Agriculture: Synergy of Land and People

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The FINANCIAL — Human life and its civilisation down the centuries have  been characterised by Agriculture, the industry that kept us all alive.

 

At a conference funded by Canada’s International Development Research Centre (IDRC)  in Colombo some years ago to bring about a greater awareness among journalists regarding the importance of agriculture in developing countries, I presented a brief paper titled “ Between the Menu Card and the Mud field”. It was about the extreme lack of knowledge on the part of planners and bureaucrats about agriculture in developing countries and how politics and policies shaped the way the industry was viewed. The menu card represented the ivory towers of economists and intellectuals, planners and politicians and the mud field represented the millions who toiled day in and day out, producing the basic sustenance of life itself: food.

Years later, I had the privilege of sharing a meal with World Bank President  James Wolfensohn at a fund raising event for Opportunity International in Sydney. Leading the charge against poverty, World Bank had worked hard to initiate and support a number of projects, most of which never did get to the heart of the matter. I asked him: “will we ever eliminate poverty from the face of the earth”. He was diplomatic. “Elimination is the ideal”, he quipped. What we could not deeply discuss over a noisy dinner table was : What has continued to sustain poverty in its  worst form of hunger and malnutrition which now plagues some 1 billion people on earth?  The answer lies in understanding agriculture and the world food systems. The answer also lies in the understanding of lands, its connection to its people and the ever evolving synergy between them.

Agriculture is about food. It is also now about bio fuel and pharmaceutical products. As human population has expanded rapidly to 7 billion and is expected to explode to 10 billion within the next 50 years, land resources will become more scarce and people who will use the land to grow food will be fewer. Water levels will be low and the ingredients such as fertiliser and pesticide will be more expensive. Food will become one of the highly priced commodity. Wars may be waged for scarce food resources.

It may be useful to read the 10 year projection on global agriculture put out by the Organisation for Economic Cooperation and Development (OECD) and the United Nation’s Food and Agriculture Organisation. The executive summary of the large report has some ominous signals. It says that agriculture has experienced severe shocks in recent years with record high oil prices, commodity price “spikes”, food security fears, resultant trade restrictions and the most serious economic recession since the 1930s. 

Economists and diplomats have something in common. They often use a language that does not upset anyone and does not haunt them if they are ever found to have erred. The 10 year global agriculture Outlook Report from OECD/FAO meanders through what is known to most:  “Underpinning agricultural prices is increasingly a higher cost structure particularly in regions where energy inputs are used intensively. Global agricultural production is anticipated to grow more slowly in the next decade than in the past one, but in the absence of unexpected shocks, growth remains on track with estimated longer term requirements of a 70% increase in global food production by 2050. On a per capita basis, production growth in least developed countries is struggling to keep up with rapid population growth. Global sectoral growth will be led by the regions of Latin America and Eastern Europe and, to a lesser extent, by certain countries in Asia”

But the alarm bells are ringing on what threatens to be a potential calamity for humanity as a whole: average crop prices over the next ten years for the commodities are projected to be above the peak prices of 2007/08. Wheat and coarse grains are projected to be nearly 15-40% higher in real terms. Vegetable oil prices are expected to be more than 40% higher. World sugar prices will also be higher. More bad news to come. Average meat prices will be higher, dairy prices will be 16-45% higher. “ Continued expansion of bio fuel production to meet mandated use will create additional demand for wheat, coarse grains, vegetable oils and sugar used as feed stocks”.

Economists and econometricians do not always take into account political turmoil, revolutions, wars, displacement of farmers, destruction of farms and cattle. If you add a more politically tumultuous scenario with continuing disturbances in a number of countries during the next 10 years, the already ominous projections will begin to gather more dark clouds and storms.

In the OECD countries, food security is paramount and hence vital support and subsidies which are necessary to keep the bread basket full will always take high priority in the OECD agenda. It is not so with developing countries, although India and China have adopted more aggressive support systems through agricultural and mainstream banks to provide agricultural credits and insurances to prop up agriculture. China’s agriculture and agro industry is almost entirely state-sponsored and state-driven.

Some countries are blessed with arable land, water, minerals and people with a tradition of growing food. Some countries are not. Those nations which have the blessed resources of land, water and minerals have a head-on advantage. If you add the drive and ingenuity of the farmers to the natural resources, one should have a winning formula. However, grooming agriculture and agro industry to maturity and wealth is the result of astute policy making, development strategies and creating an investment climate where agriculturists are amply rewarded for keeping a nation fed and healthy.

 

There is also the knowledge, the technology and improved practices on which agriculturists need to get a grip. Taiwan is a classic example of the some of the best innovative practices where very limited land space is used to produce the best and the most products, from tomatoes, beans, cucumber to wheat and barley. It is also about planning the production and marketing channels, of cold storage, processing and packaging of vegetables and other crops during time of abundance.

The OECD/FAO Outlook Report presents some comforting conclusions. The real growth in agriculture during the next years and beyond will come from emerging markets where, although prices will be higher, consumption will also be higher, driven upwards by an increasing middle class and higher disposable income levels.

Nations which take agriculture and agro industry seriously will also help develop more vibrant and resilient communities, help increase rural wealth and an overall increment in the well being of the people. Key to making agricultural pursuits attractive to a generation that believes in upward social mobility through corporate and public sector jobs is to make agriculture not merely a rural subsistence enterprise, but to wrap the industry and its growth through research and development, innovation, modern technology and practices, cost reduction techniques and, most importantly, profits that are attractive for the younger generation to stay in agriculture.

 

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