The Hindu Business Line : Back to the farm sector

IT took the visit of the Prime Minister to shift the focus of the development agenda of the State, back to the basics - agriculture. Addressing the general body of the Kerala Pradesh Congress Committee in Thiruvananthapuram last week, Prime Minister Manmohan Singh promised to take "pragmatic, practical and tactical" steps to tackle the problems in Kerala's plantation sector, adding that he recognised that agriculture is the backbone of the economy. He said that he would, in consultation with the Chief Minister, work towards a solution to the plantation crisis.

That should be glad news for the hundreds of farmers in Kerala, most in the small-scale sector who are struggling with lowered prices for their crops and poor growth and productivity. The announcement also suggests a welcome midcourse correction in the trajectory of Kerala's development agenda.

Only a week earlier, the Kerala Cabinet had gave clearance for two proposed build-operate-and-transfer (BOT) projects - the deep-sea international transhipment terminal at Vizhinjam, near Thiruvananthapuram, and the Kochi metro rail network.

The terminal project is expected to cost Rs 4,360 crore, while the metro project would cost Rs 2,239 crore. These are the sort of projects that the Kerala Government has been chasing, especially after Mr Oommen Chandy took over as Chief Minister.

No doubt, it is important to pursue such big-time industrial ventures for they are the ones likely to attract upcountry investors. For the transhipment terminal project, for instance, 22 companies had initially expressed interest. However, finally, there were only two bids, including a joint one by three of the companies.

In the case of the Kochi metro project, the Delhi Metro Rail Corporation, whose Chairman is a Keralite, Mr E. Sreedharan, had recommended the BOT route. Bids for the project will be invited soon.

While making these announcements, the Chief Minister had said that the State Government would discuss the developmental problems of the State with the Prime Minister during his visit to the State. That has now happened and the Prime Minister, being an economist himself, had no doubt where the emphasis should lie.

As a major cash-crop-producing State, Kerala has been particularly hit by the post-1990s agenda of trade liberalisation adopted by the Union Government through its new and less restrictive import policies.

Even though Kerala's agricultural sector has recorded a growth rate of around 3 per cent in the recent past, it has been hamstrung by the steep fall in prices of most of the farm commodities.

The State Government estimates that about Rs 6,645 crore has been lost to the State's exchequer due to the fall in prices of major agricultural crops.

That has a direct impact on lives and livelihoods, for nearly half of the State's population depends upon agriculture in some way or the other. Kerala's agriculture sector is characterised by the predominance of cash crops, and the State is a major producer of coconut, rubber, pepper, cardamom, ginger, cocoa, cashew, arecanut, coffee and tea. Tree spices like nutmeg, cinnamon and cloves are also cultivated, while rice and tapioca are important food crops.

The agriculture sector in the State recorded an average growth rate of 3.6 per cent, against the target of 2.5 per cent. An official review of the long-term performance of the crop sector, over the last decade, shows that the total output from the sector has recorded an average annual growth of 2.5 per cent.

However, that growth rate has been more than offset by the fall in prices of cash crops. The impact has been especially striking since there has been a large-scale and significant shift from high-volume, low-value crops like tapioca and rice to low-volume, high-value crops such as pepper and rubber.

For the sake of Kerala's economy, therefore, let us hope that the promises of Mr Manmohan Singh will be kept and, more importantly, bear fruit in the State's agriculture sector.

The writer can be contacted at kgkumar@gmail.com

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