Very few sectors are as important, yet as beleaguered as agriculture in India. Engaging more than 50 per cent of the country’s workforce, it offers livelihoods to 75 per cent of the population living below the poverty line. It consumes 80 per cent of the nation’s fresh water resources, a quarter of the total electricity and more than 70 per cent of central government subsidies. However, it accounts for just about 14 per cent of GDP. Woefully therefore, the farmer’s per capita income is less than one-fifth of the rest of the country’s average.
A four-pronged policy agenda in agriculture has the
potential to achieve the much desired ‘inclusive and sustainable’ growth of
Indian economy.
Weather-proofing
production, and conserving life-giving natural resources
The entire technology spectrum — from better seeds to
precision-farming practices, from micro-irrigation to watershed development,
from renewable energy to power-saving farm equipment — will have to be fully
harnessed. Over the years, among other policy initiatives,
liberalisation of imports of improved varieties and breeding lines has
revitalised the availability of high quality seeds. The Indian seed market,
estimated at over $1 billion, has grown at double the pace of the global seed
market. However, there is a long way to go in developing and
deploying seeds that will address extreme weather variations and poor soil conditions,
besides serious biotic stresses.
A policy framework that encourages investment in
research, and streamlines regulatory processes for accelerated introduction of
new technologies will enable sustainable intensification of Indian agriculture.
Making farming remunerative,
and enthusing NextGen in agriculture
India’s young demographic profile is a great source of
strength. Unfortunately, a future in the agricultural sector does not seem to
evoke enthusiasm among the youth. Income from farming is not only unattractive
but also not commensurate with the risks and drudgery associated with the farm
sector. This has led to farmers moving away from farms to non-farm livelihoods
in villages, besides migration to urban areas.
The next horizon in agricultural progress cannot be
conquered without harnessing the vitality of the youth. This will require a
policy impetus that encourages two vital components: one that enables greater
mechanisation of farm operations to mitigate drudgery and enhance efficiency;
and the other that enables larger value creation through farming that blends
traditional knowledge with new technologies.
Aligning production to changing
consumption trends, and linking farmers to markets
Rising disposable incomes and growing urbanisation has
brought about a dimensional change in the pattern of consumer demand. The share
of cereals is reducing in the diet, in favour of vegetables, fruits, milk, and
meat. Besides more variety, today’s consumer demands superior
quality, enhanced safety, and added convenience while shopping or using
products. This dictates a fundamental transformation.
Producing what the consumer demands is an entirely
different ball-game from consuming whatever is produced by the farmer. It is a
re-orientation from production-driven supply chains to demand-driven value
chains, and will entail huge investments in creating appropriate infrastructure
in post-harvest, logistics, processing, packaging, retailing, and information
systems.
Corporate involvement through vibrant agri-businesses and
food-processing can considerably enhance value for farmers by linking them to
the value-seeking markets. However, a variety of policy constraints deter any
sizeable investment by the corporates today. Foremost is the non-implementation
of the ‘Model APMC Act’ by many states. In addition, the ‘Essential Commodities
Act’ imposes stock limits, and curbs movements from time to time, further
affecting the viability of agri-businesses. ‘Forward Contracts (Regulation)
Act’ also requires reform.
Currently, critical risk management tools, such as
Options, are not available. Farmers can realise better prices without undue
risk, by buying Options, either directly or through aggregators. This gives them a right to transact at a future price and
not just an obligation, as is the case when only the Futures are available.
Trade and marketing policies in agriculture will need a significant overhaul,
if the farmers have to benefit from the huge consumption dividend offered by
the country.
Sharper targeting of social subsidies,
and vital investments in soft infrastructure
Over the years, subsidies in the farm sector have
certainly played an important role in aiding resource-poor small farmers.
However, subsidies can be significantly market-distorting. There is also a
concern that systemic leakages significantly dilute the quantum of subsidies
that finally reach the intended beneficiaries. Direct transfers of subsidies are perceived to be a more
effective alternative. Policies need to sharply target the subsidies to ensure
social security but in a way that does not distort markets. In the current
global and national economic context, market forces are key to unleashing the
true potential of the agricultural sector.
While past investments in rural areas have enhanced the
quality of hard infrastructure, such as roads, telecom and irrigation, we need
to invest in the complementary ‘soft infrastructure’ now. It is important to create the equivalents of ITIs in the
farm sector to train rural youth and enable better implementation of best
practices. Investments are also needed in soil health and other natural
resource management systems, as also in the emerging agri-services.
Orchestrated action for
sustained resurgence
The policy priorities outlined here need to be carried out
in a concerted manner to create a springboard that can propel Indian
agriculture into a higher orbit.
The ITC e-Choupal experience in empowering millions of
farmers lends confidence that a synergistic and integrated rural programme can
significantly raise incomes and secure a better quality of life in rural India.
Given the right policy impetus and effective
public-private-people partnerships, there is enough reason to believe that the
giant agriculture sector can be re-energised to offer a new promise for
tomorrow’s India.
This article was published in the Business Line print
edition dated May 14, 2014 with modified sub-heads http://www.thehindubusinessline.com/todays-paper/tp-opinion/sowing-the-seeds-of-a-farm-revival/article6006734.ece
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