7.3. Impact of Globalization on Agriculture

With a view to move towards liberalizing the agricultural sector and promoting free and fair trade, India, a member nation of the World Trade organization (WTO) signed the Uruguay

Round Agreements on 1st January 1995. The Agreement On Agriculture of the WTO, was the first multilateral agreement, meant to curb unfair practices in agricultural trade and set off the process of reforms in the agricultural sector.

Indian agriculture has shown a slow average annual growth rate. It was 3.1 % during the decade 1980-1990 prior to liberalization of the economy. But since then the annual growth rates have declined consistently relative to annual growth rate of the population. Several factors were responsible for this fall in growth rate; lack of credit, inadequate irrigation cover, and indebtedness, continuing use of obsolete technology, improper use of inputs and decline in the public investments

Since the non-agricultural sectors of the economy have been growing at a much faster rate than the agricultural sector, this has resulted in a declining share of agriculture in the total GDP. Although the share of agriculture in GDP declined rapidly, its share in employment declined at a much slower rate.

The notable effects of Globalization on Indian agriculture may be listed as under:

♤ With globalization farmers were encouraged to shift from traditional crops to export- oriented ‘cash crops’ such as cotton and tobacco but such crops needed far more inputs in terms of fertilizers, pesticides and water.

♤ Appropriate use of agricultural equipment’s, suited to the crops and the region of cultivation, lead to efficient utilization of farm inputs, making farming financially viable and profitable. Though there has been considerable progress in farm mechanization, its spread across the country still remains uneven.

♤ Introduced new water saving practices in India such as drip irrigation.

♤ There has been a gradual shift from Subsistence farming to capitalist farming and contract farming

♤ Increased access to developed country markets. However Indian farmer still find it difficult to export their products to rich countries because of their inferior technology and stringent quality parameters imposed by foreign consumers. (Due to sanitary and phytosanitary requirements, example temporary ban of Mangoes by EU in 2014)

♤ Seed prices have increased due to entry by seed producing MNCs like Monsanto and Cargill. There are also concerns related to patent rights on seeds. The large scale suicide by Indian farmers in Karnataka, Punjab and Haryana under the burden of heavy loans is attributed to rising cost of inputs and thin margins on profit.

♤ Trading of agricultural commodities has increased which at times lead to fluctuation of prices of these commodities.

♤ It has led to feminization of agriculture.