By Sumarbin Umdor
The Government of Meghalaya has identified 22 focus sectors and sub-sectors that relate to agriculture and allied activities as part of the post coronavirus economic revival strategy. Considering that a large segment of population is dependent on agriculture, the focus given to this sector to revive the Covid-19 battered economy is an approach that aligns with the views advocated by the American agricultural economist John W. Mellow. This column discusses the ‘‘two big ideas” put forward by Mellor in his 2018 book titled ‘Agriculture Development and Economic Transformation- Promoting Growth and Poverty Reduction’, and moreover attempts to situate his central arguments in the context of the agricultural sector and the larger economy of Meghalaya.
John Mellow, who is in his nineties and currently Professor Emeritus in Cornell University, is widely known for his research in the area of agriculture development and economic transformation of developing countries. He was with Cornell University for 23 years as Professor of Agricultural Economics and Asian Studies. He was also the founding director of the International Food Policy Research Institute (IFPRI), a position that he held from 1977 to 1990, besides numerous consulting assignments advising governments and aid agencies in Africa and Asia. Mellor first came into prominence with his seminal paper titled ‘The Role of Agriculture in Economic Development’ published in 1961 in the prestigious journal American Economic Review, followed by the 1976 book titled ‘The Economics of Agricultural Development’.
The Two Big Ideas: The first big idea advanced by Mellor in his book is that “The rapid growth of small commercial farmers dominated agriculture accelerates the economic transformation and is essential to the rapid decline in dominantly rural poverty.” He argues that small commercial farmers (SCFs) are the key engines for modernization of agriculture as they constitute a group with sufficient land large enough to adopt new technologies and produce significant market surpluses but small and numerous enough to have spending patterns that drive a vibrant rural non-farm sector. Also, unlike large commercial farmers who spend mostly on urban and imported capital intensive goods generating few growth multipliers in the local area, the expenditure of SCFs are mostly on labour intensive, non-tradable, rural non-farm goods and services supplied by rural poor which facilitate the development of smaller towns and cities in the local area.
His second big idea is that “Government has a prominent role if small commercial farmer dominated agriculture is to grow rapidly.” Here, Mellor strongly advocates for a prominent role for government and public sector in developing economies in modernisation of agriculture through the provisioning of public goods such as rural roads, electricity, education, communication, irrigation, and the development of institutional capacity for famer centric collaborative research and extension.
Structural Transformation in Meghalaya: Agriculture in Meghalaya and other upland regions of the northeast is undergoing change from a largely subsistence farming to what economists called the first stage of a transformational role in the economy beginning when agricultural labour productivity starts to increase (Timmer, 1998). Over the years, while we are seeing a steady decline in the contribution of agriculture to the GDP of Meghalaya (25 % in 2017-18), more than half of rural households (52 %) continue to be dependent on this source as their main income. This has created a serious structural imbalance in the economy mainly due to the failure of non-agricultural sectors particularly manufacturing to create opportunity for agricultural labour force. While there has been a lot of policy focus and corresponding resource flow from central and state governments to manufacturing sector in the region, agricultural sector has not had the attention that it deserves considering its predominance in the livelihood of the people of the region (Souza & Ray, 2018).
Policy Implications of Mellor’s Big Ideas: Small and marginal farmers with less than 2 hectares of land constitute about 79 % of all farmers in Meghalaya and account for 45 % of total land holdings and they form the main focus groups for development interventions of central and state governments. Mellor advocates for a shift in the approach by making the SCFs as core target group for agriculture modernization as they are more dynamic in adopting yield increasing agricultural technologies and also faces less of the many soft farming constraints (including small land holding, market access and information, financial capital, etc.) compared to majority subsistence farmers. In Meghalaya, the SCFs (small medium and medium group of farmers owning land between 2 to 10 hectares) constitute about 21 % of farmers but hold 54 % of farm land. Mellor’s policy calls for the concentration of government’s efforts and resources on this group of famers located in high potential areas.
For a resource poor state like Meghalaya, this strategy makes sense as public resources can be more intensely targeted at a smaller group of farmers located in agronomically favoured areas instead of being thinly spread over a large farmer population. Secondly, the landless and marginal farmers in the state will also benefit from this approach as income generated by the SCFs create open employment opportunities in the rural non- farm sector through development of small towns and trading centres in and around the high potential areas. This disperse urbanisation will be most welcome for Meghalaya which is seeing rural migration mainly to Shillong and Tura which together account for about three forth of urban population in the state. Mellor also points out that even population in poor resource areas stands to benefit from rapid employment growth in markets and town developed around agronomically-favoured areas, as less migration from these areas will then leave more city urban jobs for migrants from poor resource areas.
Mellor’s strongly advocates for key leadership role of government in terms of a clear national vision, strategy, and planning for ushering a transformed agriculture led growth backed by substantive public investment in rural and agricultural infrastructure and support for farmers in term of price policy, financial services and markets. In Meghalaya, the statistics for rural roads in 2017 convey a dismal picture as only about 30 per cent of the 14640 kms rural roads are surfaced. Additionally, the quality and maintenance of surfaced rural roads and the corruption associated with construction and maintenance of roads are major impediments which have to be tackled head on. Importance of public investment in agricultural infrastructure to stimulate the take-off of agricultural businesses has been clearly demonstrated in case of Bihar, where government’s effort in setting up of modern cold storages has had a favourable impacts on potato value chains with even small farmers benefitting in terms of higher price in harvest period (Minten, et al, 2014). Another area of public intervention which, according to Mellor, is critical to agriculture modernisation is a strong farmer connected research system and extension services in transforming agriculture in developing region to a commercial venture. However, this vital link is mostly absent in the state.
Poor infrastructure and institutional constraints coupled with low adoption of crop specific production technologies have prevented Meghalaya and the other states in the Northeast from realising the immense growth potential of agriculture. In Meghalaya, crop area expansion rather than productivity accounted for 76 percent of source of increase in value of crop output (Birthal, 2006). Similarly, in case of potato, which is the second most important food crop next to rice, we find that the yield per hectare is only about 40 % of all India average. The above points to the immense potential for increasing agricultural growth and farmer income in the state by improving the yield of key crops and providing the necessary post harvest support.
In conclusion, the approach advocated by Mellor is certainly not without contestation. However, it does provide the state government with a theoretical framework within which its sectoral and sub-sectoral strategies for agriculture growth can be conceptualised and strategized for the economic transformation of the state.
(The writer teaches Economics in NEHU and can be reached at [email protected])