Losses too can be profitable. E-retail shows the way.

This is baffling. The world's online retail business is growing leaps and bounds, and yet it is sinking in losses. But despite the losses, the business continues to grow. Although this strange new business phenomenon has upset the textbook definition of a business enterprise, no one is questioning. Economists are conspicuously quiet, and business leaders are turning the other way around.

That means losses can be profitable !

Well, don't blame me if I am saying something that doesn't exist in Economics 201 textbook. The fact is that the world's biggest e-retail giant Amazon has only last week posted its financial results for the US market. For the third quarter ending September 2014, it posted a 'gigantic' $544 million losses. And Amazon has already announced that the losses will continue for the fourth quarter also. In India, "our own e-commerce outfits are just through with our own holiday season, and they have turned up no surprises. They're not publicly listed so we don't know the numbers, but one can safely say that they would have lost huge sums of money because that's what they intended to do. Each one of them is making large losses and they all routinely go and get fresh rounds of money from venture funds or, as in Amazon's case, from a parent company." (No surprise: The plot thickens in country's e-retail story. Hindustan Times. http://bit.ly/1wD9AHT).

As per the latest balance sheet, Flipkart has accumulated losses of Rs 281-crore.

I tried to look deeper. Amazon, the world's biggest e-retail giant has been in business for some 20 years and has never made money. This means that losses are not only profitable, but are also sustainable. In a 3-part series International Business Times did look at various business practices being adopted by Amazon. I am particularly sharing this chart which tells you that while the revenues have continued to skyrocket, the net profit has remained more or less static thereby bringing in huge losses. How can any business remain business in such a depressing scenario? Well, certainly the plot thickens.

This chart gives you Amazon.com's revenue and profits between 2004-2014. 

Source: International Business Times

http://www.ibtimes.com/amazon-nearly-20-years-business-it-still-doesnt-make-money-investors-dont-seem-care-1513368

I asked economists and economic writers about this strange phenomenon. Everyone I asked told me it is a bubble that will soon burst. Some say that Amazon is surviving because the venture capitalists are funding it. The same holds true for Flipkart and Snapdeal. But this too defies any economic logic. Why should venture capitalists be funding a losing business enterprise? After all, no one has money to throw.

I am not sure about the future of Flipkart or Snapdeal, but the fact remains that if Amazon could survive with losses for nearly 20 years now, I see no reason why its Indian versions would not succeed. And if Flipkart also continues to be in business for even half the period that Amazon has been, and that too with huge losses year after year, it shows that the new business model successfully crafted by Amazon goes beyond what the likes of Adam Smith, John Maynard Keynes and the tribe could have ever imagined.

It's time therefore to rethink the very concept of business. Business is not only about profits, a loss too is an asset. If this is true, it challenges the popular perception of what constitutes a successful business. In other words, if Amazon can demonstrate that losses are profitable and that too for 20 years, why shouldn't the other business follow the trend? Why do traditional businesses go bankrupt while e-retail continues to grow and expand? Have economists been hiding the real truth from us all these years? Whatever be it, the plot only thickens with every passing day. #

Importing food when there is no shortfall in production. It only destroys farm livelihoods.

Potato dumped on the streets in Punjab. Not an unusual sight. -- Tribune photo

There has hardly been a year in memory when farmers have not thrown potato on the streets in protest against low prices. And yet, the government has allowed import of potato for the first time ever. While the official explanation is that the imports are to augment the domestic supplies and curb inflation, the fact remains that production of potato has been almost normal this year with an insignificant shortfall by a mere 2.3 per cent.

While the Ministry of Agriculture has directed Nafed to float tenders to ensure shipments reach by the end of November, potato crop from Punjab is expected to hit the market by the middle of November. The domestic market would be flooded by time the imports come in and I wouldn’t be surprised if farmers are once again forced to dump cartloads of potatoes on the highways. I therefore don’t understand the economic rationale of allowing the import of potato when there is hardly any drop in production. Experts say the Kharif crop has been good, and the winter crop that is expected in mid-November onwards is also expected to be normal. India is the third biggest producer of potato after China and Russia.

But then, under pressure from a strong lobby of economists, food inflation is coming in as a handy excuse to open up the Indian market for import of fruits, vegetables and milk products. This is exactly what European Union is demanding under ongoing negotiations of the bilateral Indo-European Union Free Trade Agreement.

The domestic potato chip, fries and flake industry is now pressing for removal of the 30 per cent import duty on potato to make the imports cheaper. Since Pakistan is not in a position to supply potato this year, and had resorted to duty-free potato imports continuously from India from March onwards with some 3,000 trucks crossing over daily from Wagah border, potato imports into India are expected mainly from Europe and Australia. The Economic Coordination Committee of Pakistan Cabinet has reportedly approved the duty-free imports of potato from India till Nov 15.

Potato is not the only victim of an ad hoc import-export policy. On a visit to a food processing unit in Sonepat district in Haryana, I was shocked when I was told that tomato paste is being imported in large quantities from China at a time when farmers were forced to throw tomatoes onto the streets for want of buyers. When food inflation was at its peak, reports of dumping of tomatoes by farmers had poured in from several parts of the country, including Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Karnataka and Andhra Pradesh.

With tomato prices crashing to Rs 2 (and at several places to Re 1 per kg) farmers had no choice but to feed it to cattle or to throw it away. Just in one month, between Aug 28, 2014 and Sept 28, 2014, India imported US $ 376,009 worth of dried tomato and tomato products (like paste, pulp and juice concentrate) from China, followed by US $ 94,057 worth of imports from Nepal, and US $ 44,160 from the Netherlands.

Not many know that the popular brands of tomato ketchup, tomato puree and even tomato juices that we consume at home are made from tomatoes imported from China, Nepal, Italy, USA and the Netherlands. In other words, we are inadvertently helping tomato farmers of the countries from where we import while our own farmers are left to die. The food processing industry obviously justifies the imports but what remains unexplained is if the objective of the industry is to source cheaper products from abroad why does the Ministry of Food Processing claim that agro-processing is a boon to Indian farmers?

Take the case of pasta. While huge quantities of wheat rots in godowns, Indian import of pasta from Italy has been growing at a phenomenal rate of 39 per cent per year. Since pasta is made from wheat, I don’t understand why efforts should not be made to produce pasta within the country rather than importing it. India’s import market for pasta has grown in ten years from Rs 3.39 billion in 2003-04 to Rs 17.22 billion in 2013-14. And again, pasta attracts an import duty of 40 per cent, and it is expected the import tariff would be reduced to 20 per cent after the Indo-EU FTA comes into effect.

How irrational food imports destroy domestic production is evident from the way India deliberately encouraged edible oil imports at the cost of its millions of oilseed farmers. These were small holders in the dryland regions of the country for whom oilseeds was a cash crop. Their livelihood has been snatched for the sake of economic benefit to edible oil producers in Indonesia, Malaysia, Brazil and United States.

It is true that edible oil import bill has multiplied over the past three decades. For the year ending 2012 (edible oil year is from Nov 2011 to Oct 2012, for instance), the imports touched 9.01 million tonnes valued at Rs 56,295-crore. Between 2006-07 and 2011-12, edible oil imports have risen by a whopping 380 per cent. Former Agriculture Minister Sharad Pawar often used to stress on the need to increase oilseed production so as to reduce the edible oil imports.

But what was not being told was that India had attained near self-sufficiency in oilseeds production by 1994-95, importing only 3 per cent of its edible oil requirements. After 1994-95, the import tariffs were brought down systematically as a result of which the imports grew. Against a provision of 300 per cent import duties, India allows zero tariffs at resent. Imports are now more than 50 per cent of the domestic requirement. So much so, that after having destroyed its own Yellow Revolution, a strong lobby of economists has been battling for encouraging cultivation of  environmentally-destructive palm oil plantations.

Worldwatch Institute has shown how palm oil monoculture adds to desertification, and also exacerbates global warming by releasing 10 times more carbon dioxide into the atmosphere than tropical forests. Unmindful of the ecological damage, Ministry of Agriculture plans to bring in 1.03 million hectares of forests – mainly by cutting down lush green  forests in Mizoram, Tripura, Assam, Kerala, Andhra Pradesh and Karnataka – and growing palm oil plantation to produce about four to five tonnes of edible oil. The economic rationale is beyond my comprehension. First destroy the oilseed producers, and then cut down forests to produce edible oils. A remarkable model of development indeed ! #

1. Helping imports, hurting farmers. Orissa Post. Oct 22, 2014
http://www.orissapost.com/epaper/221014/p8.htm

2. Sourcing local farm produce rather than imported concentrate.
http://chssachetan.wordpress.com/2014/10/28/sharma-source-local-farm-produce-for-processing-rather-than-imported-concentrate/

3. No rationale behind potato imports. Hindustan Times, Chandigarh. Oct 26, 2014
http://read.ht/kYm

4. आयात का औचित्य Dainik Jagran, Oct 25, 2014
http://www.jagran.com/editorial/apnibaat-justification-of-import-11724002.html

British agriculture is headed for a doom. Time to shed the false pride and learn sustainable farming from India.

British agriculture has to undergo a radical transformation if it has to survive. 

Pic by Telegraph

Some years back I was at a dinner meeting hosted by the then British Secretary of State for International Development, Hilary Benn, in London. Among those present were a select group of leaders of charities and people’s organisations working on sustainable agriculture, biodiversity, environment and worker rights. The discussion was broadly on how Britain could extend help to developing countries in promoting sustainable agriculture and food security.

After the first round of discussions, Hilary Benn turned to me. Being the only outsider at the meeting, he asked me how I perceive Britain’s role in promoting sustainable agriculture in developing countries. In a sense the question related to my expectations from the DFID, the department responsible for promoting development and the reduction of poverty. If I recall correctly, I replied: “I don’t understand how UK can help India in promoting sustainable agriculture. Your own agriculture being ecologically and environmentally devastated, please tell me how is DFID qualified enough to teach us sustainable agriculture?” 

It took some moments for Hilary Benn to understand the implications of what I was trying to say. He quipped: “Well, I get your point. In that case what do you expect British DFID to do?” My answer was simple. I told him that aid should be a two way channel. Instead of imposing the British development agenda, it was time DFID invited some farmers from India and make them go around the country educating farmers and educationists and thereby create awareness about the importance and need for sustainable farming practices. 

As you would have guessed my suggestion never received a second thought. But if Hilary Benn, and also some of the agricultural experts present at the dinner, had actually ignored the national pride tag that they were wearing on their sleeves and launched a serious effort to resurrect British agriculture, the doomsday warning could have been easily averted. A study by the University of Sheffield warns of a serious 'agricultural crisis' unless dramatic action is taken. (Britain has only 100 harvest left .. http://ind.pn/1ySqLt9)

The Sheffield study only establishes what I have been saying for long. British agriculture is one of the most intensively farmed, and of course one of the most devastated. With cultivated soil turning infertile, researchers found that soils in urban parks and kitchen gardens were much healthier. "Allotment soil had 32% more organic carbon, 36% higher carbon to nitrogen ratios, 25% higher nitrogen and was significantly less compacted."  

Britain, like many other countries, is encouraging people to farm in the available urban places. Citizens are allowed to apply for allotment plots -- small patches in urban centres where they can grow food for themselves and their families. Currently there is a waiting list of 90,000 people wanting allotment plots. Interestingly, unlike the corporate farms,  the small scale producers know the importance of maintaining soil health and therefore tend the gardens to maintain an ecological balance. With the rural landscape turning unhealthy, the hope now rests on the urban farming. 

But peri-urban agriculture may not be enough. Britain will sooner or later have to revert back to restoring its soil health. It is therefore high time that Britain sheds its false pride in agricultural superiority, and learns from countries which have shown an agro-ecological pathway. It's time DFID becomes a channel to draw from the expertise of ecological farmers from countries like India. There is nothing to feel ashamed. If only Hilary Benn had seen the merit in my argument, perhaps we could have identified a group of smart farmers from India who could have helped British agriculture to regenerate. It isn't too late even now. 

Further reading: Climate change provides the right opportunity to reorient agriculture..

http://devinder-sharma.blogspot.in/2014/09/climate-change-provides-right.html

No pesticides, No Bt, No Pests

http://indiatogether.org/punukula-op-ed

While Indian farmers are forced to dump tomatoes in the streets, Indian food processing industry merrily imports cheaper tomato paste from China

Not able to get the right price for tomatoes, farmers often resort to throwing away the produce -- The Hindu pic

Some decades back, soon after the Ministry of Food Processing was set up in prime Minister Rajiv Gandhi's tenure, I was speaking at the M S Swaminathan Foundation in Chennai. While most speakers were busy hyping the importance of food processing in reducing food wastage, which I am not in disagreement, I stressed on the need to ensure that the nascent food industry focuses more on sourcing local farm produce in processing rather than importing the food concentrate. Illustrating the point I made, I gave an example of the orange juice being made available in tetra-packs.

At that time, I remember one of the popular orange juice brands had it written on the tetra-pack: "Made from freshly picked up oranges from California."

I am sure you will agree that if the orange concentrate is to be imported from California, all the talk of reducing food wastage becomes meaningless. Soon after my viewpoint was carried prominently by the media, the processing house at least dropped this sentence from their juice cartons.

Yesterday, on a visit to a food processing unit in Sonepat district in Haryana, I was shocked when I was told that tomato paste is being imported in large quantities from China. In fact, most of the big brands of tomato ketchup and tomato puree are using imported paste and pulp from China. This is happening at a time when farmers are repeatedly being forced to throw tomatoes onto the streets for want of buyers. This year too, when food inflation was at its peak, reports of dumping of tomatoes by farmers had poured in from several parts of the country, including Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Karnataka and Andhra Pradesh.

With tomato prices crashing to Rs 2 (and at several places to Re 1 per kg) farmers had no choice but to feed it to cattle or to throw it away.

This was happening at a time when the tomato processing industry was merrily importing tomato paste and up mainly from China. While politicians, TV commentators, editorial writers stressed on the need to strengthen food processing, not many know that the existing tomato processing industry was relaying heavily on cheaper import of pulp and paste. This is not the first year for such imports, a review of reports on Google showed that such imports are continuing over the years.

Not many know that the popular brands of tomato ketchup, tomato puree and even tomato juices that we consume at home are made from tomatoes imported from China, Nepal, Italy, USA and the Netherlands. In other words, we are inadvertently helping tomato farmers of the countries from where we import while our own farmers are left to die.

Just in one month, between Aug 28, 2014 and Sept 28, 2014, India imported US $ 376,009 worth of dried tomato and tomato products (like paste, pulp and juice concentrate) from China, followed by US $ 94,057 worth of imports from Nepal, and US $ 44,160 from the Netherlands. Some more research, and I find that in 2010 when traders were eyeing the market opportunities in Pakistan arising from devastating floods, the Indian processing industry was busy importing tomato paste from China. A news report in the Economic Times (Oct 20, 2010) quoted Pradeep Chordia, managing director Chordia Food Products Ltd saying: "We can't afford the high local prices so we imported 80 per cent of our requirement of tomato paste from China this year."

Another food processor, Akshay Bector of the Ludhian-based Rs 400-crore Cremica Group said: "There is a cost advantage in buying from China versus India where prices fluctuate." This company supplies to McDonalds, Taj Group, ITC Group, Jet Airways, Indian Airlines, and chains such as Barista, Cafe Coffee Day, Pizza Hut, Domino and Papa John's.

Go back a little more, and you find a lot of Indian companies importing tomato paste way back in 2005, and even before. No wonder, tomato farmers in India have been at a great disadvantage for several years now, if not decades.

I therefore have three suggestions:

1. Ministry of Food Processing should encourage food processors to mention on the label the place from where the raw material is being sourced. Traceability is now an important trade issue.

2. It should be made mandatory for the food processing units to source the raw material that is available in India, from domestic sources. This is the only way to develop the back-end infrastructure that will help reduce farm wastage.

3. A minimum support prices should be announced for tomato which should serve as a floor price for the markets.

Climate change provides the right opportunity to reorient agriculture. Stanford study on integrated farming in China shows the way forward.

With farmers quitting agriculture, farm suicides becoming a global phenomenon, I sometimes wonder why intensive agriculture is not being replaced with safer agro-ecological methods of farming, which are sustainable in the long run and economically viable. The moment I mention this, I face a strong wall of opposition. “This is like romanticizing agriculture,” I am often told. “In the absence of technological progress the country cannot meet the future challenges of feeding the nation,” goes another refrain. This is however not true.  

Stanford University in collaboration with the China Agriculture University has in a path-breaking study compared the prevailing farming systems with the alternative approaches. The study conducted for three years between 2009 and 2012, and spread over 153 locations in the intensively-farmed regions of Eastern and Southern China has conclusively established what I have been suggesting for long. An integrated soil-crop system (ISSM) involving crop selection, method of planting, time of sowing and nutrient management produces higher yields with a significant drop in environmental damages.

“If we can combine much higher yields with much lower environmental consequences in China, there is a real hope that those challenges can be met around the world,” said Stanford biology Professor Peter Vitousek who led the exhaustive study. The integrated approach, applied in case of wheat, corn and rice achieved 97 to 99 per cent of the highest yields with no wastage of chemical nitrogen and a significant drop in the greenhouse gas emissions. More importantly, the farm incomes have risen without causing any environmental and health damages. In a paper published in Nature (Sept 3, 2014) the authors claim that even if the farmers were to achieve 80 per cent of the crop yields (on the same land area as in 2012) in the year 2030, China would be able to provide enough food for its human and animal populations, and at the same time reduce greenhouse gas emissions by 25 per cent and reduce nitrogen losses by 50 per cent.

Stanford University believes that the technology can be applied in other areas of the world, where the yields can be improved without causing any economic hardship to farmers as well as any further destruction to the environment. 

The Stanford study comes at a time when Andhra Pradesh (and now parts of Telengana) is already witnessing what is perhaps the world’s largest agro-ecological farming transformation. While the climate-change impact that the Community Managed Sustainable Agriculture (CMSA) leads to is still to be studies, but what is clearly evident is a sharp decline in environmental pollution arising from the use and abuse of chemical pesticides. Spread over 36-lakh acres across AP and Telengana, some 20 lakh farmers are adopting non-pesticides management practices. This integrated and community-based approach began from a tiny non-descript village Punnukula in Khammam district way back in 1999.

Like in the Stanford study, crop yields under CMSA in Andhra Pradesh are very high with accompanying decline in environmental damages. The soil health has improved, groundwater table has stabilized, insect attack has come down and the resulting clean and safe environment has reduced the health costs for the farming communities. By simply stopping the use of chemical pesticides, some villages which had mortgaged the entire farm land, have been able to recover it and at the same time pay back the entire interest. . On top of it, CMSA regions have not witnessed any farm suicides

Let’s be clear. The integrated approach that is being followed in China and in Andhra Pradesh is also a technological development. The only difference being this integrated-soil and nutrient-technology is not branded by multinational corporations and is not backed by financial institutions and banks. When Prime Minister Narendra Modi stresses on the need to provide soil-health cards to farmers, integrating it with low-external input sustainable agriculture (LEISA) practices as demonstrated in AP can bring about a rapid switch-over from chemical agriculture. 

The Indian Council of agricultural Research (ICAR) and the Ministry of Agriculture need to shift the research focus from the so-called cutting-edge technologies, which come with a high environmental cost, to the time-tested sustainable farming practices that were in vogue. Agriculture universities must follow a dual approach of lab-to-land and also the reverse pathway from land-to-lab.

This reminds me of yet another simple method of farming perfected in China that helps raise farm yields enormously. In a front page dispatch, and in the midst of the raging GM crop debate, The New York Times had called it a ‘stunning’ simple technique. Scientists at the Oregon State University in America and the Yunnan Agricultural University in China were able to demonstrate that by shifting from monoculture to more diverse cropping systems, farmers were able to double the yields of rice without spending a single penny on buying expensive fungicides to control the deadly rice blast disease.

This large experiment covered 100,000 acres and involved tens of thousands of farmers. Scientists had asked farmers to plant two varieties of rice in their fields – one susceptible to rice blast disease and the other variety being resistant. This was compared with the performance of a monoculture plot. The results were astounding.

At a time when the global debate is on promoting mitigation strategies for farmers to escape the fury of climate change, the Stanford University experiment in China provides an alternative route to instead reduce the contribution of agriculture in raising global temperatures. I have often emphasized that the best way to reduce greenhouse gas emissions from agriculture, which accounts for 25 per cent of the total emissions, is to change the existing cropping systems to more ecologically sustainable farm practices. The Stanford study has shown that it is scientifically possible to do so. Instead of pushing risky GM crops, agricultural universities need to shift the research focus to integrated farming systems.

I see no reason why we can’t have an agriculture which does not devastate soil health, which does not contaminate the ground water, which does not lead to drying of water aquifers, which does not cause environmental pollution, which does not create super weeds and super bugs, which does not contaminate the food chain, which does not lead to global warming and which also does not force farmers to commit suicide. It is certainly possible. All it needs is a political will. # 

The misplaced emphasis on hi-tech agriculture. Repeating the same mistake again and again.

This news report set me thinking. "The Netherlands is working with India to set up 10 centres of excellence across the country with an aim to raise agriculture output and introduce modern farm technologies and techniques," The Economic Times reported (Sept 15, 2014. http://articles.economictimes.indiatimes.com/2014-09-15/news/53943034_1_centres-hi-tech-agriculture-excellence). This is not the first time I am reading such a news report. In fact, most times when the discussions veer around to agriculture the emphasis is invariably on enhancing crop productivity. 

Whether it is farmer suicides or food inflation, the way out suggested is often in increasing investments in improved technology to increase crop productivity and thereby improve farm incomes. Raising crop productivity will bring down the cost of production and thereby reduce food prices. 

This is half the story. 

Take the case of Punjab. A year after it launched with much fanfare the Rs 500-crore plan to diversify from paddy to maize and vegetables, the plan has misfired. "Farmers have not taken to diversification. They want to be assured of fixed returns. Farmers could take to growing hybrid maize with a yield of eight quintals per acre, but want minimum support price (MSP) for the same," G S Kalkat, chairman of the Punjab Farmers' Commission was quoted as saying in The Tribune (Sept 20, 2014). This is not the first time that Punjab farmers have spurned every move to diversify from wheat and paddy crop rotation, but what is significant is that the policy makers have not learnt any lesson. It is not improved technology that is hampering crop diversification but the failure to provide an assured income that is keeping the farmers away.

Meanwhile, the Netherlands has already set up three centres of excellence, one each in Kerala, Maharashtra and Punjab. Monsanto too has signed an MoU with Punjab Government to set up three centres of excellence for the promotion of cotton, vegetables and maize. A number of other centres of excellence are coming up in other States too. 

What amuses me is that while Netherlands is pushing improved crop technology (read costly equipment and other farm inputs) in India, its own agriculture back home is surviving on massive farm subsidies. Let me make it very clear. The Netherlands is a global leader in agriculture not because of its sophisticated technology and high crop productivity but because of the massive farm support it provides to its farmers. Between 2000-02 as the reference period, the subsidies being paid to European farmers became an entitlement. Accordingly, Dutch farmers were paid a subsidy of Euro 1299 per hectare every year. This figure may have changed now but tells you how Dutch farmers have been a continuous beneficiary of direct income support. 

In the European Union, as per the financial plan for 2013, the agricultural budget stood at roughly 40 per cent of the total budget, with an allocation for agriculture close to Euro 60 billion ($78 billion). This is a whole lot of money for a sector which does not even employ 5 per cent of the population. 

As per www.foodsubsidy.org farmers in the Netherlands received a total of Euro 739,214,572 as direct income support between 1997 and 2012. The question therefore is that if Indian farmers were to raise crop productivity, which they can easily do even without the improved technology from the Netherlands, who will pay them the corresponding subsidies to keep them alive? 

But that's not the question that worries Indian policy makers. They are more keen to bail out the Dutch companies, which are find it difficult to survive in The Netherlands. Lutz Ribbe, a member of the EU's agricultural commission and the conservation director the environmental organisation Euronatur had this to say: "The Netherlands, for example has reached its limits. The farmers' income aren't right anymore; the environment is collapsing. The big companies, which can't develop anymore, are leaving the Netherlands and are being welcomed with open arms in eastern Europe." (http://www.dw.de/eu-proposal-seeks-big-reforms-on-farm-subsidies/a-16780256).Well, it goes much beyond eastern Europe. The Dutch companies are also finding markets outside Europe, and India continues to be world's biggest dustbin. 

I give you another example, this time from Denmark. Some years back I wrote in one of my articles: "If you are wondering as to why Indian pea producers are unable to competitively bid for processed foods in the global market, let us see how Denmark, for instance, manipulates the market and that too by truly following the WTO norms. Danish pea farmers do not benefit from price subsidies. Danish split pea processing companies do not benefit from processing and marketing aids. Danish pre-cooked split pea exporters do not benefit from export refunds. So obviously, you will think that they are very efficient producers and of course very competitive. But hold on.

Since pea farmers do not have to recover their full production costs from the sale price of the peas supplied to processing companies, the price at which pea is supplied to processing companies is substantially reduced. As a consequence, the price at which pre-cooked split peas is offered for sale is substantially below the prices that Indian pulse growers can offer. The provision of direct payments thus enables Danish suppliers of pre-cooked split pea to capture markets, which they would never have been able to supply in the absence of the aid payments.

Let me make it very clear. The comparative advantage that is cited by developed countries is actually built on agricultural subsidies. Withdraw the agricultural subsidies, there is no comparative advantage left for most of the crops, and I repeat, for most of the crops. That is why the mainline economists do not compare the cost of production of agricultural commodities but look invariably at the supply chain management." (Read my article: Hold economists accountable too. IndiaTogether. April 5, 2005. http://indiatogether.org/subsidies-op-ed). 

Agriculture is not simply a play of technology. It requires supporting policies to make it click. Even the Green Revolution wouldn't have been successful if the Indian government had not provided two critical policy planks. Assured price to farmers through the mechanism of MSP and the assured marketing of the surplus produce by setting up a procurement structure is what made high-yielding varieties perform and deliver. The rest is history. 

Kashmir floods: Don't blame the climate. It's a man-made disaster

Kashmir valley looked like an ocean, says Indian Air Force officials. 

Pic from www.arabnews.com 

No one cares for warnings anymore. In our madness to achieve a high economic growth, natural disasters come in handy. After the death toll has been estimated, the floods have receded and the city slowly limps back to normalcy, it's again business as usual. Wait for Srinagar to return back to normalcy, and the same people who were hit by the unprecedented tragedy, will be back to their normal routine recklessly exploiting the fragile environment.

I saw this happening when Mumbai was hit with flash floods in 2005. While 5,000 people were killed across Maharashtra, the deluge of Mumbai, the financial capital of India, donned the headlines. Many blamed the 18-km long Mithi river, which runs through densely populated and industrial areas of Mumbai and carries the overflow discharges of Powai and Vihar lakes to the Arabian Sea at Mahim Creek, responsible for the floods. Even the Mithi River Development Authority (MRDA) acknowledges: "The Mithi river used to serve as an important storm water drain but has been reduced to a sewer over the years."  

Before Mumbai, Hyderabad was hit by devastating floods in 2000. In 2009, again Hyderabad (and Kunool city) faced the fury of incessant rains flooding large parts of the city.  But interestingly, in 2000, the Geological Survey of India admitted "the August 2000 flood of Hyderabad cannot be considered as a result of the Nature's fury. It starkly exposes the deficiencies in planning of urban habitats in growing cities. Paradoxically, when Hyderabad was lashed by 24 cm of rain in 24 hours in August 2000, the adjacent districts of Mahabubnagar and Nalgonda were under the grip of drought-like or dry weather conditions due to scanty rainfall." (Read the full report here: August 2000 Flood in Hyderabad city. Causative factors and suggestions to avoid recurrence. http://www.portal.gsi.gov.in/gsiDoc/pub/cs_hydflood_aug00.pdf). 

Just to give you an idea of how unplanned urbanisation is taking a heavy toll. The Geological Survey report states, and I quote: "One such blatant violation of the urban development norms is conversion of a water tank known as Masab Tank, situated at the southern foothill limit of Banjara Hills, into currently a thickly populated residential-cum-commercial area. Further, the downstream side of the tank has been totally converted to residential areas such as Vijaya Nagar colony and Shanti Nagar ..Thus the active channels of streams that existed on the downstream side of these areas and colonies have disappeared." In the absence of any natural drainage, flooding is natural.  

Bangalore, New Delhi, Kolkata, Guwahati ,... the story is same everywhere. 

It is however very convenient to shift the blame to climate change. At a time when people have become so used to climate aberrations, and have begun to club everything under the broader head of climate change, that I find the blame game shifting to reasons beyond your immediate control to be escapism and self-defeating. If the temperature goes up, blame it on climate; if the rains are late, blame it on climate, if the heat season prolongs, blame it on climate. In fact, Climate Change has been accepted as something beyond our control. Like for all the ills in our society we blame the politicians, similarly for all the development-induced disasters we don't want to take the blame on ourselves. Why blame yourself when you can easily pass on the buck. 

In case of Hyderabad, let's not forget the city had faced a major flood disaster about 100 years back, in 1908, when Musi river had gone on a rampage. Some reports say 15,000 were killed in the flood fury. In case of Srinagar also, the city had faced a big flood in 1893 itself. You'll agree we can't blame the climate change for those disasters.

After the Uttarakhand disaster of July 2013, which again was blamed on Climate Change by many experts, I had thought that the nation would sit back and draw some lessons. But nothing like that happened. In fact, the moment you raise the issue of unplanned urbanisation, a chorus rises accusing you of being anti-development. This is a class of people who remain unmoved by the catastrophic consequences of epic disasters like the Himalayan Tsunami that struck Uttarakhand and Kashmir. They are only interested in exploiting the natural resources to the hilt. As long as they make money, who cares if thousands (and millions who survive) have to pay the consequences with their lives.

In an aptly titled report: A threat everyone knew, but refuses to believe (The Tribune. Sept 14, 2014 http://www.tribuneindia.com/2014/20140914/pers.htm#1), the authors say: "The bowl-shaped lay of the land in Srinagar is such that once the Jhelum waters breach, there is nowhere for the floodwater to drain. this is a well-known fact that everyone has chosen to ignore." In an accompanying report, The Tribune states that the State Government officials admit that 50 per cent lakes, ponds and the wetlands in Srinagar have been converted into residential and commercial places. Wular lake, Asia's largest freshwater lake in Bandipora district, has shrunk by 87.58 sq kms. The famed Dal lake in Srinagar has shrunk to 12 sq kms (from 24 sq kms) and rapid siltation has reduced the average depth to 3 mts. The 165-kms long Jhelum river was pushed to the brink, and it obviously was waiting to retaliate one day.  

While the two environmental disasters of epic proportion had struck India in quick succession I had thought that the people in power would wake up to all that was going wrong. I had thought that the media, business and industry, the intelligentsia and the planners would be burning a lot of midnight oil, and at the same time holding wide ranging public hearings on how to minimise the environmental damage in the years to come. But on the contrary I hear the media relentlessly blaming the Ministry of Environment and Forests for blocking clearance to industrial projects. Such is the tirade against anything linked to environment that those who stand up to warn are accused of holding India's growth story. Kashmir paid for ignoring the repeated warnings. But the bigger question still remains. Will the government learn from the past mistakes and make appropriate corrections?  

Environment Minister Prakash Javadekar has said when it comes to environmental clearances his Ministry's green light is always on. Reports of pending decisions to withdraw the provisions of allowing tribals to have their say before an industrial project is approved, dilution of the Indian Wildlife Act provisions, dumping of Madhav Gadgil report on Western Ghats are some of the steps that needs to be immediately reconsidered. Instead of protecting the environment to ensure that the disasters of Uttarakhand and Kashmir are not repeated, the powers that be need to understand that no amount of industrial growth can succeed in isolation. Environment is not a price that has to be paid for industrial growth. Environment is a pre-requisite for any development paradigm. Economy cannot grow on a dead planet. 

Prime Minister Narendra Modi had assured from the ramparts of the Red Fort on Aug 15 that industrial growth has to come with 'Zero Effect', which means without any accompanying environmental destruction. If this does not happen, and is glossed over, let's be very clear: what happened at Srinagar will not be an isolated event. Every city will sooner or later have to meet the same fate. #  

     
1. Playing with ecosystems. Deccan Herald. Sept 23, 2014
http://www.deccanherald.com/content/432237/playing-ecosystems.html

2. Climate, Catastrophe, Kashmir. Orissa Post. Sept 19, 2014
http://www.orissapost.com/epaper/190914/p8.htm