G. CHANDRASHEKHAR, Advisor, ERTF
‘A bold peasantry, the country’s pride;
Once destroyed can never be supplied’.
(Oliver Goldsmith in ‘The Deserted Village’)
Essentially, India is still an agrarian economy with agriculture and allied sector (dairy, poultry, fisheries - called ‘animal agriculture’) providing livelihood to 45% of the country’s workforce but accounting for just about 15% of GDP.
Fragmented landholding, dependence on monsoon, limited irrigation, low level of input usage, suspect quality of inputs, inadequate pre- and post-harvest management, lack of appropriate rural infrastructure, weak market linkages and many more related issues have stymied sustained and sustainable farm growth.
All these have resulted in low yields, non-uniform quality, on-farm and off-farm losses, price volatility and unsatisfactory returns for growers.
And now, three big challenges haunt the farm sector - land constraints, looming water shortage and adverse effects of climate change.
MSP, procurement, annual income support (PM-KISAN), input subsidies and freebies like free ration have failed to lift the farm sector and move towards global competitiveness. We have to go well beyond all of the above for real impact.
Agriculture consists of several sub-systems; and so a holistic approach or Ecosystem approach is the way forward. Over the years, successive Union Budgets came up with several initiatives; but outcomes did not match the hype that came with the announcements.
For our country, success in agriculture would be the true test of Democratic Federalism. The Centre and the States have to work together with unity of purpose. Agriculture and related matters like land, water and markets are in the State List under the Seventh Schedule of the Constitution, while Union Budget proposals including financial outlays for agriculture, export-import policy, tariff policy (Customs duty), fiscal and monetary policy as also administrative powers that impact the farm sector are all in the Centre’s domain.
At the macro level, let me suggest a few mantras for farm resurgence.
- Strengthen the input delivery system for seeds, agrochemicals, fertilizers and finance. For the purpose, set up a monitoring mechanism that seeks to weed out unscrupulous operators.
- Rapidly expand irrigation facilities. Several major and medium irrigation projects face cost and time overruns; in some cases, last mile connectivity has stalled for want of additional funds. Sort out inter-State disputes expeditiously. Centre must take the initiative to work with States.
- Infuse multiple technologies in agriculture both pre-harvest and post-harvest. Infotech, Biotech, Satellite tech, Nuclear Agri-tech (mutation breeding, irradiation), Nanotech, Digital tech, Drones, Block-chain tech and more. To be sure, technology is scale neutral. Tech will facilitate ‘precision farming’ suitable for our country’s smallholder cultivation. Challenge / encourage Startups to find smart solutions.
- Invest in rural infrastructure including road connectivity and scientific warehouses. Utilize the Agri Infra Development Fund. Depoliticize APMC oversight; strengthen market yard operations; use technology to ascertain quality and transparent price discovery. Privatize unviable market yards. States must proactively do this.
- Initiate massive awareness, training and education campaign for farmers (130 million) to inform them about input management, agronomy, modern cultivation techniques, market outlook and so on. Over time, seek to convert growers into savvy traders. Deliver weather, input, output, market and price information to growers on their mobile handset. Engage Agricultural Universities and Krishi Vigyan Kendras (KVKs) in this educational campaign.
- Given the enormity of challenge and criticality of the sector, substantially step-up the Budget outlay for agri and allied sectors. While outlays are known, the nation / taxpayers needs to know about outcomes. It devolves on the Finance Minister to present an Outcome Report based on the promises made and outlays provided in the previous year’s budget. Lack of accountability usually fosters inefficiency and indifferent outcomes. For instance, National Mission for Edible Oil (for Palm oil) launched in August 2021 had set acreage and production targets for 2025-26. Would the FM provide a status report to the nation?
This article is by no means is the last word; but these big-ticket reforms or initiatives will go a long way in mitigating the challenges that confront the farm sector.
Implementation is key to success. The Centre and the States have to work together with shared objectives and interests. Formulating a National Agriculture Policy with regionally differentiated strategies should be a good starting point for farm resurgence especially in the context of extant challenges.
I would expect the Budget to focus especially on three key crops – oilseeds, pulses and cotton. We are the world’s largest producer of pulses and second largest in cotton. The country spends over $ 20 Billion on import of vegetable oils (15-16 million tonnes) and pulses (6-7 million tonnes). Add cotton to the list. We have turned from next exporter until two years ago to net importer with import of five million bales ($ 300 million). The situation is fraught.
Successive Budgets have talked about Aatmanirbhar (self-reliance), but on the ground, lack of progress evidenced by supply shortfalls is really of deep concern.
Aatmanirbhar now appears to be a chimera because there is no holistic and strategic approach to self-reliance, nor is there anyone to take ownership.
There is a palpable lack of ‘political will’ to regulate / monitor the import trade (big corporate interests??), collect advance data, make strategic interventions in a way that would judiciously balance growers’ and consumers’ interests. It is possible, but policymakers must be open to rational suggestions.
Policy decisions are hardly data-driven. Worse, the policymaking circles lack the knowledge and capability for commodity commercial intelligence and research to take timely rational decisions.
Hedging as a scientific tool for price risk management for value chain participants is unavailable for key crops for reasons no one knows.
For key crops oilseeds, pulses and cotton, I make four key suggestions.
Stewardship: Growers need to be educated about good agricultural practices including input management, agronomy, modern cultivation practices, integrated pest management (IPM), integrated nutrient management (INM) and so on.
Technology: It will be a game changer for the country; but irrational opposition to tech infusion continues to keep farmers vulnerable and dependent on official handouts. This must change. Promote domestic genetic research including through public private partnership.
Replication: Reduce the large inter-regional variation in crop yields by studying the practices adopted by growers in high yield areas and replicating them in low yield areas.
Role of Corporates: Encourage (mandate, if need be) corporates with large exposure to oilseeds, pulses and cotton to establish backward linkages; let them work with FPOs and help augment domestic production through contract cultivation.