The imminent position of the agricultural sector in this faster and inclusive growth paradigm has three key elements: a growth rate pegged at around 4 per cent, agri-product export growth at 10 per cent and, consequent to rapid urbanization, a faster pace of change in the food consumption basket. Clear understanding of the desirability and feasibility of these growth rates is critical for their implications on the smallholder driven, commodity producing sector.

Growth rate dilemma
The 4 per cent growth rate in agriculture and allied sector activities is aptly disaggregated into demand and supply side intervention in the Eleventh Plan approach. However, a back-to-basics view shows that production growth is determined by growth in cropped area and yield, limited by biological principles and natural resources.

When the crop production growth rate is given, its validity can be checked using area and yield information. With the real limitation of area growth during the Eleventh Plan period, due to exponential growth in the number of special economic zones (SEZ), it leaves yield growth rate; namely the productivity question. Thus, the onus on attaining 4 per cent growth in agriculture and allied production activities certainly falls on obtained or expected values of yield rates.

Smallholder friendly focus
Smallholder agriculture in the country has comparative advantage centred around the smallholder farming community. This advantage is available to the state agencies as well as to all those associated with the agribusiness sector.

The three primary issues with special reference to a state or region could be categorized as follows: exploring the matrix of agriculture (crop husbandry), livestock and environment (including horticultural and non-timber forest products); changes in the rural economic environment and the identification of various segments of farmers in a state/region who will be impacted.

The common thread has been that scientists are attempting to provide specific instances to reconnect the science with farmers in the field on the one hand and agricultural department officials on the other. The criticality of budgetary funds into the agricultural sector, to specifically address the knowledge deficiency in a sustainable manner, has been underscored.

Region specific cost-risk-return trinity
Primary production activities in rural areas generally address a micro level, cost-risk-return trinity. The growth in the number of SEZs to enhance industrial activities may result in more agricultural land being taken out of cultivation leaving yield as the only answer. This is the key constraint identified in the supply side of the Eleventh Plan approach.

Another related, and critical, component is technological intervention. That technology is typically non-linear and lends itself to price and income substitutions in smallholder dominated agriculture once again has attained importance. There is an urgent need to devise a mechanism to encourage agricultural scientists to pro-actively consider the region-specific optimization framework within the cost-risk-return trinity constraints.

The quality and quantum of land and water are dominant concerns for all states. With the deepening of the water table, the quality of water is bound to influence crop sequencing and output. Therefore, the diversification agenda for micro-level planning must factor the health of soil and water quality into the main investment plan.

The great disconnect between the scientific fraternity and farmers fields will be addressed through extension activities, though agricultural extension represents a meagre 4.7 per cent of the total central annual plan outlay for 2006-2007. Besides, the proposition of attaining 10 per cent growth in agri-product exports will raise critical questions on quality and globally valid certification systems. The compliance cost burden in the smallholder dominated system must be borne by public agencies to provide the required cost advantage.

Finally, environmental and net returns trade-offs need to be examined within the diversification discourse. It must be appreciated that market price is not the sole or best objective 'marker' for diversification. The key issue must be to incorporate corrections to environmental aberration in the cropped area through policy instruments, particularly in agriculture. Clarity in such areas will greatly aid our efforts to reach the 4 per cent growth target.

Written by Prof. J. George, Chief Promoter, Strategic Economic Management Initiatives in Governance and Chair, Faculty of Economics and Development Planning, HIPA and Member of a Working Group set up by the Planning Commission for the Eleventh Five-Year Plan preparation.

(References available upon request)