AGRICULTURE: OPPORTUNITIES & CHALLENGES

SHAMSUL GHANI
(feedback@pgeconomist.com)
July 18 - 24, 20
11

World agriculture is a maze of variables - both economic and non-economic. The world is producing enough g per land % of 01=100) es - at least for the time being - to feed its almost seven billion population. In this scenario, hunger and undernourishment should have been virtually non-existent.

But, unfortunately, these turn out to be the major economic and social issues that so boldly threaten the world peace. Besides changing weather and climatic conditions and unfavorable geographical conditions, low per-hectare yield remains the most destabilizing factor for the less-developed agro economies. Growing world population and shift of farm workers from farm to industrial economy pose a challenge to the perceived balance of food production and consumption. In 1930, the ratio of rural and urban world population used to be 70-30 which has now changed to 50-50.

KEY WORLD AGRICULTURE INDICATORS

COUNTRY POPULATION IN MILLION) TOTAL LAND AREA 000, SQ.KM RURAL POPULATION % OF TOTAL POPULATION 2009 AGRO LAND % OF TOTAL LAND AREA 2008 ARABLE LAND % OF TOTAL LAND AREA 2008 FOOD PRODUCTION INDEX 2009 (1999-2001=100) CEREAL YIELD KG PER HECTARE 2009
World 6931 148940 50 37.6 NA 123 NA
United States 313 9162 18 45.0 19 115 7238
U.K. 63 242 10 73.1 25 98 7008
Australia 22 7682 11 54.3 6 95 1764
Belgium 11 30 3 45.3 28 96 9632
France 66 548 22 53.4 33 98 7460
Germany 81 349 26 48.5 34 103 7201
Netherlands 17 34 19 57.1 32 94 9032
China 1340 9327 56 56.0 12 133 5460
Japan 126 365 33 12.7 12 95 5920
India 1210 2973 70 60.4 53 119 2471
Russia 139 16378 27 13.2 7 130 2279
Brazil 203 8459 14 31.3 7 148 3526
Mexico 114 1944 23 52.7 13 117 3111
New Zealand 4.4 34 13 43.2 2 115 6922
Pakistan 187 77 63 34.0 26 132 2803
Afghanistan 31 652 76 58.1 12 127 1983
Bangladesh 151 130 72 71.4 61 132 3890
Bhutan 0.7 38 64 14.7 3 153 1699
Chile 17 744 11 21.2 2 120 5472
Egypt 81 995 57 3.6 3 139 7635
Indonesia 246 1812 47 60.4 12 146 4813
Iran 78 1629 31 26.6 11 124 2291
Libya 6.4 1760 22 8.8 1 109 623
Malaysia 28 329 29 24 6 144 3750
Mauritius 1.3 2 57 48.3 43 106 7895
Nepal 29 143 82 29.4 16 130 2374
North Korea 24 97 18 18.6 16 101 7073
Saudi Arabia 26 2000 18 86.8 2 124 5212
South Korea 49 120 37 24.5 27 112 3698
Sri Lanka 21 63 85 42.1 20 120 3722
Thailand 67 511 66 38.5 30 126 2954
U.A.E 8.3 84 22 6.8 1 117 2000

The basic reason for the shift, to which the free-market buffs will not agree instantly, is the inflation-prone fiat money system. The uncontrollable monetary expansion that takes place under this system creates unmanageable income inequalities. The farm worker, unless the agriculture is heavily subsidized and the subsidies accrue to the poor workers, not to the rich land owners, finds himself or herself at a great disadvantage in relation to the urban dwellers whose incomes continue to grow to overcome or at least minimize the effect of inflation. The gulf between rural and urban workers' income widens with the passage of time with the result that the inevitable happens and the shift of workforce from the fields to the factories takes place Alan Greenspan, the ex-Fed chairman and a known free market economist heavily favors such a shift, irrespective of the economy the shift is taking place in.

He writes about India's economy: "For India to become the major player in the international arena that it aspires to be, it will need to build factories that entice a very large part of its agricultural workers to urban enclaves to produce labor-intensive exports...Rural India is mired in a level of poverty as bleak as anywhere in the world outside of sub-Saharan Africa...Productivity on farms is only one-fourth of what it is in nonfarm areas."

Pakistan and India's agriculture economies have many things in common. Their percentages of rural population and per-hectare yields are significantly close to one another. India is known to have expanded more than four percent of its GDP on subsidies and has successfully maintained the ratio of rural and urban population in total disregard of Mr. Greenspan's wishes. It also snubbed the free-market basics when it slapped a ban on low-quality rice export to hold sufficient stock to feed its people. It was only recently that the ban was lifted for a limited amount of export. Pakistan faces a similar shift of rural population which it cannot stop simply through enhanced spending on subsidies as its feudal system - which India managed to do away with much earlier - stands in its way. The benefit of farm subsidies goes to land owners, particularly the large holders. The system of targeted subsidies gives rise to political misuse and corruption. Food and energy subsidies will be effective only when the power structure of feudal is dismantled and targeted-subsidy-system is allowed to work sans political interference.

Per-hectare yield is another area that needs improvement through investment in the sector to achieve a higher level of technological advancement. On this key indicator, we are better than India, Russia, Iran Afghanistan, Nepal and Bhutan but lag far behind as many as a dozen economies of the region including: China, Japan, Brazil, Bangladesh, Indonesia, Malaysia, South Korea, North Korea, Thailand, Sri Lanka and Saudi Arabia. Surprisingly, a centrally planned economy, North Korea has the highest per-hectare yield in the region -7073 kg. Almost all major industrialized economies have a high per-hectare yield ranging from 7000+ to 9000+ kg. Belgium tops the list with a yield of 9632 kg followed by Netherlands, 9032 kg. African countries like Angola, Botswana, Le-so-tho, Niger etc have a low yield of less than 500 kg per hectare. There is no reason for the developed Western world to keep the means of enhanced food production to themselves. They already possess substantial nuclear deterrents. If they plan to use hunger and food insecurity as yet another deterrent, it will be their biggest mistake- bigger than a nuclear holocaust. To ensure the world peace, they must transfer advanced farm technology to struggling economies under heavily subsidized programs.