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5.1. Major driving forces and challenges for the future

Agriculture continues to play a pivotal role in most Asian countries. Its contribution to their gross domestic product is substantial, its share in employment is high; and a large part of exports is accounted for by agricultural commodities. In the family budget of the majority of households, food and agricultural products account for the largest share. With greater focus on sustainable development, agriculture has acquired a new significance. Sustainable use of land and water, application of pesticides and fertilizers, the place of animals, prospects for afforestation, and issues of biodiversity are considered vital. As should be expected, the records of Asian countries vary in these respects. Yet there are several common features and emerging trends in agricultural development in the region which have a bearing on its march towards sustainable development.

5.2. Land reforms and tenure

Land reforms and tenure used to have a dominant place in all policy discussion in almost all the countries in the region. However the enthusiasm of the 1950s and 1960s for land reform seems to have withered away, though sporadic efforts to redistribute land have continued. Even improvements in land tenure (tenancy practices), which are easier than land redistribution, have not made much headway. The primary reason why land reform has largely failed in Asia is that there has been a lack of political will in its implementation, and because the overall structures of national societies are biased in favour of certain interest groups who are resistant to change. After the 1970s the emphasis moved from land reform to agrarian reforms. Agrarian reform embraces improvements in land tenure and in agricultural organization. Its policy prescriptions urged governments to go beyond redistribution: they should support other rural development measures such as the improvement of farm credit, cooperatives for farm-input supply and marketing, and extension services to facilitate the productive use of the land reallocated. While conceptually sound, these wider prescriptions discouraged governments from doing anything until they could do everything.

The main reason for the negligible impact of agrarian reform on production in the South Asia countries - apart from several lacunae in legislation and in implementation - was that there were weaknesses in the supportive systems, i.e. input supply, extension, credit and marketing. These institutions were basically geared to the requirements of medium to large farmers, and bypassed the small landholders (Vyas 1994). Agricultural growth in South Asia was largely attributed to the medium to large farmers who had viable landholdings and access to support institutions.

The situation prevailing up to mid-1987 is aptly summarized in the following two paragraphs, which also point to an agenda for the future.

"Access to land during this period was determined, on the one hand, by trends in demographic, structural and other economic factors and, on the other, by policies of the governments concerned. In practice, very few governments adopted any significant programmes for agrarian reform during this period; hence, the effects of demographic and structural factors have tended to predominate. The following adverse developments are reported: a decline in land availability per capita of agricultural population in most countries (except in parts of Latin America and the Near East); large inequalities in the size of landholdings; a high rate of growth of operational holdings; a large increase in very small and marginal holdings, verging on near-landlessness; an increase in landlessness; and virtually no direct land rights for women.

"A review of agrarian reforms by region shows no new programmes for agrarian reform. While many have continued with their land settlement programmes, none of the latter has succeeded in keeping pace with even the annual increase in agricultural population. The question of women’s access to land has not been explicitly addressed in any country, while their benefits from past or continuing agrarian reforms are extremely doubtful."

There is therefore a strong need for improvement of land tenure in the region. There is wide variation in the objectives, circumstances and conduct of land reform. Just how extensively the state should intervene has long been the subject of debate. Those favouring revolutionary change advocate a drastic, planned, public intervention to redistribute land. Yet attempts at drastic redistribution of private land, in the face of strong opposition from landed interests (and in some cases related budgetary impediments), have detracted from more feasible evolutionary policies aimed at improving access and security of tenure for small farmers under alternative forms of individual and communal tenure, which do not involve expropriation and compensation.

In conclusion, the reasons for the failures of land reform include lack of serious commitment at the top levels of government, weakness in the design of enactments, failure to provide necessary support services to beneficiaries, lack of local organizations, budget constraints, shortages of necessary personnel, lack of cooperation from the people affected (by the programme), deficient land reform legislation, lack of cooperation among government agencies concerned and lack of political will. These problems are found to be quite common in Asian countries with varying degrees of seriousness.

The requisites for a successful land reform programme are mostly indicated by the reasons for the failures. The major requisites include: political commitment, local land reform organizations, clarity in objectives and targets, speed of execution, administrative preparedness and structure, sufficient funds for land reform, and constant evaluation. These requirements are usually lacking in most countries and they will not be easily attained under current economic, social, and political conditions. It must be noted that other requisites may also be essential; for example, adequate supporting services such as farm credit, marketing and extension, continuing education for beneficiaries, and favourable agricultural policies and programmes to improve rural income and welfare. Finally, as pointed out by Hayami et al. (1990):

"For land reform to achieve its intended goal, it must correct the flaws in the previous design. A basic requirement of the alternative land reform design should be the expansion of its coverage to all lands, regardless of tenurial status and commodity produced."

Therefore, it must also cover the plantation sector. Another supporting programme proposed is a progressive land tax to induce big landlords to sell their land to small farmers and the landless. Progressive land tax can also help reduce land speculation activities which are now occurring in some countries such as Thailand, and restrain farm land prices which, if allowed to rise, will increase the cost of the land reform programme and penalize the beneficiaries as a consequence. Implementation of land reform in most countries will still take many years to complete, so progressive land tax should be introduced as early as possible.

5.3. Development of agricultural research and extension

5.3.1. Research

Agricultural research and extension programmes have been recognized as vital public sector responsibilities both in planned and in market economies. Expenditure on research in Asia is roughly one-third of the amount spent by industrialized countries, although agriculture is more than six times as important in developing countries in proportion to their overall economies. Studies indicate that Asian economies spend less on extension programmes than on research. Even though there are differences in perceptions among experts and policy-makers, and variations in actual country experiences, investment of about 1 percent of agricultural gross domestic product (AGDP) in agricultural research and 0.5-0.8 percent in agricultural extension is absolutely essential.

Further, the number of researchers per AGDP in developing countries of the region is approximately equivalent to the number in industrialized countries, but the numbers of extension workers per AGDP far outweigh those in developed countries. This implies that the research and extension workers do not have adequate support in the way of equipment, facilities, and transportation.

According to the World Resources Institute, global expenditure on agricultural research has increased 258 percent in real terms over the past three decades but little has been spent on local food crops. The benefits of successful high-yielding crop strains have been reaped by farmers (including smallholders) in irrigated areas with access to fertilizer, credit and other inputs. Farmers on marginal lands have not benefited. The neglected smallholders need a farming-systems approach, beyond the traditional focus on individual commodities. The situation in Asia is no different. The Green Revolution of the 1960s and 1970s in Asia radically changed the region’s agricultural economy. Following the introduction of high-yielding seed varieties (predominantly rice and wheat) and large-scale irrigation and modern inputs, India, Indonesia and Pakistan all achieved cereal self-sufficiency, while Bangladesh became almost self-sufficient.

However, these major cereal and irrigation-orientated assistance strategies failed to benefit many of the rural poor.

It has now been universally recognized that for agricultural development it is imperative that research be intensified to support the smallholders, and that the institutions responsible for spreading the information from laboratory to land be strengthened.

Field studies on the adoption behaviour of small farmers have clearly shown that, given the opportunity, they take up new technology enthusiastically, provided its profitability is demonstrated. To bring such technical change to smallholders, there is a dire need for drastic changes in priorities, location, content and coverage of research, matched with increased levels of investment.

The research agenda should focus on high-yielding varieties (particularly of traditional food crops) which use less water and chemicals, stable farming systems in arid and semi-arid regions, improved soil and water conservation technology, biological control of pests, incorporation of multi-purpose trees and shrubs into production systems, and pre-harvest and post-harvest losses. For some crops, post-harvest loss accounts for as much as 30-40 percent of output, posing a major threat to food security. The small farmer sector is highly complex and diversified. The emphasis, therefore, has to be on a research system which is a problem-solving process directly related to the smallholders and their environment (Alamgir and Arora 1991).

Focus is also lacking in terms of extension support, the link between research and extension, and the roles of smallholder producers in both. Ironically, extension services in most countries of the region are not very sensitive and responsive to the needs of the poor, or to their perceptions and absorptive capacities. The extension services need to be strengthened so that they are participatory and cost-effective, and contribute to the sustainability of development efforts. The objective is to do away with the existing strict dividing lines between extension agents and farmers. The final goal should be to establish a client-orientated research system and a client-responsive extension system with strong links between the two.

5.3.2. Extension

Up to recent time, agricultural extension has had quite a considerable role in increasing the productivity of farms and farmers. The focus is on technology development and its transfer to the medium- and large-scale farmers has had considerable success. Much less has been achieved in transferring technology to subsistence farmers, and in improving their ability to participate in their own overall development. On the whole, those who are small-scale, landless, poorly educated, resource poor and vulnerable, including women, have been largely bypassed or ill-served by the existing extension system.

Despite the generally progressive economic development experienced in countries of the region as a consequence of the various efforts made to improve the rural community, still such development has not affected the great majority of small farmers. Many governments are increasingly adopting new development strategies which focus on the development of the vulnerable groups, particularly the landless, the rural disabled, the subsistence and the women farmers.

5.3.3. Institutional structure and human resources

The organizational structure of agricultural extension services varies among countries in the region. It is influenced by development in the agricultural sector, by the social, cultural and demographic make-up of the country and also by the prevailing political set-up. As noted above, there are several extension organizations serving the farmers in each country. In extreme cases, there are various organizations dealing with a particular sector; in some other cases, each sector’s extension is separated from the others, e.g. crop extension is separated from fisheries, livestock or family improvement extension.

There have been efforts in many countries to improve the situation. For example, in Bangladesh, six extension-orientated agencies were merged together in 1982 to form the Department of Agricultural Extension. In the Philippines, the line functions of the various bureaus in extension (plant industry, animal industry, soil, fisheries, agricultural extension) were reconsolidated under the decentralization programme, at the regional and provincial levels. In other countries, where there is still a multiplicity of extension organizations, coordinating committees have been set up at the different levels of the administration. For example, in Indonesia, where each directorate general has an extension component, coordinating committees have been formed at the national, provincial and district levels.

The process of reconsolidation and reorganization of the extension system continues to take place, as each country gains experience in the implementation of its extension activities. As countries develop, they exhaust the existing or conventional development model, and then need to formulate and develop new models, on different bases, which can be adapted to the country’s new and changing needs and to the solution of its related problems.

It is estimated that in the Asia and Pacific region, about 80 percent of the extension personnel are employed as field staff, 7 percent as administrators and 13 percent as subject-matter specialists. The ratio of extension agents to farmers ranges from 1 to about 350 in the Philippines and to more than 1000 in Thailand. The ratio of field staff to subject-matter specialists ranges from 1:10 in Bangladesh and Malaysia to about 1:20 in India and Indonesia. Apart from the People’s Republic of China, which is reported to have about 120 000 extension workers, there has been significant improvement in both ratios during the last decade or so, when the Training & Visit (T & V) System was introduced in the participating countries. Under the programme, the target was to have a ratio of 1:800 for the effective transfer of technology to farmers.

Although this ratio has been achieved in some countries, the national average is still far below the targeted average in individual countries. Indicators obtained in case studies reveal that the maximum number of farmers that an extension agent can actually reach in a year is about 500. This has great implications for agricultural extension management in countries where the agent to farmer ratio is low. Group farming approaches are being adopted to help reduce this constraint (Jalil 1994).

In recognition of the significant role of women in agriculture, a new orientation is being enforced to help women farmers, who are so often responsible for both agricultural and family development but lack access to extension and related resources. The percentage of female extension workers in the agricultural extension services in the countries in this region varies from about 2 percent in Nepal to more than 40 percent in the Philippines. The percentage of female extension workers is generally lower in the South Asian countries compared to the rest of Asia.

5.3.4. Extension-research linkage

The conventional role of extension services is to tell farmers about new and improved agricultural production methods and to encourage them to apply these on their farms. At the same time, extension provides agricultural support services for farmers’ needs and problems, with two-way access. To ensure that the farmer adopts the improved technology and profits from it, and for the extension services to play their role effectively, there must be adequate mechanisms for providing this information and the inputs and support services which can be adopted or adapted to farmers’ needs and capabilities.

Many past efforts have stressed extension but neglected research. It was assumed that technological knowledge was already available and could be adopted easily. Research was not a priority. There was a lack of interaction between the extension and the research institutions and a limited feedback from the farmers. Even though the need for and the importance of the linkages between research, extension, farmers and the supporting service are stressed and acknowledged in the various approaches to extension, generally this mechanism is still weak. Institutional separation and weak mechanisms for coordination have led the relevant organizations to operate in isolation. At times, separation has created competition rather than being a reason for the services to complement each other. Since research and extension will continue to compete for scarce resources, effective mechanisms still need to be developed to create a more productive interaction among research and support service institutions, extension and farmers, for the purposes of identifying problems, developing solutions and facilitating feedback.

Agricultural extension continues to have a role in the development programmes of most countries, in reducing poverty, facilitating growth and ensuring food security through the development of human resources. Apart from these, agricultural extension will have to be involved in issues relating to sustainability in development, safeguarding the environment and increasing the effective role of the vulnerable groups, and it still has an important role in ensuring the nutritional well-being of the people.

Agricultural extension must be dynamic to accommodate the above roles and to meet the future needs of the evolving economies. The extension system must be able to respond to the structural changes that are taking place in the individual countries. It must meet the needs of the more educated farmers, the needs of the farming systems which would be operated on a commercial basis, and the needs of high-value agriculture. The private sectors should gradually be involved, as partners of extension systems, to cater to the professional needs of their present and future clientele.

5.4. Technology for sustainable agriculture

As discussed in section 2.3.5, appropriate technology is the main vehicle for smallholders’ development. Technology is either mechanical technology, which is labour-saving or biological and chemical technology, which is land saving. Biological technology is urgently required by small farmers, though small-scale mechanical technology, besides reducing the drudgery of farm work, particularly women’s work, can increase output. The two main components of biological technology are the breeding of new varieties and the improvement of cultural practices. The scarcity of improved technologies is the major barrier to the development of indigenous crops. Small-scale livestock enterprises run by small farmers suffer from the same weakness.

For developing new technologies there will be a need to learn from farmers, not only about their problems but also about the logic of the adaptations. Promising technologies derived from work on research stations need to be tested in the context of local farms, both in researcher-managed trials, seeking to confirm the technical feasibility of the recommendations, and in farmer-managed trials, to establish their socio-economic manageability. Labour-saving techniques will be essential for countries where wage rates are high, but in other countries labour-absorbing techniques will be more viable.

The combination of lagging growth in productivity and rising population, often accompanied by poverty, landlessness and unemployment, is putting severe pressure on natural resources. This is reflected in environmental degradation (deforestation, soil erosion, desertification, flooding, water pollution, salinization), and is possibly contributing to global warming. The challenge facing policymakers and scientists is to design agricultural technology that can quickly accelerate food production without compromising the sustainability of the natural resource base on which all agricultural production depends.

National and international agricultural research systems, which have in the past been concerned mainly with increasing production, are now faced with an expanded set of research imperatives specifically related to sustainable agricultural technology and land use. These include (Oram 1991):

a) the development of systems for characterizing agroecology so that optimal land-use systems can be determined and the component technologies and input levels appropriate to those systems can be identified. This can provide the essential ecological framework for agricultural planning and research priorities, as well as a means of assessing ‘spillover’ benefits from research.

b) characterization of social and demographic situations in the context of the ecological framework, so as to develop technology that is both environmentally appropriate and acceptable to potential users.

c) evaluation and monitoring of sources of change, i.e. the technological, economic, social, and demographic factors contributing to environmental degradation and loss of sustainability. A new factor is the threat of global warming, which is already altering the distribution of natural flora and fauna, as well as pest problems, with major implications for crop and weed growth, water resources, trade, economic growth, and research priorities.

d) initiation of macro-level studies to understand the impact of policy on land use, technology adoption, resource management, and environmental sustainability, and to shed light on which policies have been most beneficial, and why. This is crucial, because conflicts affecting sustainability often have their origins in intersectoral policy distortions affecting taxes, exchange rates, trade and protection, structural adjustment, unemployment, prices and subsidies for agricultural, forest and other products, and investments (or lack of them) in research and other institutions, and in infrastructure.

e) assessment of externalities. This is difficult to do; it may require monitoring of erosion, run-off, pollution, salinity, loss of biodiversity, impact on human health and nutrition, etc., over several years. Nevertheless, it may be basic to understanding the sources, costs, and responsibilities for loss of sustainability, as well as how to reduce further economic damage.

f) continued high priority for the evaluation and conservation of plant and animal genetic resources, both internationally and nationally. This involves delicate decisions about future needs, extending beyond germplasm banks to preservation in situ. Some needs transcend national boundaries, requiring an international consensus for action and involving issues of ownership and compensation.

g) more efficient chemical inputs (fertilizers, herbicides, pesticides) to improve cost-effectiveness and avoid environmentally-damaging overuse or misuse. This is one of several cases where improved technical efficiency also serves the cause of sustainability.

h) evaluation of the technical and economic viability and contribution to sustainability of "environmentally friendly" farming systems and techniques of production: alley cropping, organic farming, integrated pest management, drip irrigation, low-input agriculture, etc., in various ecological and social situations.

i) an understanding of economic constraints at the farm or village level that might limit the adoption of sustainable innovations. For example, there are substantial capital and labour constraints to investment in laterite bonds in Burkina Faso, although they are the key "sustainability innovations" proposed there by ICRISAT. Success may require coordination or cooperation across a village: for example, if one farmer alone builds a dyke, this may funnel rainwater toward a neighbour’s land with even greater force. Other situations where sustainability may not be obtainable by individual action include community forestry, watershed management, range grazings, and common property resources. Individual group members often lack collateral, so innovative, risk-sharing approaches to community credit may be needed, such as the Grameen Bank scheme in Bangladesh.

j) establishment of complementary infrastructure to support sustainable farming systems. Irrigation projects often lack an effective network of offtakes from main canals to farms, on-farm drainage, feeder roads, and other structures essential for a viable system. Research innovations in rainfed areas fail for lack of on-site water.

While it would be unjust to suggest that agricultural scientists have neglected sustainability, the long list of new research needs, the widespread failure of efforts to introduce improved technology to farmers and farmers’ abandonment of subsidized practices once the subsidies are withdrawn, all suggest that much more attention must be given to sustainability in the future.

5.5. The roles of public and private sectors

The appropriate roles of the public and private sectors have become the focus of increasing attention in recent years. In general, a smaller role is being given to the public sector, a reversal of earlier emphasis.

All countries, developed and developing alike, accord an essential role to the public sector in the development of the agricultural sector. This is especially so in providing its infrastructure - transport, research and extension systems, large-scale irrigation, technical standards, control of animal diseases and agricultural pests and so on - but among developing countries other influences have also been prominent.

Some countries in the Asia region at the time of independence inherited well-established systems of public marketing channels. Many other countries faced serious inadequacies in agricultural institutions and in physical infrastructures - rural credit, input supply and agricultural services systems, storage, price information - and direct public provision of these services appeared to be the quickest solution. It was widely felt that food prices needed to be controlled in the interest of poor consumers and so that rising wage costs did not impede industrialization.

The overall result, typically, was a substantial presence of government controls and public or quasi-public bodies. There was considerable public activity in marketing and significant transfers of public funds from and to the sector. There was also some direct public participation in production, although in most countries agricultural production remained in the private sector.

Since the beginning of the present decade the extent and forms of many government activities in agriculture within the region have come under increasing criticism. Private sector initiatives and institutions are being advocated in place of their public sector counterparts. This change is supported by financial constraints and by the recognition that public enterprises frequently have low cost-effectiveness. To reduce the balance of payments and budget deficits has become the primary objective of economic policy in many countries in recent years.

With the decline in external capital inflows and the extreme difficulty in increasing revenue from domestic sources, public spending cuts have often appeared to be the only option. Agriculture has had to bear a share. The main targets have been public expenditures on agricultural marketing of output and inputs, distribution and transport, and on transfer payments, i.e. subsidies of various kinds. Some loss-making public enterprises have been privatized.

Governments in the region need to address three major issues concerning the respective roles of the public and private sectors in agriculture. The first is to keep an appropriate balance between private and public sector roles. In this context it is recognized that provision of the infrastructure for agriculture, protection against violent price fluctuations, and access of the poor to food are examples of functions which continue to require a substantial government presence. In the field of marketing, a competitive coexistence of private and public channels is recognized as a better means of promoting efficiency and equity of treatment than the complete phasing out of either public institutions or private enterprises. The provision of agricultural credit will continue to need some government backing, especially for credit to small farmers and insurance against losses. The focus therefore is on improving efficiency and this will often require some shifts in the composition of activities of the public sector, e.g. more of its resources devoted to building rural roads and fewer to the commercial marketing of food, rather than a diminution in its overall extent.

The second issue is that a withdrawal of the public sector may lead to a collapse of a particular service. Experienced and competent private enterprises are usually lacking. The change-over from the public to the private sector must therefore be phased, with assistance being given to enable private enterprises to become established and effective. For instance, credit is being extended to the private sector to take over existing marketing facilities and establish new ones. The transfer is a transitional problem, but the lack of sufficient assistance and a general readiness on the part of government to nurture the incoming organizations can be a serious deterrent to the willingness or the ability of the private sector to assume a wider role.

In the third place, governments are faced with decisions about the balance between long-term and short-term objectives. Policy reforms associated with smaller government expenditures and a greater influence of markets have, in many ways, temporarily added to the hardships faced by the poorest people. Unemployment has increased, food prices have increased, welfare schemes have been provided with fewer funds, and subsidies on production inputs have been reduced. The public sector therefore has the duty of alleviating these hardships. The choice appears to be between a broader protective coverage and faster economic growth in the long run. The selection of the latter can be made politically viable only by skilful interventions in terms of targetting beneficiaries of foods and, in some special cases, making inputs available below cost, and a determination to continue to allocate public funds to these welfare schemes.

5.6. Macroeconomic policies and agricultural development

Governments have used a variety of economy-wide or macroeconomic policies - fiscal, monetary, trade, and so on - as well as others more limited to one sector or problem. When farming in the region was almost entirely subsistence agriculture, these macro-policies had little influence on it except for the small export enclaves. However, agriculture is still a leading sector in most developing countries, and has become much more commercialized, both as to output and inputs. Thus it is increasingly open to the influences of macro-policies and the national and external conditions and policies which they reflect. The linkage works in the opposite direction also; how agriculture performs in such matters as generating a trade surplus, holding down food prices, providing employment or generating savings also influences the constraints on the scope and effectiveness of macro-policies.

Impacts of macro-policies on the sector have been weighty, and experience shows that they have often been adverse to agriculture. The effect of such damage to the sector, and in the longer run to the whole economy, appears to have often been overlooked or underestimated.

Pressures for increased efficiency in agriculture have mounted, driven by the needs of countries to continue to increase production, remain competitive in difficult world markets and enhance economic performance to improve their creditworthiness. Measures to bring about a more rational allocation of resources and to raise the efficiency of their use have therefore been at the centre of the policy stage in most developing countries in the region. Macro-policies are basic instruments for achieving these economic objectives, and several are particularly relevant to agriculture in Asia.

Some interventions arising from macro-policies have improved the profitability of agriculture, e.g. expenditure of public funds on infrastructures which benefit agriculture also, or the insulation of the economy from the full impact of windfall gains from nonagricultural exports. In many countries, however, macro-policy applications have worked against agriculture, particularly in the areas of industrially-based development strategies and exchange rates and other influences on producer prices. These disincentives to agriculture have probably been introduced inadvertently at times, particularly when they originated in abrupt and unforeseen changes in economic circumstances.

5.6.1. Protected industrialization

A development strategy under which the industrial sector is very highly protected compared with agriculture has been typical, at least at some stage of development, of most countries in the region. The direct effects of this protection, however undertaken, are first to raise the profitability of manufacturing relative to agriculture, thus stimulating investment in manufacturing and drawing resources out of agriculture. Then prices of industrial inputs used by agriculture and locally manufactured consumer goods purchased by farmers are raised. Many countries are understandably reluctant to dismantle the protection typically accorded manufacturing, because they fear that this might halt the process of industrialization. But the situation has held back agricultural growth and overall economic development.

5.6.2. Exchange rates

Inappropriate exchange rate policies have also directly damaged agriculture. Over-valued currencies have been a disincentive to the production of agricultural exports and import-competing foodstuffs. They have been instrumental in establishing or encouraging patterns of consumption which tend to generate additional import demand and so detract from demand for domestically produced foods. The correction of an exchange rate by a shift in the direction of the value likely to be set by a free exchange market has been often difficult, politically and administratively. This is primarily because distribution of income within a country is changed. Uncertainties may be created. The effectiveness of a devaluation will be undermined if it causes irresistible pressures on domestic price levels; the change in the nominal rate will not be reflected in relative sectoral prices, i.e. in the actual exchange rate within the economy. Within agriculture, the effects of an exchange rate change must not be offset by institutional arrangements which introduce a wedge between external and internal prices, such as a price-setting mechanism that does not allow local prices to reflect export parities. The influence of high cost marketing parastatals has at times caused agricultural producers to be worse off after a currency devaluation than before. For producer prices to improve as a result of an exchange rate change it is usually necessary to create an effective incentive by attention to other influences on output as well.

5.6.3. Fiscal policy

The raising of government revenue by taxes on agricultural export commodities is a traditional fiscal instrument used in many countries in Asia. At early stages of development, the paucity of alternative sources of revenue and the administrative ease of collecting levies on exports made this choice virtually inevitable. Such taxes, however, have distorted producer prices. In a number of instances, the taxes have been very heavy and they have sometimes become the income of monopolistic marketing bodies. Economic development makes other sources of revenue available, and decreases the share of total revenue obtained by taxes on agricultural commodities, but governments have been reluctant to abolish these taxes. It is of considerable interest to the agricultural sector to have commodity taxes quickly replaced by some other means of collecting agriculture’s contribution to government revenues.

Budget deficits have also affected agriculture adversely. Financing the deficit usually adds to inflationary pressures which raise the general level of costs in the country. Prices of agricultural products, however, which are open to both international market influence and to government interventions designed to check rises in food prices, have been prevented from sharing fully in the general inflationary rise.

Sadly, at present there appear to be few major changes to macroeconomic policies that can specifically bring about positive shifts towards sustainable agriculture.

Governments have generally appeared unwilling to use pricing policies and taxation for environmental policy. A recent review of such policies in seven countries in the region showed no notable movement towards change. Several countries had adopted a more liberal trade policy, accompanied by a general lowering of tariff rates, but there was little indication of the specific impact of such policies, except in the case of the fisheries sector in the Philippines.

Countries require well chosen macroeconomic policies adapted to particular country circumstances, for the good of the national economy and not simply to benefit one of its sectors. There is a clear need to reduce inconsistencies which have existed between macro-and sector policies and to avoid serious distortions in price relationships and resource flows. It is evident that macro-policies, such as exchange rates, sectoral protection and fiscal policy, should be subject to ongoing and rigorous analysis and monitoring of their potential effects and their implications for agriculture. Since agriculture tends to be the victim, even if accidentally, rather than the beneficiary of some macro-policies, its own sectoral economic institutions should develop the technical competence to make authoritative analyses of the effects of actual or proposed macro-policies on the sector.

5.6.4. Sectoral policies following macroeconomic and structural reforms

A number of market-orientated Asian countries, such as Bangladesh, Indonesia and the Philippines, have already established a macroeconomic policy framework orientated towards growth, in the course of implementing programmes of stabilization and structural adjustment. They have now moved on to sectoral reforms. Macroeconomic policy reforms cannot be fully effective in improving efficiency and unleashing the farmers’ production potential unless sectoral constraints on growth are also tackled. A comprehensive package of agricultural sectoral policy reforms generally consists of the withdrawal of input subsidies, the dismantling of expensive public food-distribution systems and the removal of subsidized credit and protective tariffs as well as other barriers. It entails freeing import restrictions, encouraging private sector participation and investing in distribution systems and the removal of subsidized credit and protective tariffs as well as other barriers. It also loosens import restrictions, and encourages private sector participation and investment in infrastructure to promote the efficient operation of market mechanisms.

It is not easy to design equitable agriculture sector policies, aimed at efficiency. Changes to sector policy have different effects on the various sections of society; policy makers have to take that into account, and they also have to deal with diverse coalitions and interest groups who react differently to policy changes. These reforms are therefore being carried out selectively and in sequence, with due consideration being given to the socio-political realities of the countries concerned. For example, in some cases fertilizer subsidies have been gradually reduced (in India and Indonesia) while an active public sector role has been maintained in foodgrain procurement, distribution and buffer stock management.

To sum up, productivity is and will remain the engine of growth in food production in Asian countries. But for productivity to prosper, policymakers will have to give more attention to the effects of trade and macroeconomic policies on incentives in agriculture and rural areas. Farmers and rural people in developing countries respond to economic incentives in much the same ways as their counterparts in industry and services in urban areas. Their response is even stronger if price reforms are complemented by investments in public goods, especially agricultural research and development, and rural infrastructure.

5.7. Options for the future: the development dimension

Sustainable agricultural development depends on a complex interaction among demographic pressures, poverty and environmental conditions. Sustainable development requires prudent management and conservation of the natural resource base. Also, technological and institutional changes need to be directed towards the attainment and continued satisfaction of human needs for present and future generations. In the agricultural sector, land and water, plant and animal genetic resources should be conserved. In the Asia and Pacific region, concerns for sustainable agricultural development reflect the increasing scarcities of land, water, energy and other environmental resources. The demographic pressures and constraints of land resources in many countries in the region have forced agricultural development strategies to emphasize the extension of irrigation, the adoption of high yielding varieties of cereal and other crops, and the increased use of fertilizers and pesticides. Such strategies have definitely helped in increasing agricultural production, especially food grains production, through increased productivity per unit of land.

However, it is now clear that this process cannot be sustained any longer unless there is effective action for maintaining ecological stability. It is increasingly realized that the fluctuations in agricultural production experienced periodically in many Asian countries due to natural calamities such as floods and droughts are, in turn, caused by factors such as deforestation and lack of appropriate measures for soil and water conservation. Growing population, limited land resources and the consequent incidence of poverty are seen as major causes of deforestation. Therefore it is necessary to evolve an agricultural development strategy that is less land-intensive and ensures environmentally sound land use, including the implementation of afforestation programmes.

Small and marginal farmers who are handicapped by lack of irrigation, poor soil conditions and an inadequate resource base have to be encouraged and assisted to take up other activities such as animal husbandry and fishing so that their dependence on crop production, and hence on land resources, is reduced. This implies that greater attention has to be given to creating the requisite institutional and other rural infrastructure for promoting such activities. On the other hand, farmers who are engaged in crop production have to be motivated to adopt practices that will ensure the use of land and water resources in a suitable manner. The agricultural research system has the capacity to evolve technologies and practices to overcome the various constraints confronting sustainable agricultural development. The much more difficult task, however, is to formulate appropriate policies and also to create the necessary institutional framework that will make the farmers realize the social scarcity of vital natural resources and adopt new methods to conserve them.

There is considerable scope for increasing agricultural production in the developing Asia with HYV and other technologies. But, it is important to recognize the agro-ecological and socio-economic problems that will confront efforts to double food and agricultural production. During the past three decades, agricultural production has been associated with a high rate of deforestation in several countries, with a growing concern for land and environmental degradation, and with a widening realization of the need for greater equity in income distribution. Biotechnology can be helpful in meeting the challenges of accelerated and sustained growth in crop and animal production in particular, and agriculture in general, in the developing Asia, but they should be used as an adjunct to provide new tools to solve problems, and should not replace conventional approaches.

Biotechnology, in combination with high yielding varieties (HYV) and other tested technologies, has demonstrated the achievement of the following:

Therefore there is need to give extra investment support to biotechnology, particularly the use of in vitro culture for micropropagation. This technique is ideally suited to developing countries and to promoting the genetic improvement of poor-person crops such as roots and tubers, coarse grains, pulses, etc., which are often neglected in the industrialized countries. Improvement of these crops and commodities will considerably improve the nutrition and the income of resource-poor people. Through redesign, it should be possible to create a cafeteria of crops and varieties that could be grown in marginal conditions, such as rainfed and saline tracts, and to introduce new crop rotations for judicious exploitation of soil and water resources.

Over the past 30 years, FAO has played a leading role in promoting integrated pest management (IPM) as a scientifically sound, economically justifiable and environmentally desirable approach to pest control in agriculture. In spite of the effort put in, and the many successes directly or indirect attributed to FAO’s leadership in this field, there remains much to be done to incorporate the practice of IPM into the core programmes of the plant protection and extension services of the developing countries in the region. This is becoming more urgent as agriculture intensifies to meet the growing demands of rapidly increasing population.

Policies intended to increase compatibility of growth, sustainability, and poverty alleviation of developing countries in the region should be considered in the context of the goals and priorities of each country. They should be able to function within fiscal constraints, to substantially raise agricultural productivity and output, to reduce degradation in areas with high potential (bread baskets), and to mitigate severe degradation in areas with low potential, or relocate populations, or both. For growth and sustainability, policymakers and researchers should take into consideration the rural households who are the key actors. Therefore, sustainability and productivity investments must be affordable and attractive to households and villages.

Farm-level investments can be divided into four groups: productivity, sustainability, productivity and sustainability, and productivity and resource degradation. These four have different time frames for returns, and require different levels of household resources (particularly labour) to effect the investments. The critical mass of resources needed to effect each investment needs to be defined, and so do the potential negative and positive externalities.

It is in each country’s interest to persuade its farmers to adopt overlapping technologies and investments; that is, those that meet both productivity and sustainability goals. Farmers should be steered away from productivity investments and land use practices that harm sustainability unless they combine them with investments in conservation. Some agricultural research supports investment in sustainability. In the case of zones with low productivity potential this research includes: modestly more productive technologies; conservation of soil and bush cover; and the finding of alternate employment. In the case of areas with high potential, the topics include Green Revolution technologies to realize growth potential, and complementary soil conservation investments to ensure the foundation for future growth.

In conclusion, appropriate macro-and sectoral policies are needed, to make agriculture profitable and to stabilize the profits. To formulate these macro-and sectoral policies, the various subsectoral policies, such as credit, marketing complementary public investments, etc., should be evaluated to see if they meet the needs of the vastly changed agro-economic environment. Also, public policies relating to the pricing of agricultural inputs such as water, fertilizer, electricity, etc., have to be used in such a way as to prevent environmental degradation arising out of wasteful uses of these inputs.

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