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Impact of globalisation on food security
By Prof. M.C. Varshneya
Farmers who traditionally grew pulses, millets, and paddy have been lured by seed companies. Their native seeds have been displaced with new hybrids, which cannot be saved and need to be purchased every season at a high cost. Hybrids are also very vulnerable to pest attacks. Spending on pesticides in some countries has increased and now farmers are consuming the same pesticides as a way of killing themselves.
The developed countries, having a low proportion of population in agriculture, have readily adopted globalisation which favours more the growth of the manufacturing and service sectors. These limitations are severely affecting the capacity of Indian agriculture to compete in the global market.
Globalisation has also had an adverse effect on our food security. Export-oriented agriculture is gradually reducing the area of food cultivation, as more and more land is being used for cash crop production. This is helping the rich farmers who get all help from the government and increase their income by exporting their products. A continuation of this policy will only make us more and more dependent on food imports.
Facing a severe economic crisis, India approached the IMF for a loan, and the IMF granted what is called a ?structural adjustment? loan, which is a loan with certain conditions attached which relate to a structural change in the economy. The government ushered in a new era of economic reforms based on these conditions. These reforms can be broadly classified into three areas: Liberalisation, privatisation and globalisation. Globalisation can be viewed as the integration of inputs and outputs into global markets, sharing of information and knowledge, and promulgation of rules governing such integration.
Prime movers of globalisation
The World Trade Organisation (WTO) is the international organisation dealing with the rules of trade between nations. As in January 2007, 150 countries are members of the WTO. In becoming members of the WTO, these countries undertake to adhere 18 specific agreements, of which Trade-Related Aspects of Intellectual Property Rights (TRIPS) appears to have greatest impact. The World Bank and the International Monetary Fund (IMF) play a vital role in the process of economic globalisation. The positive and negative effects of globalisation and the groups that resist and support globalisation are many. Some of the impacts of globalisation can be seen on small farmers in developed and developing countries. Corporate globalisation has impacted the rural communities in several ways
Impact of globalisation on farmers
In the case of agriculture, globalisation demands export-oriented cash crop farming, free trade, discouragement of subsidies, insistence on standards, and enforcement of intellectual property rights. Globalisation envisaged food security to help augmenting availability of food grains, trade to bring about flexibility in the matter of food security, increased access to food by the poor, increase employment opportunities, and cash crops to earn foreign exchange.
Seed saving
Farmers who have been growing seed for generations now face legal barriers. Farmers who traditionally grew pulses, millets, and paddy have been lured by seed companies. Their native seeds have been displaced with new hybrids which cannot be saved and need to be purchased every season at a high cost. Hybrids are also very vulnerable to pest attacks. Spending on pesticides in some countries has increased and now farmers are consuming the same pesticides as a way of killing themselves so that they can escape permanently from unpaid debts
Protective subsidies
Protective subsidies are given in industrial countries while other WTO member countries are discouraged. In some countries zero tariffs are imposed. United States gives over $18 billion a year in subsidies to its own farmers. This has affected prices of agricultural produce produced by farmers in other countries.
Lack of markets
Farmers lack access to overseas markets, where they can sell their produce at higher prices and purchase cheaper inputs and better technology. They also lack sufficient access to local markets and face unfair competition from subsidised imports. Inputs and outputs are controlled by multinational companies.
Protesters against globalisation
Despite all these hassles most protestors against globalisation are from industrialised countries. They include labour organisations worried about loss of jobs moving to south, US farmers defend to support agriculture, and radicals from European Union countries opposed to corporate capitalism. In fact few protesters come from poor of the world and most are representatives of NGOs.
Impact of globalisation on agricultural workers
The experience of globalisation has been in sharp contrast to the rosy picture painted by the fund-bank. Instead of bringing the third world countries to a level where they are able to compete in the world market, the system has pushed up unemployment there, converting them into havens of excessively cheap labour, including child labour. Moreover, neo- liberalism has truly destroyed civil society in many countries by widening the gap between the rich and the poor as time progressed.
Impact on work & wages
Because of implementing the fund-bank directives and globalisation, the agricultural production changed from for food sufficiency to exports. As a result, imports of thousands of items of agricultural produce have been liberalised. We are now importing even food grains from developed countries that have an excess of them, and such imports are capturing our food market. Our producers are, as a result, facing a serious challenge. At the same time, the government too has slowed down the procurement of food grains and producers are not getting remunerative prices. Those producing cash crops are also in great difficulty; in Andhra Pradesh, Karnataka, Maharashtra, Punjab and other states a large number of them have been driven to commit suicide. Our peasantry is facing great hardships also because of the decline in government expenditure on rural development projects, irrigation, state-sponsored credit schemes, subsidisation of fertilizers, etc.
Also due to the growing costs of agricultural inputs and shrinkage of the market for agricultural produce, the farmers are resorting to reduce the cost of labour-component in cultivation. They are pressurising the agricultural workers to work more with lesser wages and also employing women and children for lesser wages as well as they are going in for more and more mechanisation. As a result, today, agricultural workers are not getting even 100 days work in a year and are facing starvation.
Decline in employment
The impact of globalisation on our agrarian sector has worsened the plight of agricultural workers to an alarming degree. The share of agriculture in our gross domestic product (GDP) has declined from 54.56 per cent in 1951-52 to 27.87 per cent in 1999-2000?almost a 50 per cent reduction. But the shift of labour force from agriculture to other sectors, as projected by the followers of the World Bank-IMF model, has not taken place. Further, the proportion of people depending in India on agriculture is about 60 per cent whereas the same for the UK is 2 per cent, USA 2 per cent and Japan 3 per cent. The developed countries, having a low proportion of population in agriculture, have readily adopted globalisation which favours more the growth of the manufacturing and service sectors. These limitations are severely affecting the capacity of Indian agriculture to compete in the global market. Characterised by low and stagnating yields, a very large proportion of marginal, small and semi-medium holdings, a high proportion of landless labour households, and highly concentrated and food-oriented cropping system, Indian agriculture would therefore be facing serious challenges, both internal and external, in the process of fulfilling WTO commitments.
Food security
Globalisation has also had an adverse effect on our food security. Export-oriented agriculture is gradually reducing the area of food cultivation, as more and more land is being used for cash crop production. This is helping the rich farmers who get all help from the government and increase their income by exporting their products. A continuation of this policy will only make us more and more dependent on food imports.
Transformation of domestic agriculture
The major challenge facing domestic agriculture is the need to adapt its production systems in order to meet the requirements of the two stages of diet diversification. In the first stage, the increased demand for domestic food products would call for a higher level of activity by traditional suppliers. The key issue is whether there are conditions for increasing returns in production, as the overall level of demand for food expands. If conditions for increasing returns in production are met, then many small producers may effectively be driven out of the production sector. In their place, we could see the emergence of monopolistic suppliers consisting of large firms that employ more cost-effective technologies and operate under increasing returns to scale. While during the second stage, farmers need to satisfy the demand for new types of foods, representative of a more global diet. During diet globalisation, domestic suppliers could face strong competition from foreign suppliers. Also domestic suppliers can adapt production which meets the procurement requirements of large food outlets. In India, we have already started agricultural diversification and the emergence of contracts between farmers and large food outlets. Agricultural markets also require moving out from subsistence agriculture to commercial one in nature. Thus, diversification is important. The challenge here is for farmers to produce those varieties of crops for which world demand is growing. More formally, we can identify certain fundamental constraints that could hinder the ability of farmers to enter global markets on a competitive basis.
First, farmers need adequate knowledge of markets and of their changing profiles. Second, it is vital that farmers have knowledge of and access to new technologies that permit them to implement the necessary changes in the production structure. Third constraint results from understanding to what extent land can suitably be adapted to new crops. This also depends on the irrigation facilities available or required and other support infrastructure, such as roads, communication, and storage capacity. Just because diversification into a particular crop may appear lucrative, it may not be physically possible to change since the costs may be prohibitive. Fourth, there is a real need to develop managerial expertise in order to partake in international markets. The thinking behind subsistence farming is radically different from the approaches that need to be fostered in a more competitive environment that is subject to new and different risks. Fifth, the institutional environment needs to be such that it permits novel approaches to the relationships in either labour, product or credit markets. Sixth, Farmers need to have access to credit in order to fund their modernisation projects. For which credit markets in rural areas are sufficiently developed. Finally, farmers must be able to hedge against the risks associated with new production systems, and thus need to put in place adequate insurance provisions. Diversification in production may itself be a form of insurance.
Globalisation, diet diversification and the small farmer
The most critical issue for Indian agriculture is how small and marginal farmers can be integrated into the global process. Indian farming is dominated by subsistence farmers who need to be able to face the challenges that result from exposure to integrated world markets. The risks arising from globalisation are quite different. Therefore appropriate mechanisms and policies need to be put in place. However, there are a number of possible strategies that small farmers could pursue in order to sustain their livelihood with the potential for growth
In Andhra Pradesh, for example, farmers have engaged in a variety of practices designed to protect and sustain their livelihoods in the face of new markets. One such scheme is the labour-water exchange whereby marginal farmers obtain irrigation water from neighbouring farmers with tube wells and pay in labour services. Where such schemes have worked, the availability of water has enabled year-round production of vegetables. Social networks and cohesion ensure that the contracts are honoured. Another innovation is contract leasing. Small and marginal farmers lease out their lands to outsiders who then supply the land with a tube well and grow a variety of crops. The contract is verbal in nature lasting five years with no government intervention. Landowners are offered wage employment on these farms. The growth of village milk co-operatives in India has pointed to a successful way of integrating landless, small and marginal farmers into the changing food market. Following the experience in the dairy industry, co-operatives are also in operation in vegetable production but with mixed results.
A crucial issue for the survival of small farmers is their ability to sell their products to large supermarket chains. This could be achieved by ensuring the structures of intermediation, i.e., in the form of cooperatives of small farmers which provides a channel for selling their products to supermarkets under fair conditions subject to confirmation of the standardisation required for supermarkets.
The policy agenda
Appropriate policies are needed to be put in place to allow domestic producers to survive and thrive in an international market environment. This is especially important for small farmers, who also suffer from the competition by large farmers.
Government policy needs to provide support systems that develop information and education on new technologies and new markets. There is a need for investment in infrastructure to facilitate and support the process of modernisation and diversification of the food supply chain. Government strategy needs to rethink ways of providing investment funds to poor farmers. The government could decide to implement forms of direct intervention, such as public investment in agriculture or in infrastructures. Finally, government needs to develop the right environment conducive to agricultural growth in the long term, i.e the development of specialist agricultural agencies that promote and disseminate appropriate use of technologies and provide clear information on the evolution of markets.
Conclusions
The impact of globalisation has accelerated the nature of dietary change and this has implications for food supply systems. While liberalisation means large food chains have a strong incentive to enter in large Indian market but given their relative bargaining power it could have adverse effects on Indian suppliers. However, while diversification is important for the future of Indian suppliers, the direction of diversification needs to be such as to provide a hedge against risk as well as the process of transition in food production in order to meet the change in food demands. Indian agriculture is responding to the changing domestic demand and the effects of globalisation. This is happening through both public and private investment. The Indian government, recognising the increasing demand for fruits and vegetables, has dramatically increased investment in horticultural production in the last 15 years and this is expected to stand at Rs 20 billion by the next five-year plan. The poultry sector is one example of an industry that has reinvented itself to become a major commercial activity. In the last 15 years growth rates in production and consumption have been 11 per cent, well above the world growth rate of 5 per cent. Heavy investment in breeding, rearing and processing seems to have reaped dividends. The dairy industry has also been successful in meeting the rise in demand for milk products through the widespread establishment of milk co-operatives.
(The writer is the Vice Chancellor, Anand Agricultural University, Anand and can be contacted at vc_aau@yahoo.com.)
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