By 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.


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