Perspectives and Instruments for Agriculture Development

In developing countries the productivity gain in agriculture has not only raised the farmers’ income but also provided new livelihood opportunities.  The success in agriculture has provided the basis for economic diversification and has continued to an important determinant of economic growth and poverty reduction.  It is true for most developing countries. 

Small scale farming is often questioned that it can potentially be a ladder out of poverty.  What matters in achieving the desired goal of economic growth and poverty reduction is not the small scale of farming per se but how the farming and the support system are organized and interlinked.  The main agenda of the day is whether the agriculture development is well focused or not, and whether the support systems are well integrated or not.

If agriculture has to be the engine of growth and generate wealth and jobs for rural households, the angle of looking at agriculture needs to be shifted altogether.  It requires economic perspective and accordingly organized and supported within the parameters environmental limits and biodiversity much more pragmatically.

The ultimate aim should be that farmers earn an income that justifies them to continue to be a farmer and have dignified life.  The support systems should then be organized in meeting that goal in business model in which the investment in agriculture can still be far less than the agriculture GDP.  Only then the agriculture being the engine of growth is justified. 

When the whole economy is operating in market economy model, the agriculture cannot be left otherwise.  The whole spectrum of the support system necessary for agriculture development needs be packaged and provided in an integrated manner and not in isolation, often in conflicting manner. 

Investment is necessary for using right technologies including seeds and plants, irrigation system, fertilizers and plant protection options.  The level of investment needs to be confirmed at the policy level depending upon what level of productivity gain is desired. 

In agriculture, making the technologies available is not the end of the game.  Making the technologies used by the farmers is inevitable for which credit support is imperative. 

Providing credit in agriculture is not as straight as it is being provided by commercial banks to any other commercial venture.  Credit to farmers is an investment, a sustainable investment for sustainable agriculture for which reason there is provision under Agreement on Agriculture (AOA) of WTO for making subsidies available to the farmers of developing nations.  A subsidized credit indeed plays a pivotal role in adopting new technologies and enterprises in agriculture.

The small scale production by small scale farmers gains size that justifies transporting and marketing the produce at a distant market when farmers are organized in a cooperative mode.  This is an area where private sector can be attracted.  But the private sector will only come in where the level playing fields in terms of statutory policy and support systems exist, and it is transparent and workable. 

What is still to be put in place in most developing countries is the insurance system.  A farmer though provided with subsidized inputs and subsidized credit, cooperative and marketing support still feel unsecured against disasters becoming more frequent than ever before.  Indeed insurance should be roped in wherever subsidized technologies and credits, and cooperative supports are being provided. 

Agriculture development is intertwined with the mandate of food and nutrition security, and in it the whole energy and scope for economic approach for import substitution and export growth, employment, reducing rural-urban migration, are lost.  This mandate costs and it is difficult to achieve without investment but that investment must not be seen or considered also for economic entrepreneurial engagement.  The two, the security and economic models, cannot be one and therefore they should be treated separately because their key results are different.

With all the above operating, what remains is regulatory system with the motif to ensure not only the quality aspect but also to ensure the whole system is operating as desired. 

It is many decades now since developing countries have been engaged in providing subsidized agriculture inputs, constructing infrastructure including irrigation and road access, and product marketing to ensure stable, predictable and remunerative prices.  Through such instruments, the governments have created a lower risk environment for agriculture innovation and increased its affordability for small scale farmers with considerable access. 

The issue is not whether the small scale farmers would succeed but how to make sure they do.  Investment in agriculture cannot be considered a welfare bill but a stimulus to trigger the national goal of well-being and economic development.  One without the other remains unaccomplished.