Widespread use of the technology together with intensive or high input cultivation has resulted in a rapid increase in yields of major crops and in lowering production cost.

G. Chandrashekhar

Global agricultural commodity markets are simply huge. Look at the production numbers: Cereals over 2,000 million tonnes; oilseeds nearly 400 million tonnes; sugar 140 million tonnes; cotton 26 million tonnes (150 million bales) and so on. On the other hand, the Earth is home to over six billion people who have to be fed. Agricultural crops have to be processed to make them fit for human consumption. This has spawned a large food-processing sector.

Feed for livestock and poultry is another major outlet. Differences in natural endowments across regions, level of investment, infusion of modern practices, policy support and varying emphasis on agriculture across regions, all impact the nature, type and quantum of agricultural crop production. Availability of land, water and sunlight are critical for farm promotion. Population size, income levels and consumption habits determine demand for agricultural commodities. No wonder, there are regional and seasonal variations in production.

Harvesting crops

While countries in the tropics are able to harvest two crops a year (due to abundant sunlight — most crops are photo-sensitive), those in the temperate zone are often able to harvest only one crop because of limited availability of sunlight. Regional and seasonal variations in production, on the one hand, and year-long consumption, on the other, as also surpluses in one region and shortages in another, have resulted in goods moving from one place to the other leading to world trade in agricultural commodities.

Farm fears

In recent years, the growth rates of world agricultural production and crop yields have slowed. This has raised fears that the world may not be able to grow enough food and other commodities to ensure that future populations are adequately fed. However, the slowdown has occurred not because of shortage of land or water, but because the demand for agricultural products has also slowed. The world population growth rates have been declining since the late 1960s and fairly high levels of food consumption per person are now being reached in many countries, beyond which further rises will be limited, according to Food and Agriculture Organisation (FAO). However, it is also the case that a high share of the world’s population remains in absolute poverty and, therefore, lacks the necessary income to translate its needs into effective demand. A more recent phenomenon is the growing importance of Asia in food production and consumption.

Impacting trade

While the industrialised nations have traditionally been large producers, consumers and exporters of food crops, in recent years Asia has begun to play an important role both as a producer and consumer of farm commodities. China and, more recently, India have begun to register robust rates of GDP growth. The population of the two countries together (2.4 billion) represents close to 40 per cent of the humanity. These two countries are also large producers and consumers of a host of farm goods. So, Asia is now emerging as a major producer and consumer of a wide variety of agricultural commodities and is in a position to impact world trade.

Global output drivers

Over the last ten years or so, technology and subsidy have turned out to be two major drivers of world output growth. Yet, there have been concerns relating to tightening food supplies. Agricultural biotechnology (also known as genetic-engineering technology) is driving output of crops such as soyabean, corn and cotton up, especially in the US and other countries. Biotechnology offers promise as a means of improving food security and reducing pressures on the environment, provided the perceived environmental threats from biotechnology itself are addressed.

Genetically modified (GM) crop varieties could help to sustain farming in marginal areas and to restore degraded lands to production. Although considerable research to develop more GM crops is currently under way, all commercially-grown GM crops now are either non-food crops (cotton) or are heavily used in animal feeds (soya bean, corn/maize).

Widespread use of the technology together with intensive or high input cultivation has resulted in a rapid increase in yields of major crops in major origins. It has also contributed to lowering production cost. For developing countries where conventional approaches have failed, the technology may deliver solutions.

(This article was published in the Business Line print edition dated November 11, 2007)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.