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Commercialisation of farming

November 04, 2012

Farming plays a key role in reducing poverty and supporting food security in South Asia. Yet, the pressure on land and climate change are putting stress on the agriculture system, requiring corrective measures.

This was key message in the major research papers on South Asia presented at a conference held in Colombo late last month.

The topics included irrigation and water use efficiency, agricultural pricing, public procurement, agricultural commercialisation for inclusive growth, long-term challenges to food security and rural livelihoods, and improving the effectiveness, efficiency and sustainability of fertiliser use.

The major research papers were put to extensive discussions and deliberations to fine tune them for submission to the South Asian policymakers. Global Development Network in collaboration of the Institute of Policy Studies of Sri Lanka gathered policymakers, researchers, experts, private sector etc in Colombo to delve deeper into farming policy issues.

The paper on irrigation and water use efficiency reveals astonishing facts. It says South Asia has one of the highest rates of irrigated agriculture, which is nevertheless under stress because of growing populations and poor management.

In Pakistan, the per-capita availablility of water in the year 2009 was 1354m3/capita, which is the lowest in South Asia besides Maldives. This is a stark difference from a few decades ago.

Dr Ali Hasnain, an assistant professor of LUMS Lahore, who is co-author of the research paper said that Pakistan’s use of water has not become sufficiently more efficient to compensate for the deteriorating situation. In South Asia, water is predominantly spent on agriculture (95 per cent against a world average of 70 per cent), and so getting water to farms and using it efficiently requires the greatest focus.

Similarly, another big problem facing Pakistan is the wastage in water use. This wastage is because of low prices. “The relative prices of water in Pakistan are absurd as one litre bottle of water costs Rs30 whereas a farmer gets 60,000 litres of surface water for one rupee.

The result is that people are very careful with bottled water supplies and very wasteful with agricultural water supplies.” said Mr Nawaz Khan, Senior Research Associate, and Dr Amir, Director of Food and Agriculture Division, Planning Commission, Islamabad

Globally emphasis has shifted from infrastructure development to ‘more crop per drop’ in the form of improving water use at the farm level. The paper suggested charges levied on the volume of water used, in line with the cost, and ensuring that the dues were effectively collected.

This will, in return, increase the efficiency of irrigation water.

In a related research on agriculture pricing in South Asia, no evidence was found to prove the link between South Asia’s impressive agriculture output growth in the past three decades and any farm price and procurement policies. Research Fellow Dr Parakrama Samaratunga said government intervention was partially successful in subsidising farmers and stabilising grain prices in most South Asian countries. However, it varies from country to country.

Yet South Asia is still not in a position to completely withdraw such interventionist policies, and a need for further continuation of these policies still exists in spite of the escalating costs of these operations. Accordingly, a middle path drawing upon the strengths of both, public policy and private market operations, was recommended as a promising way forward. Some speakers were critical of Pakistan procurement policy which, it was said, largely benefited the vested interest groups.

Use of fertilisers play a key role in increasing crop yields. However, the paper on fertiliser use observed that the current pattern of use, with heavy reliance on nitrogenous fertiliser, coupled with poor nutrition management, caused decline in soil fertility.

Fertiliser can have a role in reducing poverty and food insecurity if the right policies and practices are developed.

Researcher Mustafa K. Mujeri from Bangladesh listed factors affecting the efficient and sustainable use of fertiliser. These were fertiliser price, transportation cost, soil quality, climate, faulty fertiliser use, nutrient management, irrigation and improved seeds, and institutional factors.

He said significant factors that influenced food security and rural livelihoods in South Asia were related to fertiliser and other input subsidies, investment in agriculture, and the impact of sub-optimal use of fertiliser.

To address the long-term challenges to food security and livelihood in South Asia, Researcher K. S. Kavi Kumar from India suggested investment in farming and rural livelihood be a priority for South Asian countries. Investment in information and communication technology will also help small producers access markets to get better price for the produce.

The paper on managing agricultural commercialisation for inclusive growth in South Asia by Vijay Paul Sharma from India identified a list of bottlenecks that prevent smallholder producers to participate in commercialisation process.

These include inappropriate policies, lack of access to technology, institutional barriers, poor infrastructure, and crucially poor links to markets.

To overcome these, the paper suggests vertical integration into agri-food value chains, coordination and collective action, stronger market information systems, and better access to institutional credit.