Market-driven farm diversification

With diversification of agriculture becoming an in-thing in India and elsewhere in South Asia, the farm sector of this region seems to have turned full circle.

For, most farmers of this area have traditionally been following a production system comprising a mix of crops, livestock and other locally relevant allied ventures, which, in a way, was a form of diversified agriculture. But, unlike the modern market-aimed diversification trends, the older systems were meant basically to mitigate risk by not putting all the stakes on any single venture.

It was indeed the Green Revolution that had changed it all with the farmers opting chiefly for crops and cropping sequences that promised higher productivity and surer returns.

Though this paid good dividends for quite some time, the continuous cultivation of the same crops year after year began throwing up problems that adversely impacted both crop yields and profitability, necessitating the search for relatively sustainable and lucrative alternatives. The answer lied in demand-driven and market-oriented diversification of agriculture. This transformation, albeit gradual, has been very ably captured and presented by the authors in this book.

What comes out quite clearly as one goes through its chapters is that the governments of the South Asian countries cannot claim much credit for the emerging trend. The changing market demand, as a consequence of new consumption patterns, is largely determining the direction of diversification. And, what is equally noticeable, the private sector is playing a role in this evolution. The governments, on the other hand, have lagged in creating the required supporting infrastructure and policy and procedural environment.

Indeed, though the pace and status of diversification are different in all South Asian countries, there are many common constraints holding the small farmers back from participating in the process of diversification to the desired extent. The book has identified several of them, including meagre farm size, infrastructure paucity, technology void, investment crunch and weak linkage between production, marketing and processing.

The book, put together and edited by three prolific authors, has well-researched and equally well-presented contributions from 16 others, many of whom are known to be keen observers of the changes taking place in the agriculture sector in South Asian countries. India gets more exposure in this book, which is understandable.

Interestingly, this compendium of studies does not only encapsulate major aspects of farm diversification but goes beyond and takes a look at the new and emerging issues, such as WTO-related trade aspects and sanitary and phytosanitary norms for edible product exports from this regions.

Besides, it also offers an insight into the farm-firm linkage as it has started unfolding in its various forms, including the emerging retail chains""a trend described by the authors as a "silent revolution" in retail marketing. Where India is concerned, the book attributes the slower than potential pace of the retail revolution to, as could well be expected, the lack of domestic investment and bar on foreign direct investment in retailing.

It carries an interesting study of the status of the agro-industry in India, which, ultimately, points only to the hitherto known fact that this sector is still in its infancy. The study's conclusion that unfriendly policies, laws and procedures are responsible for the infancy of this sector, too, is no revelation.

What is indeed significant about the book is that it has been structured in a reader-friendly manner. The whole matter has been divided into six parts and each has an introductory note explaining what the reader can look for in that part. The data are well-tabulated, supported with illustrations in some cases.

On the policy front, the authors prescribe promoting the well-tested "three Is"""incentives (not subsidies), institutions and investment""to boost economic diversification in rural areas. A strategy founded on these three Is would let the small farmers also to participate in the diversification process, it maintains.

Where research and development backing for the process of diversification is concerned, the book recommends targeting effort sharply at three levels""production, post-harvest produce management, and processing.

Notably, the book does not fail to point out that fast-paced diversification into high-value agriculture could lead to markets collapsing due to over-supply. But, it goes on to argue that market forecasts, improved transportation and storage facilities and institutional innovation could help cope with this danger.

Agriculture Diversification and Smallholders in South Asia

P K Joshi, Ashok Gulati and Ralph Cummings Jr.
Academic Foundation
Price: Rs 995; Pages: 626