Saturday, March 21, 2009

Global crisis arriving at Indian farms too

The farm sector, which has by and large been resilient so far, may not remain so amid waning exports of cash crops. The fiscal stimuli announced by the government to minimise the impact of the global economic crisis may prove to be inadequate in insulating the farm sector from the downturn, according to the Planning Commission.
"The fiscal stimuli hitherto announced are mainly industry-centric. It has not exactly addressed the need to safeguard the farm sector from recessionary impact,'' Abhijit Sen, Member, Planning Commission, who oversees the agriculture sector in the Plan panel told The Indian Express.
Citing that exports of cash crops have taken a hit in states including Kerala and Orissa, Sen said, "There is a need for directed efforts to alleviate the crisis in states from where there is sizeable agri exports. We are yet to see this," he added.
India's exports of agricultural and processed food products is expected to grow at just 20 per cent, significantly lower than the 46 per cent recorded in the previous year. In 2007-08, agri exports stood at $7.9 billion and the current fiscal could end up with total exports of under $10 billion, which is just 6-7 per cent of the country's total exports. This is largely because of the worsening global economic situation and a marked decline in global trade volume.
Sen said nothing could be done right now and corrective measures can be taken only after a new government is in place. So far, the government has not decided to pare the subsidy for either fertilizer, power or water for irrigation. But if the global recession continues and lasts longer than anticipated, "an affected government would have to cut it down which will push the farm sector to a crisis point.''
The Agricultural and Processed Food Products Export Development Authority maintains that India's annual export growth rate has been between 36 per cent and 50 per cent over the past three years. This will most likely slow down to 20 per cent this year.
About a third of exports are to the Middle East and West Asian countries. The US and Europe account for less than 15 per cent. The country has seen a 4-5 per cent growth in export of processed and value-added products in the past 3-4 years mainly because of improved quality of processed food. Value-added products make up 25 per cent of India's agro-based exports.
Another factor that could adversely impact the farm sector is the new trend of reverse migration, Sen warned. With the export sector facing the brunt of the downturn leading to job losses, those laid off are likely to go back to the countryside in search of jobs, which could augment the workforce, already surplus, in the agricultural sector.

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