Industrial, agricultural developments are not alternatives

10Jun 2016
Muharram Macatta
The Guardian
Industrial, agricultural developments are not alternatives

AGRICULTURAL sector plays a strategic role in the process of economic development of a country. It has already made a significant contribution to the economic prosperity of advanced or developed countries

increase in agricultural production and the rise of per capita income of the rural community, together with industrialisation, lead to an increased demand in industrial production.

and its role in the economic development of less developed countries is of vital importance as well.

In other words, where per capita real income is low, emphasis is laid on agriculture and other primary industries. Hence, increase in agricultural production and the rise of per capita income of the rural community, together with industrialisation, lead to an increased demand in industrial production.

Most of historians may vividly recollect that a country such as England or the United States of America and even Japan, where agricultural revolution preceded industrial revolution.

In Japan and USA also agricultural development has helped to a greater extent in the process of their industrialisation. Similarly, under-developed countries of the planet engaged in the process of economic development, such as our own country right now is in the verge of embarking on economic development.

That is why the President Dr. John Magufuli has already found out the limitations of putting over-emphasis on industrialisation as a means to attain higher per capita real income.

In which case, industrial and agricultural developments are not alternatives but are complementary and are mutually supporting with respect to both inputs and outputs.

It is seen that increased agricultural output and productivity tend to contribute substantially to an overall economic development of the country it will be rational and appropriate to place greater emphasis on further development of agricultural sector.

Agriculture makes its contribution to economic development in several ways: By providing food and raw material to non-agricultural sectors of economy, by creating demand for goods produced in non-agricultural sectors, by the rural people on the strength of purchasing power, earned by them on selling the marketable surplus; by providing investable surplus in the form of savings and taxes to be invested in non-agricultural sector.

Others are by earning foreign exchange through the export of agricultural products, and by providing employment to a vast army of uneducated, backward and unskilled labour. As a matter of fact, if the process of economic development is to be initiated and made self-sustaining, it must begin for agricultural sector.

Frankly speaking, the role of agriculture in economic development should be regarded as a sector that is pivotal to an economy which provides the basic ingredients to mankind and now raw material for industrialization.

Agricultural advancement is quite necessary for improving the supply of raw materials for agro-based industries especially in our country. This is typically demonstrated by the shortage of agricultural goods like the one adversely affecting domestic sugar industry, at the moment, has its impact upon industrial production and a consequent increase in the general price level. It impedes the growth of the country’s economy, just due to inadequate raw material from the agricultural products.

For instance, we should now pay particular attention in respect of the flour mills, rice sheller, edible oil refineries, bread, meat, milk products, wineries, beverages, beer, jute mills, sisal products, textile mills and numerous other industries based on agricultural products.

The progress in agricultural sector provides surplus for increasing the exports of products. In the earlier stages of development, an increase in the exports earning is more desirable because of the greater strains on the foreign exchange situation needed for the financing of imports of basic and essential capital goods.

In view of the urgent need for enlarged foreign exchange earnings and the lack of alternative opportunities, substantial expansion of agricultural export production is frequently a rational policy even though the world-supply-demand situation for commodity is unfavourable.

The lesson drawn from the economic history of many advanced countries as pointed out above, tell us that agricultural prosperity contributed considerably in fostering economic advancement.

It is correctly observed that the leading industrialised countries of today, were once predominantly agricultural while the developing economies still have the dominance of agriculture and it largely contributes to the national income. In Tanzania, we presume it contributes to between 40 and 45 percent of national income.

Nearly all of developing countries of the world are exporters of primary products. These products contribute to 70 to 80 percent of their total exports earning. Thus the capacity to import capital goods and machinery for industrial development depends crucially on the export earning of the agricultural sector.

If exports of agricultural goods fail to increase at a sufficiently high rate, the country is forced to incur heavy deficit in the balance of payments resulting in a serious exchange problem. However, primary goods face decline prices in international market and the prospects of increasing export earnings through them are limited.

Due to this, large developing countries like India or the United Republic of Tanzania and others (having potentialities of industrial development) are trying to diversify their production structure and promote the exports of manufactured goods even though this requires the adoption of protective measures in the initial period of planning.

Our country needs huge amount of capital for its economic development. In the initial stages of economic development, it is agriculture that constitutes a significant source of capital formation or special funds to be raised by either generous donors’ support or the recognized Banks.

Anyway, the truth prevails that agriculture provides employment opportunities for rural people on a large scale in developing countries. It is an important source of livelihood.

Generally, landless workers and marginal farmers are engaged in non-agricultural jobs like handicrafts, furniture, textiles, leather, metal work, processing industries and in other service sectors.

These rural units fulfill merely local demands. In Tanzania, it is alleged that about 80 percent of total labour force depends upon agriculture. It is, however, time that rural economy depends on agriculture and allied occupations in our country,
The rising agricultural surplus caused by increasing agricultural production and productivity tend to improve social welfare, since the fourth phase government under the administration of Dr. Jakaya Mrisho Kikwete’s presidency who officially launched “KILIMO KWANZA” slogan; particularly in rural areas.

Since then, the living standard of rural masses raised and they started consuming nutritious diet including eggs, milk, ghee and fruits. They lead a comfortable life having all modern amenities – better house, motor-cycle, Bajaj, radio, mobile phone, television and most of them are well clad in better clothes (used or semi used cloths commonly known as ‘mitumba.’)

As a result of agricultural progress, there will be extension of market for industrial products, increase in agricultural productivity leads to increase in the income of rural population which in turn leads to more demand for industrial products; thus development of industrial sector as determined by Dr. John Magufuli, in the 5th phase of government.
Further, increase in agricultural production of both food, cash and export products and the rise in the per capita income of the rural community, together with industrialization and urbanization, lead to an increased demand in industrial production.

In this way, agricultural sector helps promote economic growth by securing as a supplement to industrial sector. To be more specific, structural trans-formation demands industrialisation.

As industrialization develops, there occurs a shift in the composition of output from primary sector activities towards industrial activities along with structural change in employment pattern in favour of industrial sector.Therefore, education acts as a catalyst of social change, new progressive idea towards life occur.

A new class of entrepreneurs is born, capital formation increases, technical innovation take place. All these changes produce favourable impact on social relationship which, in fact, acts a precursor of a new, modern, cultural, and vibrant society.

It is strongly stressed that over time as agriculture is subject to diminution, its labour absorptive capacity will decline. However, the employment potentiality of industrial sector is indeed large.

Although heavy industry being capital-intensive in nature cannot be a great employment provider, small and medium industries (SMEs) have the greater capacity to absorb labour force.

Anyway, no economy can afford the luxury of remaining an agrarian one all the time, indeed no other alternative to this economy but to have industrialisation.

From the above cited explanation, we conclude that agricultural development is a must for the economic development of a country. Even developed countries lay emphasis on agricultural development.

Every one of us may realize that agricultural progress is essential to provide food for growing non-agricultural labour force, and raw materials for industrial production.

Furthermore, intensive and extensive agricultural production provides saving and tax revenue to support development of the rest of the economy, to earn foreign exchange and to provide a growing market for domestic manufacture.
MUHARRAM MACATTA is a retired civil servant.

He is an economist and political science. Before retirement he served as director of international and external trade; director of imports and exports, with the then Ministry of Commerce, which later came to be known as the Ministry of Industry and Trade. And he also is the founder and first director of the SabaSaba International Trade Fairs.