Opinion Farmer for the future
Strengthening the food and agricultural supply chain
It is very sensible not to delay any more the answers to the question of strengthening the food and agricultural supply chain. If anything is holding back the sustainability of a 9 per cent growth rate it is wage goods inflation. I get misunderstood when I say that the seasonal fall of food prices official spokesmen love to predict is a non-sequitur because even an 8 per cent food inflation is inconsistent with competitiveness since the interest rates of major economies are lower than 5 per cent. The other great advantage is that the government has,on FDI in retail,placed its cards on the table so that we can have a reasoned debate. It was only much later that we realised the damage done by the near secretive nature of the 1990s reforms in the Narasimha Rao government.
The reversal of the nuanced policies of reform in the 1980s led to a decline in industrial and infrastructure growth from which we have still not recovered. Manmohan Singh has himself critically commented on the power policies followed then. Joining the WTO without homework and reducing public investment led to a decline in the agricultural growth rate from which we recovered only after UPA 1s policies in the Tenth and Eleventh Plans. There was also no benefit from all this in the growth rate for,as economists like me and Arvind Virmani showed,later corroborated by IMF studies by Rodrigues and Subramanian,the growth rate in the 1990s was not higher than in the 1980s.
Getting back to the food supply chain,the recognition that resources and technology needed to get Indian agriculture to meet the needs of a fast-growing economy need a totally different mindset is again very timely. A healthy part of the Approach Paper of the Twelfth Plan is the recognition that in agriculture,cereal demand growth is low (2 per cent),but the rest is high (6 per cent). The incentivisation problem is therefore far more broad-based,both in terms of commodities (oil,sugar,fruits,vegetables,milk,meat,eggs and so on),as in regionals. Spices,tree crops,fodder and feed for animals,oilseeds,pulses and cane does not grow only in north-west India but also in the east,the Deccan Plateau and the hills. We need transport,storage,technology for markets and processing and all that is not easy. Incidentally,that the food security bill will change all this is wrong since the poor also have a very limited demand of grains but a high and rising demand for non-grains.
The difficulty,however,is that the FDI policy as reportedly passed by the cabinet ignores the most important part of the requirements for growth. It does not have a place for agricultural producer groups in it. Also,it is exclusively metro-based. The problem is in the small towns where the millions of farmers are going to sell their produce as now documented by the discovery of census towns. The Planning Commission has recognised in the Approach Paper that they were wrong in ignoring this great human movement in the past by 42 million people,but now ignore them for the future. These glaring gaps have to be filled in the legislation.
The first thing is to allow investment in smaller towns (in fact,census towns not even officially recognised as towns). Reform is not for metros but for widespread agricultural growth and to exclude agriculturists and smaller towns is illogical. The government will have to give comfort for that in PPPs but thats what policy is about. Policy must not keep farmers and their producer groups and cooperatives out of the ambit of the special categories of this legislation but to make them a central part of it. The eccentricity of the government to keep farmers out of a legislation meant for them is truly extraordinary. Farmers producer companies and cooperatives in non-metros,so-called backward areas,have existing tie-ups with FDI,with Nestle,Cadbury and so on. To keep them out is strange. Chinas Wal-Marts,even when in metros,are in the urban peripheries. Also farmers and artisan groups are given space in the mart.
The reason we are given is that the commerce ministry objects. As Montek Singh Ahluwalia said,governments work in silos. The commerce ministry hasnt exactly covered itself in glory in opposing the recommendation of the Alagh committee and CACP of variable tariffs for agricultural imports. It is now making things worse by raising the spectre of a non-existing WTO binding and the PMO has a responsibility this time for the stakes are truly high. The Chinese example given is both incomplete and incorrect. China controls migration from village to town. But it gave priority to smaller areas and to farmer groups in reservations in multi-brand retail. In our case,the bargaining strength to negotiate is high since many of these groups are facing a demand crunch elsewhere but have the pockets to invest in the supply chain if our sights are clear.
The writer,a former Union minister,is chairman,Institute of Rural Management,Anand
express@expressindia.com
Share
