The Hindu Business Line : Agriculture in strategic policy making

The productivity gains made in the last forty years can be the foundation for India's agriculture sector to be globally one of the best. If these gains are compounded, the country's exportable surplus in many commodities and products can give it immediate status as the world's largest exporter.

Why is agriculture important? Why does agriculture matter? Is it because there are many more rural voters than urban? That is a cynical view. Consider the alternative possibility that agriculture is of strategic significance.

Agriculture has a political connotation in the globalisation context and it is appropriate that it be given the pride of place in strategic policy making. The recent World Trade Organisation talks highlighted the political importance of the farm sector, as the excessive subsidies paid go sorely against the grain of a liberal global trading environment.

Defence and agriculture

Wars have been fought and won only when a country has had a significant agricultural economy and extremely high prowess in supply management. Whether it was Napoleon or Hitler, those who fought battles with overstretched or inadequate supply lines lost, irrespective of firepower or will.

Josef Stalin won the war in the East against the Nazis, in 1945, because of American grain and an excellent supply infrastructure, while William Slim won in Burma against the Japanese because India supplied the food, and soldiers, to keep the 14th Army going.

In the wars between India and Pakistan, all the major operations were launched only when the harvesting season was over; care was taken to avoid all damage to civilian facilities that would be used for agricultural purposes in the war areas and villages were evacuated so as to cause minimum damage to civilians, especially farmers.

Farm and realpolitik

The presence of a significant agricultural economy has provided countries with enormous clout to wage a cold war. Take the case of India and its treatment at the hands of Lyndon Johnson in the 1960s. A starving India went seeking temporary relief from the US, so as to alleviate food riots in the streets, only to be told by the President that no aid was possible unless India explicitly toed the American line in all policy.

Johnson clearly saw food as a political weapon to be used to bludgeon countries into subservience. He was more than willing to use it, and I am sure that this is what triggered the feverish pace of the Green Revolution.

`Jai Jawan, Jai Kisan' was the rallying cry that Lal Bahadur Shastri gave to stir the consciousness of a nation and India, has, since then, developed the capacity to withstand military or agricultural insults.

Role in economic history

The US got to where it is as a super-power only because of attention to agriculture after the Civil War. From 1865 onwards, as part of reconstruction and reconciliation, the mechanisation of agriculture in the vast land west of the Mississippi as well as of the antebellum south led to significant productivity gains as scale economies were realised by bringing the defeated South back into the national economic picture. The political equation changed.

In the latter years of the 19th Century, the establishment of land grant universities, many of which are now world-class establishments such as the University of California at Berkeley, the University of Minnesota at Minneapolis, and Cornell University, led to the institutionalisation of capability building.

The knowledge creation that took place because of the large sums invested in research and extension activities had such a profound effect on productivity that by the turn of the 20th Century the economic might of the US was well established.

The synergies between the developing agriculture sector and the then nascent manufacturing sector were profound. The railroads were developed to transport grain and other commodities over vast distances to markets in the East.

The learning that occurred on the financing and organisation of railroads was immediately transferred to the financing and organisation of sectors such as steel, chemicals and investment banking.

There were symbiotic relationships in the evolution of the agriculture sector, railroads, manufacturing industries and the financial services sector in 19th Century US, such that by the early 1900s, the US was an economic powerhouse. The trigger was agriculture.

The growth of the agriculture and manufacturing sectors in the US then led to the transfer of skills in establishing one of the world's largest defence industries. The Ford manufacturing plant at Willow Run, in Michigan, became one of the largest factories to produce the B-24 Liberator bombers, a type of aircraft operated by the Indian Air Force well into the late 1960s.

Contemporary relevance

In transforming the agriculture sector, in raising rural incomes, in making the intellectual connect between the semi-rural and the sub-urban lifestyles seamless and in making the agriculture sector add substantial national value, much is to be done.

Yet, not only are political gains possible by making the rural population participate in the national economic equation, but the connectivity between the agriculture, manufacturing, communications and financial sectors is profound.

Just as the US realised the benefits of connectivity by the early 20th Century, India can do so in the 21st Century. The benefits of this connectivity will have substantial consequences in defining the contours of global commerce.

Many smaller countries, in size or population, have established their national wealth primarily because of the agricultural sector. New Zealand earns vast sums of money through exploiting its position in the mutton, wool, butter and cheese trades.

Denmark earns vast sums through exploiting its position in the milk, butter, cheese, pork and ham trades. Argentina and Brazil earn vast sums of money through exploiting their abilities in the grain and beef trades.

Solid foundations

The productivity gains made in the last 40 years are the foundations for India's agriculture sector to be one of the best globally. If these gains are compounded, India's exportable surplus in many commodities and products can give it immediate status as the world's largest exporter.

Its exportable wheat surplus could dwarf that of a country such as Canada. Its exportable surplus of dairy products could well be larger than that of Australia, Denmark or New Zealand. To be able to do so means that the attention being paid currently to agriculture is hardly misplaced. In fact, agriculture has significant strategic consequences best examined today in the context of India's evolving global role.

(The author is Professor of Technology Strategy, University of Texas at Dallas. He can be contacted at majumdar@utdallas.edu)