February 4th, 2008 
krishna India is one of the emerging developing economies demonstrating a healthy quarterly growth rate of over 8 per cent per annum in the recent past. Among the three sectors, agriculture and allied activities hold the key to a sustained growth journey in the coming years. Against this backdrop, the main thrust of the Eleventh Five Year Plan (2007-12) is “Towards Faster and More Inclusive Growth”. The bottom line, however, has been aptly summed up by the Prime Minister that growth alone cannot be the sole goal of planning since global trends in food production and prices will exert escalating “pressure on both availability and prices of basic food items”.
The imminent position for agriculture in the faster and inclusive growth paradigm, against this backdrop, has three key elements: agricultural sector growth rate pegged ” around 4 per cent, farm product export growth at 10 per cent and, consequent to rapid urbanization, faster pace of change in the food consumption basket. A clear understanding of desirability and feasibility of the first two growth rates are important for their serious implications on the smallholder-driven commodity producing rural agriculture sector.
The test, however, lies in correctly identifying the sources of growth in the agricultural and allied production activities. The next step would be to design commensurate investment in production enhancing policy and physical planning. The inclusion concept, therefore, has ambitions for such ground realities associated with trust in the growth rate.
The 4 per cent growth rate in agriculture and allied sector activities is aptly disaggregated into demand and supply side interventions in the 11th Plan strategy. However, a simplistic view demonstrates that the production growth rate is determined by the growth rates in the crop area and the yield rates (productivity) in a fashion that biological and natural resources principles determine the boundaries.
When the crop production growth rate is given, its validity can be checked using area and yield information. In the event that an independent estimate of yield growth rate is not available, for given values of the crop area growth rate and the output growth rate, the yield growth rate attains determinable significance. Thus, the onus of attaining a 4 per cent growth rate in agriculture and allied production activity certainly falls on obtained or planned values of yield rates. .
The smallholder agriculture in the country has a comparative advantage centered on the farming community. This advantage is available to the state agencies as well as to all those associated with the agribusiness sector. The challenge, though, will rest with those who effectively translate smallholder-friendly knowhow into similar show-how. The state agencies certainly have a lead in this challenge posed by the approved 11th Plan strategy.
The three primary issues with special reference to a state or region could be categorized as follows:
1. Exploring the matrix of agriculture (crop husbandry), livestock and environment (including horticultural and non-timber forest produce);
2. Changes in the rural economic environment and identification of various segments of farmers in a state/region who will be impacted.
The common thread has been that scientists are attempting to provide specific instances to reconnect science with farmers in the field on the one hand and agriculture department officials on the other. The criticality of budgetary flow of funds into the agriculture sector to specifically address knowledge deficiency in a sustainable manner has been underscored.
The primary production activities in the rural areas generally address a micro-level cost-risk-return trinity a la the three R’s of reform propounded by Nobel Laureate Amartya Sen (viz. reach, range and reason). The limitation of the area growth rate during the 11th Plan period is real with the exponential growth in the number of special economic zones (SEZs) for enhancing industrial activities. In the event that agricultural land will go out of cultivation for setting up SEZs, we are left with the productivity question.
This is a key element identified as the supply side constraint in the XI Plan approach. Another related yet critical component is the technological interventions. That technology is non-linear and lends itself to price and income substitutions typically in the smallholder-dominated agriculture once again have attained importance. There is an urgent need to devise a mechanism to get the agricultural scientist to pro-actively consider a region-specific optimization framework within the cost-risk-return trinity constraints of a specific region.
The quality and quantum of land and water are the dominant concerns for all the states. With the deepening of water table, the quality of water is bound to influence crop sequencing and output. Therefore, the diversification agenda for micro-level planning must factor the health of the soil and water quality into the main investment plan.
The great disconnect between the scientific fraternity and the farmers in the field will be addressed through extension activities, though agricultural extension has a meagre 4.7 per cent share in the total Central annual plan outlay for 2006-07. Besides, the proposition of attaining a 10 per growth rate in agro-product exports will raise the critical questions on quality and globally valid certification systems. The compliance cost burden in the smallholder farmer dominated system must be borne by public agencies to provide the required cost advantage.
Finally, environmental and net returns trade-offs need to be examined within the diversification discourse. Surely, it needs to be appreciated that the market price is not the sole or best objective “marker” for diversification. The key issue must be to incorporate corrections to environmental aberration in the crop area through policy instruments, particularly in agriculture. Clarity in such areas will greatly aid our efforts at reaching the 4 per cent growth target.
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