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The Financial Express

Farm sector: Pepping up to reap rich dividend

B K Mukhopadhyay | Published: September 11, 2016 20:04:27 | Updated: October 24, 2017 04:43:28


Farm sector: Pepping up to reap rich dividend

The latest forecast says agriculture could become Russia's second biggest export after energy. The country is gaining momentum as one of the world's leading exporters of agricultural products.  
Russian agriculture was in decline since the collapse of the Soviet Union in 1991. Investors avoided the sector, turning to raw materials instead. Over that period Russia lost about 35 million hectares of arable land (an area almost the size of Germany). Everything changed in 2014 with the introduction of Western anti-Russia sanctions and Moscow's response.
In recent years, the share of agriculture in the Russian economy has increased, contrary to the global trend. In the past year, Russia for the first time earned more from agricultural exports than sale of arms. Grain production rose over the last six years and in 2015 Russia unseated the world's biggest wheat producer and exporter USA. According to the Russian Ministry of Agriculture, this year's harvest will be at least 110 million metric tons. At the moment, Russia exports 22.5 million metric tons of grain and this is expected to increase by 4.5 million tons in 2016/17. Wheat exports from Russia are expected to outpace the European Union this year, according to the US Department of Agriculture.
Clearly, the economies which attach top priority to this sector gains in the long run. It is definitely an eye-opener for the developing bloc.
The good news now is that FAO raised its forecast for world cereal production in the year 2016-17 to nearly 2.566 billion tons, 1.6 per cent higher than in 2015. It forecast that both wheat and rice output of the world will hit new records. Side by side, World food prices rose to their highest in August since May 2015, as increases in dairy, oil and sugar offset a drop in cereal prices, according to the United Nations food Agency. Food prices on global markets were almost 7.0 per cent higher in August than in the same month last year - the index measures a basket of cereals, oilseeds, dairy products, meat and sugar.
INNOVATIVE APPROACH NOT TO LOSE SIGHT OF: Global hunger is not the result of insufficient food supplies but of their uneven distribution across the globe: 1.02 billion people are going hungry entirely unnecessarily. Still 70 per cent of the world's poor live in rural areas and therefore a healthy agricultural sector is of paramount importance for its sustainable development and food security and to reducing global poverty.
It remains a matter of great concern that in spite of latent potentialities developing world cannot make much headway. Ignorance about the main tenents of international marketing, faulty planning and poor implementation of the same, among others, did not allow economies like India to make the desired foray into the vast international markets. What is lacking is absence of a proper regional development plan which could enable the implementation agencies to move systematically.
STILL A LONG WAY TO GO: It may be noted that a number of developing countries that depend on imports for their food supply are also concerned about possible rises in world food prices as a result of reductions in richer countries' subsidies. Although they accepted that higher prices can benefit farmers and increase domestic production, they feel that their concerns about food imports need to be addressed more effectively.
Some developing countries make a clear distinction between their needs and what they consider to be the desire of much richer countries to spend large amounts subsidising agriculture at the expense of poorer countries. Whatever it is, it is clear that subsidy cannot be a lasting solution. It at best can give short-term benefits. Once it is stopped there would be hue and cry because the recipients were used to that and old habits die hard! So why not restrict the same at the initial stages only?  
Realistically speaking, food security is one of the important areas which call for immediate attention, especially in the background of globalisation. Adequate production and distribution of food and attaining self-sufficiency in food production have become the priorities for every nation - the concern amply spelt out by the FAO at its World Food Summit held way back in 1996 wherein heads of different nations reaffirmed "the right of everyone to have access to safe and nutritious food, consistent with the right to adequate food and the fundamental right of everyone to be free of hunger". As per the Rome Declaration, "Food Security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life". What is more there was a pledge of political will and commitments to eradicate hunger in all countries with an immediate view to reducing the number of undernourished people to half by not later than 2015.
Finally, climate change is already threatening the fragile food security ecosystems throughout the developing world. The poorest and vulnerable are affected most because they rely on climate-sensitive sectors, such as agriculture, and often lack capacity to adapt to disaster risks. Climate change requires collective action and also substantial investment in mitigation and adaptation efforts.
Dr. BK Mukhopadhyay, a Management Economist, is Principal, Eminent College of Management and Technology, Kolkata, India.
m.bibhas@gmail.com

 

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