged in farming, agriculture must be viewed as key for economic growth, food security, poverty reduction and environmental sustainability. Agriculture has huge potential in contributing to the solution, instead of only be seen as part of the problem. Is intensification the silver-bullet solution?

This emerging issue was discussed during the Food Security Main event at the Forum on Science, Technology and Innovation for Sustainable Development, held alongside the recent Rio+20 conference.

Intensification is a long-term project

How can agriculture be sustainably intensified? Tim Benton, Professor in Population Ecology at the University of Leeds, pointed out that intensification is not only about  technical solutions or industrialization. It is about increasing growing yields per area. In other words, it is producing more, while minimizing the impact on the environment. It must be viewed as a journey and not something that can be implemented tomorrow, he said. Organic farming is one part of the solution, but it is not the entire solution, he emphasised. Technical interventions including new crop varieties; valuing ecosystem services; use of best practices based on context, management of landscapes and soils are some of the solutions to how to transform the agricultural sector into a more sustainable and intensified production system.

An innovative idea that Benton laid forward was to address intensification across multiple spatial scales. This means intensifying within one area, but sparing more land somewhere else for the conservation of biodiversity and ecological systems.  This can be done within one country, or between countries. There is thus a trade-off between land used for production and the preservation of different ecosystem services that are needed to obtain a good yield such as pollination for instance.

Getting policymakers on board is essential

But the challenge is still how do we ensure that politicians understand what needs to be done? And how do we communicate research to politicians without over-simplifying it, Commissioner Adrian Fernandez. “This is a challenge we need to take” he said, “ensuring that politicians understand our research”. He presented the Commission on Sustainable Agriculture and Climate Change’s seven key recommendations on how to achieve food security in the context of climate change and a growing population. The recommendations were included in a Summary for Policy makers – ensuring that the research is communicated as key action messages, ready to be included into government’s policies. 

Dr. Fernandez concluded his presentation by saying that, business as usual will not bring food security and environmental sustainability. Instead we have to change the way we view agriculture. Agriculture is part of the solution that can help us create a food secure future, with greater prospects for farmers to enhance livelihoods. But there are still challenges left that need to be further investigated. He emphasized that we must not forget the sustainability aspect within sustainable intensification; it is key in order for agriculture to be part of the solution. 

Original article here

Deteriorating agriculture sector

AGRICULTURE is one of the major contributors to our GDP. It is the sector to which a major bulk of our population is linked directly and indirectly and is a source of livelihood for them. It provides raw material to our industry and earns a considerable amount of foreign exchange in the form of exports of agricultural products. But the negligence of the government has thrown it in a continuous state of degradation.

Unavailability of electricity, shortage of canal water, unchecked increases in the prices of fertilisers and skyrocketing prices of petroleum products have further aggravated the sufferings of middle and lower class farmers.

An interesting thing is that there has been a continuous fall in the prices of most of agricultural products for the last two or three years. For instance, the maize rates have gone down from approximately Rs900 to Rs1,000 per 40kg in 2010 to Rs600 to 650 per 40kg in the current year.

Similarly, potato growers had suffered unaffordable losses at the beginning of the current year due to fewer exports this year than the previous year.

Neither the provincial nor federal governments have given any importance to the development of this sector as is obvious from their recent budgets. No proper regulatory authorities have been set up by the government to fix the prices of agricultural products. It is usually observed that the prices of a crop considerably fluctuate in the same season, and even day-to-day prices vary greatly within a specific area.

Besides, enough variations in the prices of crops have been noted in different areas the same day regardless of the quality of the crops. So, poor farmers are left at the mercy of intermediaries who exploit them.

The agricultural sector needs special attention of the government. Prices of fertilisers and crops should be regulated by the government itself. An increase in the rates of crops proportional to the rates of inputs like fertilisers, electricity rates and petroleum products should be made.

If the government takes serious interest in the development of this sector, it can save it from further deterioration and can provide relief to poor farmers.

M. AHMAD ARAIEN
Ladhaywal, Okara

Cultivation without chemicals
While watching an Indian programme, Satyamev Jayate, on an Indian TV channel, hosted by actor Aamir Khan recently, I noted that it was against the use of pesticides and fertilisers.

Research has proved that the use of chemicals is most harmful to the land and crops are also laced with harmful chemicals.

However, we really do not require experiments to know that the chemicals are harmful. It is a known fact.

The policy of not using chemicals is extensively being pursued in India. As informed in the programme, Sikkim has completely banned agricultural chemicals. Bihar has broken the world record of per acre yield for cotton and rice, without any use of pesticides and fertilisers.

When you stop the use of chemicals, the yield drops initially. But that is compensated by the money saved on procurement of expensive pesticides and fertilisers. Within a couple of years, the earth regenerates its vitality and the yield increases.

Some indigenous simple equipment solution within is used for trapping/killing  insects. Like aromatic glued paper, traps using lamps, female insects in traps to attract males, etc.

The more we are close to nature, the better our life would be.

We should emulate the proven example from India.

NUSRAT K. SIDDIQUI
Karachi

The Grim Reaper: Declining Profitability of Agriculture and the Agrarian Crisis in India

By Madhumitha Madhavan
Contributor

At a recent interview, the Chairman of Central Bank of India, a government-owned commercial bank, asserted that agriculture in India is a profitable business and that misuse of loans by farmers was the primary reason for non-performing bank assets. Furthermore, the media was blamed for the hype over farmer suicides in India, currently estimated at over 200,000 between 1997 and 2011.

It is true that the miracle economy of India has seen high growth in almost every sector in the last couple of decades. The current GDP is almost 1.73 trillion. Yet, despite the fact that India’s economy is primarily agrarian, the agricultural sector has actually seen negative growth. Anybody who thinks that agriculture in India is profitable only needs to look at its contribution to the overall economy. In 2010, agriculture contributed to 19% of the total GDP, while employing over 51% of the population.

The dramatic increase in food prices in recent times might also lead one to believe that farming is a profitable business. However, in India, while large farmers are net sellers of food grains, small farmers who constitute a major percentage of the farming population are net buyers. This means that as food prices increase, large farmers make bigger profits while smaller farmers are forced to shell out more money for their food.

Numerous reasons have been cited for this decline, one of the most interesting being the after-effects of the Green Revolution in India. In the 1960s, High Yielding Varieties (HYV) of crops, most importantly rice and wheat, were developed by international agricultural research centres and introduced in Latin America and Asia. In India, these crops were rapidly adopted and led to increased productivity. Although these crops required higher input of fertilizers and irrigation, they had much higher output than traditional varieties. Furthermore, the Indian Government promoted these crops by subsidizing inputs such as fertilizers and electricity for irrigation. However, the investment in irrigation has been gradually declining with the result that only 35% of the total agricultural area is currently irrigated. Moreover, the input subsidies have placed a heavy fiscal burden on the government.

For example, the state of Punjab in India was at the forefront of the Green Revolution and underwent substantial modernization of the agricultural sector. There was consolidation in the land holdings and the subsidization of electricity for irrigation by the government. Per hectare consumption of fertilizers increased, and water intensive crops like cotton, rice and wheat were adopted. Singh has shown that the total operational cost of rice and wheat increased by around 50% between 2000-01 and 2005-06, while rice yields increased by only 12%, and wheat yields actually declined by 8%. (Singh, Karam. 2010. “Agrarian Crisis in Punjab: High Indebtedness, Low Returns and Farmer Suicides”. Agrarian Crisis in India. Edited by Narasimha Reddy and Srijit Mishra. Oxford University Press. 261 – 280.) This means that while farmers spend more money on growing their crops, their total output, and therefore their profit, has continued to decline. Moreover, excessive dependence on these crops has made farmers extremely vulnerable to a number of factors ranging from volatility of commodity prices to increasing changes in weather patterns due to climate change. Had they maintained their crop diversity and not solely depended on these HYVs, they might have been better shielded from these factors.

Another factor that has an important impact on agriculture in India is the Agreement on Agriculture (AOA) under the World Trade organization (WTO). This was formed in order to enforce the policies of economic liberalization and promote free trade. Under this system, it was believed that developing countries would have the comparative advantage over developed countries. However, the opposite has often been the case, mainly because of its distorting effects on market access and relationships.

For example, the first tenet of the AOA required enabling market access. Developing countries could no longer have import bans and prevent other countries from importing commodities into their markets. Instead, they had to replace them with tariffs. However, Gulati found that while India’s peak tariff rate in the dairy sector was zero percent in 1998, those of the EU, South Korea, Canada and Japan were 99%, 211%, 213% and 336% respectively, thus preventing or at the least making it extremely difficult to gain access to their markets. (Gulati, Ashok. 2001. “Agriculture and the New Trade Agenda in the WTO 2000 Negotiations: Interests and Options for India.” Prepared for The World Bank’s Integrated Program of Research and Capacity Building to Enhance Participation of Developing Countries in the WTO 2000 Negotiations)

The combined result of the AOA is that markets in developing countries are flooded with cheaper commodities from developed countries. Although AOA essentially allows developing countries to put in place their own mechanisms to reduce the price of their commodities, they simply cannot afford to do so.

In today’s world, a farmer in rural India is inevitably linked to a banker on Wall Street. Professor Jayati Ghosh, an eminent economist from India, has shown how speculation and futures trading in commodities by large banks adversely affected the price of crops and directly contributed to the global food crisis. In an interestingly titled paper “The Unnatural Coupling: Food and Global Finance”, she argues that deregulation of commodities trading in the United States and elsewhere resulted in extreme volatility of food markets.

The problem with agriculture in India, as in many developing counties today, does not lie with demand-supply imbalances, a decline in net food production, or excessive demand caused by population growth. The problem does not even lie completely with the actual farming itself, but rather the political economy of the society in which it takes place.

Agriculture in India intersects with almost every development agenda—be it poverty elimination, rural development, environmental protection or human development—because of the huge number of people it employs. It is therefore very important that agricultural development successfully keep pace with the progress other sectors have made. Teaching farmers how to better invest their money and grow crops using advanced scientific techniques is no doubt important, but there are a number of extremely complex factors at play that determine the profitability of agriculture. If India were to achieve the status it wishes on the world stage, it would do well to understand this and protect the sector that is a big source of livelihood for a huge percentage of its population.

Photo courtesy of soubhagya via Flickr.

Original Article Here

2nd UPDATE: Brazil GDP Growth Stumbles On Agriculture, Industry

--Brazil's gross domestic product grows at slowest pace in more than two years

--Country's massive agriculture sector shrinks in first quarter; industry stagnates

--Latin America's largest economy joins other emerging markets, succumbs to global malaise

(Updates with comment from U.S. asset-management company Blackrock Inc.'s Will Landers in sixth, seventh paragraphs)

By Jeff Fick

Of DOW JONES NEWSWIRES

RIO DE JANEIRO (Dow Jones)--Brazil's economy grew at its slowest pace in more than two years in the first quarter as weak industrial production and a drought-wracked agricultural sector undermined growth in Latin America's largest economy.

Brazil's gross domestic product expanded 0.8% in the first quarter, compared with the first quarter of 2011, the Brazilian Institute of Geography and Statistics, or IBGE, said Friday. That was less than economists' forecasts for 1.34%, and the economy's worst performance since contracting 1.5% in the third quarter of 2009. Brazil's GDP also advanced 0.2% in the first quarter compared with the fourth quarter, matching the revised growth of 0.2% registered in the fourth quarter.

The latest growth figures showed Brazil joining the ranks of other emerging-market powerhouses that are succumbing to the ongoing European debt crisis and a sluggish U.S. recovery. Brazil, China, Russia and India, the so-called BRICs, helped lead the global economy out of recession in the wake of the 2008 financial crisis but have struggled recently.

Brazil's central bank has worked feverishly to counter the impact of the global turmoil on the local economy. Interest rates were slashed to record-low levels earlier this week, while the government has implemented a series of tax cuts and credit measures aimed at stoking domestic demand.

Despite the moves, officials have reined in expectations for economic growth in 2012. Finance Minister Guido Mantega told the Wall Street Journal earlier this week that the economy will grow 3% this year. That was down from previous expectations for 4.5% growth. In 2011, Brazil's economy expanded 2.7%, down from a stunning 7.5% surge in 2010.

Investors from abroad received the new data with caution. Brazil's "weaker than expected GDP figures are a concern for investors," said Will Landers, of U.S. hedge fund manager Blackrock. "People investing in Brazil are mostly looking for growth, and a return to growth has been slower than forecast."

However, this weak economic activity puts to rest anyone's doubts about whether the central bank was correct to start cutting rates early on in August last year, and it's precisely the interest-rate cuts that should help with growth prospects in quarters to come, Landers said. With strong employment and wage growth, along with falling interest rates, the Blackrock executive said he has "no doubt that Brazil is well on its way to returning to more attractive levels of growth--it may take a quarter or so longer than what had been forecast."

In the first quarter, Brazil's massive agriculture sector suffered through a drought that crimped output of commodities such as soy, IBGE researcher Rebeca de La Rocque Palis said. Agriculture shrank 8.5% year-on-year in the first quarter. Brazilian industry, which accounts for about 30% of the country's economy, continued to stagnate but did show signs of life in the quarter, Palis added. Industry advanced 0.1% in the first quarter.

The service sector, meanwhile, expanded 1.6%.

"Economic growth in Brazil continued to be driven by domestic demand, which represents 60.3% of the country's GDP," Palis said. "Government spending also pushed [the first quarter] expansion, accounting for 20.7% of the growth."

Family consumption increased 2.5% year-on-year in the first quarter as Brazilians took advantage of record-low unemployment, higher wages and greater access to credit. Government spending also gained 3.4% in the period.

Fixed-capital formation, however, shrank 2.1% year-on-year. Brazil's investment rate was 18.7% of GDP in the first quarter, down from 19.5% of GDP in the same quarter of 2011.

In market value, Brazil's GDP was 1.03 trillion Brazilian reais ($512 billion) in the first quarter.

-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; Jeff.Fick@dowjones.com

--Diana Kinch contributed to this article.

Agriculture will make or break India

By: S.S. TARAPORE

The major economic problem of India is that agriculture and allied activities account for only 15 per cent of GDP while 70 per cent of the country's population lives in rural areas. With a growth of agriculture at a rate significantly lower than that of GDP, the trend is an inexorable reduction of the share of agriculture in GDP.

One wonders why the rural poor migrate to urban areas, particularly metropolitan cities, to live in pathetic slums. The fact is that the extent of rural poverty is far more than is generally perceived and what the authorities are willing to admit.

MISPLACED BELIEF

From time to time, earnest efforts are made to break through the barrier of rural poverty and faith is put in various programmes — the Intensive Package Programme of the 1960s, the Integrated Rural Development Programme of the 1970s, the Service Area approach of the 1980s.

Today's mantra is financial inclusion and the Mahatma Gandhi National Rural Employment Guarantee Act scheme. The excessive reliance on financial inclusion as a panacea is misplaced. Financial inclusion, without the generation of real activity, is bound to fail.

There is an erroneous belief that the rural sector is pampered — exemption from income tax, huge subsidies, irregular use of electricity and water and a host of other facilities.

What is often not recognised is that while these concessions add up to a very large amount, the benefits flow largely to the well-off segments in the rural areas.

While there is no magic wand which will cure all the ills of the rural economy, a few immediate measures could at least alleviate the situation.

EXCESS STOCKS

The most pressing problem faced by the government at the present time, relates to the unprecedentedly high public sector stocks of foodgrains of 75 million tonnes (essentially rice and wheat).

It is unfortunate that, of these stocks, 25 million tonnes are in open storage which would be subject to severe damage in the next few months.

Free distribution of the excess stocks to areas where there is acute starvation is the logical solution over rotting stocks being fed to rats.

Erudite analysis would caution us about leakages which would result from grains not reaching the intended beneficiaries and anticipations would develop of free distribution becoming the norm.

Another alternative would be to export as much as possible at international prices, which may be lower than domestic prices, but would obviate a total loss of the excess stocks.

Unless the excess stocks are reduced speedily, there would be a loss of about 10 million tonnes from the public sector stocks by end-2012.

On balance, a humane decision would be to rapidly undertake a free distribution of the excess stocks and face up to the medium-term problem of this becoming a bad precedent.

It does not need great erudition to alter incentives to discourage production of commodities in excess supply and to encourage output of commodities in short supply. It is unconscionable that the per capita daily availability of pulses has fallen from 69 gms in 1961 to 31.6 gms in 2010.

PULSES PROBLEM

It is to India's shame that vast tracts of population are bereft of protein. This problem has not surfaced only in the recent period but has been observed over the past five decades and, while token efforts have been made to deal with this, the pulses situation continues to deteriorate. While pulses output rose sharply to 18 million tonnes in 2010-11, indications are that output will soon fall back to the trend of earlier years of around 15 million tonnes.

Again, there is a chronic shortage of vegetable oils and large imports have become entrenched in the system.

It is time to expeditiously undertake effective measures. First, if the present foodgrains subsidy of Rs 73,000 crore per annum is reduced by 10 per cent and Rs 7,300 crore is channelled to pulses and oilseeds, there would be a clear enhancement of national welfare.

Secondly, foodgrains producers could be provided subsidies for keeping land fallow or if they switch over to pulses and oilseeds.

LIMITED CORPORATISATION

Thirdly, pulses are grown essentially by marginal farmers in arid areas. While there are apprehensions of a political fall-out of corporatisation of agriculture, serious consideration should be given to leasing it to corporates for long periods, for producing pulses on uncultivated government land. Today's technology enables the desert to bloom and limited corporatisation specifically for pulses could be considered.

The government needs to give freedom to commodity producers to choose between selling in the domestic market and exports. The government's policy of flip flop on banning and allowing exports needs to be reconsidered. (Business Line ‘Export Control Raj', May 5, 2012 presents a perceptive analysis of this issue).

There is an imperative need to free agriculture from the shackles of subsidising the urban sector. Herein lies the solution to alleviate rural poverty. Ultimately, it is agriculture which will make or break India.

(The author is an economist. blfeedback@thehindu.co.in)