Donald M Taylor is an international agri-business management and consultancy expert, who worked in more than 30 countries with various organisations. An American citizen, he has lived and worked in Asia for the past 25 years. During the past three years, he has managed the US Agency for International Development sponsored Growth Oriented Micro-Enterprise Development program, based in Jaipur, India.

GMED's this program is currently associated with ITC Limited, Radhakrishna Foodland, Nandani Cooperative, BAIF Research Foundation, the Federation of Farmer Associations and the Tamil Nadu Horticulture Mission and is working with approximately 6,000 farmers in Punjab, Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat.

For several years prior to his current assignment in India, Taylor served as a short-term consultant to the Asian Development Bank [Get Quote], responsible for designing agribusiness development projects in Bangladesh, Pakistan, Papua New Guinea and Vanuatu; as a rural business development specialist in Vietnam; and as consultant to a crop diversification project in Sri Lanka. Taylor was the founder and CEO for several years of the International Food Corporation, Vietnam. Excerpts of an interview with Commodity Market.

It was the responsibility of the society or administration to take care of the peasants who make food for the rest of the population. Do you think there has been a paradigm shift during the past 50 years to look at agriculture as a business?

The term "agri-business" was coined in 1957 by an American, Ray Goldberg, and an associate, John H Davis, both of whom were professors at Harvard Business School, to characterise the value chain linkages that run from production input suppliers to commercial farmers to traders/processors to retail outlets and ultimately to the final consumer. The remainders of the developed economies have undergone similar shifts.

Most developing countries, however, have until recently been characterised by a large proportion of the population still dependent on agriculture for the majority of their livelihood, varying proportions of their crops utilised for home consumption and a lack of direct connectivity between agricultural producers and end users, with the gaps filled by several layers of middlemen.

This is still the case in much of Africa and parts of Asia and Latin America. One exception to this, in a number of developing countries, has been the growth of the industrial and cash crop sector, particularly over the past half century, where direct links between farmers and processors and other end users have become common.

A growing proportion of small-scale farmers in a number of developing countries, particularly in East and Southeast Asia, have joined the ranks of commercial farmers during the past few decades. In India, unfortunately, this has not yet happened to any great extent. The overarching challenge here is to achieve the shift from small-scale farming as a livelihood to farming as a business.

In India lot of farmers are committing suicides over the years. The reasons given are indebtedness due to loans taken mostly from money lenders and unremunerative prices. In your view what exactly are the problems that farmers face in India?

The problems facing Indian farmers have been discussed at length in the mass media, in conferences and elsewhere. These include small size of land holdings, lack of organisation, inadequate physical infrastructure, multi-layered and inefficient marketing systems, lack of access to appropriate technology and quality production inputs, inability to obtain credit from formal sources, few avenues for risk amelioration, etc.

The inability to repay indebtedness to money lenders and traders is a symptom of these problems. There are no single solutions. If the situation is to improve, the entire complex of problems listed above must be addressed not only by the government, the private sector must also play an important role.

You have stayed in over 30 countries and presently working in Asia. In your view are the problems faced by farmers similar everywhere?

The basic problems tend to be very similar in all of the developing countries, although the degree of seriousness varies with each. The solutions, however, are often very different, due to differences in culture, history, resource endowments, governmental and policy structure and many other factors.

Could you enlighten us on the genesis of GMED program and its implementation in India?

The India GMED Program, sponsored by the USAID, was introduced three-and-a-half years ago as a pilot effort to determine how best to facilitate the growth of micro and small enterprises. GMED represents the first-ever enterprise development initiative by USAID in India.

The program originally consisted of two components, agribusiness and urban services. The agri-business component included fruits and vegetables, organically certified food product and maize, while urban services concentrated on solid waste management.

In 2007, the program was realigned with the entire focus being placed on the integration of small-scale horticulture farmers into organized retail and export supply chains. Perhaps the most significant achievement of the GMED program has been to prove that small-scale vegetable and fruit farmers (one to five acres) can become successful suppliers to organised retail and export supply chains. When GMED first came to India in late 2004, none of the firms involved in the nascent organised food retail industry believed that this could be done.

GMED is currently working with 6,000 small-scale vegetable and mango farmers (soon to become at least 10,000) in six states. The program has links with five corporate partners, one cooperative, two NGO partners and two state horticulture commissions.

Purpose of the program is to link these farmers with higher value market and to ensure that they can meet market requirements. In the process, GMED has succeeded in significantly raising farmer productivity, reducing production cost, improving average product quality and increasing farmer incomes by introducing simple packages of production and post-harvest practices supported by innovative but inexpensive tools and equipment.

There are several significant differences between GMED and traditional donor-sponsored agriculture development projects. Historically, these projects have used consulting teams to directly address farmer constraints and have largely focused on production with little direct effort devoted to marketing the farmers' products. GMED works with the entire value chain, starting with the buyers, in the belief that unless all of the participants in the value chain become more competitive, none of them will prosper.

Instead of working directly with farmer beneficiaries, GMED trains the field extension workers and other partner personnel to transfer the needed technologies to the farmers, while providing them with various support measures such as demonstration plots and post-harvest infrastructure as well as guaranteed crop purchases.

While this support requires the buying organisation to make an investment in farmer support, the consequent ability to guarantee a reliable supply of the proper quality fresh produce makes the investment worthwhile.

In discussions about agriculture problems often small size of agriculture holdings are said to be a major problem. How far can GMED programs help farmers in getting a remunerative price?

GMED is currently working exclusively with vegetable and mango farmers. In the case of high value horticulture crops, small land holdings are not the primary problem. Farmers need to be organised, linked with supermarket, hypermarket, processor and export buyers, and afforded the capability to meet buyer specifications. GMED is doing this successfully with the farmers mentioned above. Program interventions have succeeded in raising farmer incomes by 30% to 50% (more in individual cases).

How do you view the current commodity crisis across the world?

The recent decrease in stocks and the sharp increase in the price of foodgrains are due to the convergence of a number of inter-related trends. Per capita incomes in many developing countries are rapidly increasing. When people's incomes increase, one of the first effects is an increase in their food consumption, such as rice throughout Asia, and meat and dairy products in all countries.

This is impacting the rice supply-demand equation as well as that of livestock feed grains. Another, possibly even more important impact is being caused by the increasing use of maize (corn) for the production of ethanol and other bio-fuels. Adverse weather in several important producing countries has affected wheat stocks. Crop land in many countries is being lost to other uses.

According to a recent report I saw, during the past decade, 20 million acres of farmland in China has been converted to residential and industrial use. The high cost of oil is having a major effect on grain production costs. The apparent prospect for a substantially larger wheat harvest this coming crop year should help address the supply shortage at least temporarily, but from all indications, high food prices are here to stay.

In Asian countries, millions of tonnes of food grains are destroyed everywhere due to flooding, cyclones, and drought. A recent innovation from IRRI Submergence I rice variety can withstand floods. I think there are also Bt varieties developed to withstand adverse climatic conditions. Can you summarise the developments in such innovations and how far could it help farmers?

I am not in a position to summarize all of the innovations currently underway in crop research. As a general observation, however, the many advances in the development and application of genetically modified crops hold great promise for alleviating the current worldwide food shortages as well as promoting better consumer health and nutrition.

You have a degree in agricultural journalism, how do you assess the current state of global reporting on agriculture, agri-business and commodities in the mainstream media?

In my opinion, except for a relatively few international trade publications, global reporting on agriculture, agri-business and commodities has generally not done justice to the importance of these subjects to the international economy. I must say, however, that coverage of agriculture by the media within India is quite impressive.

In the India Budget 2008-09, finance minister announced a massive loan waiver scheme of Rs 60,000 crore. How do you respond to this announcement?

As an expatriate and a non-economist, I am not really in a position to comment on the policies and programs of the government. Judging by reports I see in the mass media, however, it appears that the purposes of too many government programs designed to assist agriculture are being defeated by corruption and bureaucratic inefficiency. There have been reports in the press recently on the effect of corruption on the National Rural Employment Guarantee Scheme, to take one example.

In India getting credit from banks is a major problem faced by farmers. Is it the same across Asia?

The situation varies country by country, but farmers in most countries face similar problems. In the Philippines, where I currently make my home, most small-scale farmers are perennially in debt to the money lenders and traders and are thus unable to accumulate the capital necessary to improve their economic situation. I believe this situation is prevalent in most developing countries.

What more needs to be done to India's agriculture? In the changed scenario where many countries are not increasing foodgrain production, what role do you envisage for India?

While I realise that this question is addressed to the world situation in grains, I can only speak to the Indian horticulture sector, with which GMED is most concerned. Most Indian vegetables and fruit are produced by small-scale farmers. The rapid growth of the organised retail sector (supermarkets, hypermarkets, etc), vegetable and fruit exports and the domestic processing industry is creating unprecedented market demand for better quality, safer fresh produce. This demand represents huge opportunities for Indian horticulture farmers.

In order to take advantage of these opportunities, however, farmers need to be enabled to meet market requirements. The GMED program has proved conclusively that this can be done. Indian vegetable and fruit farmers are poised to enter into a new era of increased opportunities and higher incomes.

While this will not solve the anticipated world shortage and higher prices for grains and other staple foodstuffs, it does promise a boost for the rural economy of India.