Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Friday, April 23, 2021

Agriculture: There are lessons from China.

Pic courtesy: depositphotos.com 

Speaking at an international conference in 1998 at the University College Cork, in Ireland, to commemorate 150 years of the Great Irish Famine that killed nearly one million people, I was asked a question: who will feed India? This question cropped up at a time when the world was already deliberating a hypothesis floated by the well-known environmental researcher and thinker, Lester Brown. 

Founder of the US-based environmental think tank, the Worldwatch Institute, and later president of the Earth Policy Institute, Lester Brown in 1995 had built on his analysis to come out with a book Who Will Feed China? This had triggered a hot debate, prompting numerous seminars and conferences across the globe. I remember having participated in a few of these conferences, witnessing heated debates that followed. There were terrific academicians who would support Lester Brown’s hypothesis, and there were experts who openly challenged it. Nevertheless, 25 years later, faced with record high domestic grain prices, China has emerged as the world’s biggest food importer – a reminder of what Lester Brown had warned decades back. 

While the severity of China’s food crisis is being denied, questions continue to be raised especially after President Xi Jinping launched an  ‘Operation Clean Plate’ campaign in August last year, asking people to ensure that no food is wasted. With an estimated 6 per cent food wasted every year, good enough to feed 200 million people, the campaign even involved restaurants to ensure people are not provided with lavish spreads. If the consumers order for five meals, the quantity of food served by some restaurants would equal to the requirement for four people. 

This reminds me of the times when in 1965, the then Prime Minister Lal Bahadur Shashtri had asked Indians to observe a fast on Monday, every week. This was primarily to ensure that people learn to ‘share and care’ at a time when food was in great shortage. In fact, in 1965, a year prior to the launch of Green Revolution, India had imported 10 million tonnes of foodgrains to tide over the severe food crisis. Shows how precarious the situation was. But after the launch of Green Revolution, India attained food ‘self-sufficiency’ but with the easy availability of food over the years, a kind of complacency has set in. 

Similarly, China too had taken long strides in food production. It was in 1996 that China had brought in a policy focus to ensure that it meets 95 per cent of its food needs from domestic production. But by 2011, as per the World Trade Organisation (WTO), China had become world’s largest food importer. With rising incomes, the food preferences of the burgeoning middle-class had undergone a change that shifted the food habits from staples to an exploding demand for meat and nutritious products, including dairy. 

The changing food habits prompted the government to shift the policy focus from food self-sufficiency to allowing ‘moderate imports’. Denials notwithstanding, mass urbanisation and the efforts to move bulk of the farming population away from agriculture to join the industrial workforce in the cities did leave a gap in production. At the same time, intensive farming practices resulted in heavy soil contamination, groundwater decline as well as pollution, and the resulting environmental degradation reduced the extent of arable lands, prompting China to announce that it will protect 120 million hectares of farmlands to meet its food security needs. 

As the average farm size in China declined to 1.6 acres, the growing appetite for chemical fertilisers, including nitrogen, coupled with direct income support for farmers had resulted in grain surplus accumulating to 600 million tonnes in 2017. Although the silos were bursting, the growing demand for nutritious foods, including beef, also soared meanwhile. To give you an idea, the sale of beef to China in a decade had grown by 19,000 per cent. A change in diet therefore forced China to scout for food all over the world, including India and Pakistan. 

According to Fitch Ratings, China’s imports of corn, wheat, sorghum and barley in 2020 soared by 136 per cent, 140 per cent, 437 per cent and 36.3 per cent, respectively. It expects the trend to continue in 2021 as well. Already it has exhausted soybean supplies from Brazil, the world’s biggest soya producer, and is now turning to USA. So much so, as Forbes points out that despite being the world’s second biggest wheat producer, China holds over half of world’s wheat stocks. Similarly, it has 65 per cent of world’s corn inventories.  

Unable to meet its growing food needs domestically, China has been on an aggressive spree buying farmlands in Africa and Latin America, and is now turning its attention to purchase farm lands in America, European Union and Australia. The website farmlandgrab.org estimates that since 2010, China has already made an investment of $ 94 billion in farm activities abroad, purchasing 3.2 million hectares. 

While China is clearly at the edge of a severe food crisis, there are important lessons here for India. In a country where mainline economists ravel in cut paste prescriptions in the name of agricultural reforms, the Chinese example illustrates how the transformation from a state-regulated farming to a market-oriented agriculture has brought it to face an unmanageable food crisis, perhaps pointing to a bigger crisis ahead. With the experiment to transform China into a manufacturing hub going awry, especially after Africa was able to provide cheap workforce, restoring farm viability now is becoming a still bigger challenge. 

China provides $206 billion of farm subsidies ever year (add to it tens of billions spent on importing food year after year) shows if the same amount had gone into converting small farm lands into an economic powerhouse, the world’s biggest grain producer could have easily avoided turning into world’s biggest grain importer. There was an alternate economic pathway, more sustainable in the long run, that China failed to undertake. 

India cannot afford to go on the same beaten track. Or else, the question as to who will feed India will continue to haunt future generations. #

Lessons for India from China's food import. The Tribune. April 21, 2021. https://www.tribuneindia.com/news/comment/lessons-for-india-from-chinas-food-import-241793?fbclid=IwAR0lcM3vV8wRpZE2b3g4AwbM2KjUNQPnNs0JTW7JgP3b2Ip8VML2Y47zJjM


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Sunday, November 17, 2019

India stays out of RCEP treaty


15 members of RCEP --Wikipedia map

Soon after assuming office, when the US President Donald Trump withdrew from the Trans Pacific Partnership (TPP) mega-trade agreement between 12 countries, which shared a common coastline on the Pacific and made up for 40 per cent of the global GDP, it came in for a lot of criticism. Terming it as a “horrible deal” President Trump was convinced that the treaty, which was meant to remove 18,000 tariffs on agricultural and manufactured goods, would steal American jobs.

Withdrawing from another mega-trade deal -- the Regional Comprehensive Economic Partnership (RCEP) -- which covers 45 per cent of the global population and accounts for 25 per cent of world’s GDP, Prime Minister Narendra Modi in a statement a few days ago, said: “When I measure the RCEP Agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the Talisman of Gandhiji nor my own conscious permits me to join RCEP.” Remarkable words, indeed. Again, like US President Trump, what perhaps weighed on Prime Minister’s mind were the massive job losses and livelihood destruction expected on removing tariffs on 92 per cent of the tradable goods, including manufacturing and agriculture.

At a time when the dominant economic thinking is swayed towards globalisation, a strong leader demonstrating political courage to withstand the tide is certainly admirable. More so, at a time when dominant economic thinking creates a fear of the unknown – how much the country will miss out by not being a part of the proposed free trade agreement (FTA), some term the phenomenon as Fear of Missing Out (FOMO), the Prime Minister’s assertion for fairness and balance is legitimate. Such a precautionary approach becomes absolutely essential knowing that in the past too India had entered into free trade agreements with 12 of these RCEP countries (including the 10-member ASEAN grouping) with the same illusion of finding an access into their markets only to register a whopping trade deficit of $ 107.28 billion. The assumption that getting into an RCEP agreement at this stage will further widen the trade deficit and hit agriculture the most therefore is not entirely unfounded.

Similarly, the over enthusiasm with which India went on signing Bilateral Investment Treaties (BITs) on the presumption that it will promote investments were in reality vague and without proper homework. As the number of arbitrations increased, India terminated 58 of these BITs.

Given this backdrop, it is quite obvious that the fear of unknown has been over-hyped. If the FTAs with the Asian countries were pushed in the search of penetrating important markets and participating in the value chains of East Asian economies, it didn’t work. To Illustrate, India’s trade deficit with the 10-member ASEAN, signed in 2010, has increased by 250 per cent. It is therefore quite obvious that the Indo-ASEAN Agreement was signed without any adequate assessment, no proper scrutiny and was perhaps based more on the unknown FOMO factor. Otherwise there is no reason that the exposure to 10 Asian countries markets should fail to provide any significant trade outcomes. It is therefore heartening to know that the Prime Minister has now called for a review of Indo-ASEAN trade agreement. In fact, not only Indo-ASEAN there is a dire need to review all the bilateral and plurilateral trade agreements that India has so far signed.

There are lessons in store. When the multilateral World trade Organisation (WTO) treaty came into effect, a lot of euphoria was generated. We were told that a multilateral trading system – based on one country one vote principle – would obliterate the need to get in cumbersome and time consuming bilateral agreements. But over the years, this was proved wrong with more than 300 bilateral free trade agreements (FTAs) signed, which in principle were WTO plus treaties with stronger intellectual property rights (IPRs) and aggressive push to open up markets. Since most countries already are into bilateral agreements – with emphasis on zero tariff imports and removal of non-tariff barriers -- I fail to understand how any incremental growth can be expected from regional treaties where majority members are already having separate FTAs. Unless of course the new grouping includes a giant like China (with which India has a trade deficit of $ 53 billion) and countries like Australia and New Zealand (like in the RCEP) which desperately eye to get a foothold into India’s dairy (and farm sectors) to pull out their own dairy sector from distress.

The extra precaution with which India wants to engage with RCEP trade partners is therefore quite justified. Although the Commerce Minister Piyush Goyal lays out three conditions – strict rules of origin, updated base duty period, from 2014 to be moved to 2019, and auto-trigger mechanism – to be addressed before re-entering the RCEP negotiations, India’s decision making should be guided by more detailed studies and more open and transparent stakeholder dialogues. The Ministry of Commerce cannot be allowed to work in isolation, and needs to take other ministries on board. Reports saying that China was upset at India opening up issues like auto-trigger at times of volume surge, changing the base duty etc a few months before the treaty was being finalised raises questions over the competence of Indian negotiators. How come for seven years of RCEP negotiations, they failed to bring up these crucial issues that India is in any case fighting for in the ongoing Doha Development Round of WTO. 

Even during the earlier days of WTO negotiations, the promise of a drastic reduction in the monumental agricultural subsidies being provided by the richest trading block – the Organisation for Economic Cooperation and Development (OECD) – was projected to act like a ‘big bang’ for India’s farm exports. This was a gigantic mistake. Except for a jugglery in the way these agricultural subsidies were very conveniently shifted between the three boxes – green, amber and blue (in WTO parlance) – these subsidies have remained more or less intact. The 28-member EU provides $ 65 billion in farm subsidies, three times of what the US gives, and any quick effort to sign an FTA with these two giants must be carefully evaluated in the light of the damage it can inflict on India’s agriculture. Considering that 600 million people are engaged in agriculture, directly or indirectly, it is important to weigh the fallout on farm livelihoods before rejoicing over the market access an FTA provides. Nor can agriculture be sacrificed anymore for some gains in the services sector. Let’s treat Mahatma’s talisman as the preamble for any future trade negotiations. #


India holds its own. The Tribune. Nov 15, 2019
https://www.tribuneindia.com/news/comment/india-holds-its-own/860892.html?fbclid=IwAR1-S3eR9t3Fg4Lcn25eVXYWSVjqbnlcnwGRu9muy4aRpdp5McRabJCG8vU
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Saturday, April 20, 2019

Only a vibrant agriculture can address the employment crisis





In April, the Railway Recruitment Board received over 1.6-crore registration for 35,000 jobs of typists, stenos, account clerks, ticket collectors etc. In Punjab, over 6-lakh students appear for an International English Language Testing System (IELTS), the examination that young students aspiring to migrate abroad must first clear. Such is the crave for leaving abroad that IELTS coaching has become a roaring business, estimated to be over Rs 1,100-crore. With agriculture becoming economically non-viable and with no jobs to look up to, Punjab youth is increasingly keen on leaving the country.

While you are still grappling with the long-term implications of growing unemployment in the country, here comes another shocker. The Bangalore-based Azaim Premji University has in its State of Working India-2019 report said that 50 lakh people lost their jobs between 2016 and 2018. A month earlier, a leaked Periodic Labour Force Survey 2017-18 report of the National Sample Survey Office (NSSO) had shown that 3.2 crore casual labourers in rural areas lost their job between 2011-12 and 2017-18. Of these, roughly 3-crore were the farm workers showing a decline of 40 per cent in jobs availability for farm workers. Some economists have analysed this report and found out that between 2011-12 and 2015-16, manufacturing jobs alone declined from 580.6 lakh to 480.3 lakh, showing a job loss exceeding 1-crore.  

From unskilled to skilled, from uneducated to educated and even to those with high qualification, jobs have been shrinking. In Uttar Pradesh, 3,700 doctorate degree holders, 28,000 post-graduates and 50,000 graduates applied for just 62 jobs of peon. The job basically requires a minimum qualification of class V pass and the ability to ride a bicycle. And this is not the first time highly qualified people have applied for such low jobs. No wonder the Azim Premji University study shows that rising unemployment among the higher educated, the less educated as well as for the informal labour force there has been job losses and reduced work since 2016, the year demonetisation was announced.

At a time when massive unemployment prevails in the urban areas, the number of workers in agriculture too shrunk between 2004-05 and 2011-12. This is being hailed by mainline economists as a brighter side of the job loss nightmare that the country is witnessing. The argument is that the translocation of agricultural workforce to the cities is a sign of economic growth, and it is for the first time that such a clear sign of people moving away from the villages has been seen. Like his predecessor, even the new Chief Economic Advisor Krishnamurthy Subramanian has called for shifting people from agriculture to the cities, which are in need of cheaper labour.

I find this argument regressive. It comes from the same flawed economic thinking that the World Bank/IMF has been promoting all these years. Since Indian economists, and considering most of them occupying higher positions in India have been trained abroad, this flawed thinking has become the unwritten policy design. Way back in 1996, the World Bank had directed India to move out 40-crore people from the rural to the urban areas in the next 20 years, by the end of 2015. More recently the National Skill Development Policy document had made a promise of reducing rural workforce from 57 to 38 per cent by the year 2022. This was based on the premise that urban areas need dehari mazdoor and that can only come from agriculture.

This is a sad reflection on the way economic prescription are borrowed and blindly implemented. In a country where 70 per cent work force still lives in the rural areas, imagine the futility of moving a large percentage of the population to swarm into the cities looking for menial jobs. I have always wondered why can’t Indian economists and policy makers for a change spell out a policy design that aims at making agriculture profitable and thereby revitalise the rural industry. Once there is more money in the hands of rural work force, more demand would be generated, and that would mean the wheels of economic growth will zoom to a much higher trajectory.

While Indian economists failed to emerge out of the World Bank’s blinkered economic thinking, China has taken a leap forward. With nearly 60 per cent of its population forced to move into the cities over the past few decades of rapid industrialisation, China now realises its mistake. With most of the skilled jobs in the cities moving away to Africa where a still cheaper labour force is available for the foreign investors, China has now launched a ‘reverse urbanisation’ programme to take care of the idle or underemployed work force.

According to a report in South China Morning Post, an estimated 70-lakh people, most with higher educational qualification, have moved back to the countryside last year, with 60 per cent reportedly getting back to farming. This also became essential considering the decline in domestic agricultural production as a result of which imports soared. With unemployment and underemployment rising, and with agricultural production dipping, China has taken the right step to what is proverbial known as killing two birds with one stone. Adequate rural infrastructure is being laid out, and a translocation subsidy is also being provided to those who opt for rural areas.

In India, there is no other alternative to creating more jobs than to strengthen agriculture, create more infrastructures in the rural areas, and at the same time provide for more social security in the form of public sector education and health services. With the introduction of PM-Kisan scheme, which initially promise a direct income support of Rs 6,000 per year for farmers, which I am sure will be enhanced in the times to come, the first step of providing an additional income into the hands of farmers has already been taken.

While economists are refusing to change, it’s the political thinking that is beginning to show signs of maturity. First, NDA announced PM-Kisan scheme, and this was followed by Congress with an electoral promise of Nyuntam Aay Yojna (NYAY) promising Rs 6,000 per month to the lowest 20 per cent of the population, a clear pointer to what political leadership sees as a road ahead for economic development that is more inclusive. Both the parties are now beginning to realise what I have said for long: agriculture alone has the potential to reboot the economy.#

कृषि क्षेत्र से ही पैदा होगा रोजगार  Amar Ujala, April 19, 2019


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