BUSINESS

No free lunches in India

By Sunita Narain
July 04, 2006 14:09 IST

People who matter in this country have a simple enough formula for life and liberty. We should open up the market, create opportunity for the organised industry, mix and stir, and then the work will be done.

They will tell you that this will mean taking risks. If you object, you will be told that you are archaic, or worse still, a communist, who wants to perpetuate poverty in the country.

I say this in a fortnight when the government is faced with a price rise of food commodities and decides to open the doors to import by private players. We will export high-value services and goods, even horticulture, floriculture and import what is cheap on the world market. Farmers will adjust.

But other countries have found that this participation in trade comes at a huge cost. Our stakes are high. We have a huge number of people engaged in agriculture. If this economy is destroyed, rural poverty increases and the pressure on urban areas will go up.

Eighty per cent of Latin America lives in cities or sprawling urban slums. Africa is seeing staggering rates of migration from rural to urban areas, with implications on services in cities and growing violence and lawlessness.

Kenya, for instance, has emerged as a dynamic exporter of fresh vegetables to the European Union. This is clearly desirable. But the problem is that this trade has marginalised the smaller landowners.

In 1997, the bulk of the country's high-value horticulture exports were supplied by small farmers. Now, less than 18 per cent of the trade is in their hands. Instead, farms are leased or owned by major exporting companies, which can guarantee quality for the supermarkets of the rich world.

Remember the consolidation and concentration of power in the global sourcing and supply systems?

So what? Such companies will make our farmers more efficient players in the international trade, say the anti-contrarians. But this begs the question: Who will make whom more efficient? The fact is that global agriculture, against which our government would like to pit our farmers, is certainly not efficient.

The fact is that global agriculture survives today because of the huge and senseless subsidies that are poured in by rich governments of the rich world to keep their people happy.

On the other hand, farmers in our world get peanuts in the name of subsidy. The bogey of free power is a bogey. Farmers will tell you they pay for diesel to pump water. They will also tell you that they have invested to build their own infrastructure for agriculture. Over 60 per cent of cultivated area is irrigated with private groundwater systems. There is no subsidy. No lunch. Free or otherwise.

We need reform. We need to take risks. But not with others' money. Or others' lives.
Sunita Narain
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