Print Friendly, PDF & Email

Agriculture: More from Less

  • Indian agriculture, is in a way, a victim of its own past success—especially the green revolution. It has become cereal-centric and as a result, regionally-biased and input-intensive (land, water, and fertiliser).
  • Changes
    • Rapid industrialization and climate change are raising the scarcity value of land and water, respectively
    • Evolving dietary patterns are favoring greater protein consumption.
  • measures to solve the changes
    • increasing productivity by getting “more from less” especially in relation to water via micro irrigation;
    • prioritizing the cultivation of less water-intensive crops, especially pulses and oil-seeds, supported by a favorable Minimum Support Price (MSP) regime that incorporates the full social benefits of producing such crops and backed by a strengthened procurement system;
    • re-invigorating agricultural research and extension in these crops.
    • provide evidence of deep segmentation in Indian agricultural markets which, if remedied, would create one Indian agricultural market and boost farmers’ incomes.
    • Encouraging other crops, notably pulses (via a Rainbow Revolution to follow the Green and White Revolutions) will be necessary to match supply with evolving dietary patterns that favor greater proteins consumption.
 
  •  sharp decline in cultivable land per person in India—much sharper than in other countries
  •  India has much lower levels of water per capita than Brazil, one of the world’s leading agricultural countries.
  • Brazil and China use approximately 60 per cent of their renewable fresh water resources for agriculture, India uses a little over 90 per cent.
  • ProductIvIty :The macro picture

    • central challenge of Indian agriculture is low productivity, evident in modest average yields, especially in pulses.
    • Eg:wheat and rice. These two cereals are grown on the most fertile and irrigated areas in the country
      • they use a large part of the resources that the government channels to agriculture,
      • Even then, average yields of wheat and rice in India are much below that of China’s – 46 per cent below in the case of rice and 39 per cent in the case of wheat.
      • In wheat (Figure 3), India’s average yield in 2013 of 3075 kg/ha is lower than the world average of 3257 kg/ha. Although both Punjab and Haryana have much higher yields of 4500 kg/ha, most other Indian states have yields lower than that of Bangladesh.
      • India’s best state, Punjab, has paddy yield close to 6000 kg/ha whereas China’s yield is 6709 kg/ha.
    • India happens to be the major producer and consumer of pulses, which is one of the major sources of protein for the population. India has low yields comparable to most countries
    • India is the major producer and consumer of pulses, imports cannot be the main source for meeting domestic demand. Therefore, policy must incentivise movement of resources towards production of pulses.
  • Where are croPs GroWn? a double bloW for Pulses
    • most of the land dedicated to growing pulses in each state unirrigated,
    • the national output of pulses comes predominantly from un-irrigated land.
    • In water scarce Maharashtra, all sugarcane which is a water intensive crop is grown on irrigated land.
    • Meeting the high and growing demand for pulses in the country will require large increases in pulses production on irrigated land, but this will not occur if agriculture policies continue to focus largely on cereals and sugarcane.
    • According to NSS data, the average annual income of the median3 farmer net of production costs from cultivation is less than R20,000 in 17 states
    • India uses 2 to 4 times more water to produce a unit of major food crop than does China and Brazil
  • Critical InPut: Water

    • Irrigation investments must shift to adopting technologies like sprinkler and drip irrigation and rainwater harvesting (leveraging labour available under the MGNREGS where possible)
      • In order to facilitate this shift, the new irrigation technologies need to be accorded “infrastructure lending” status (currently accorded to canal irrigation) and both the centre and states need to increase public spending for micro irrigation.
    •  ongoing irrigation schemes
      • the Accelerated Irrigation Benefit Programme (AIBP),
      • Integrated Watershed Management Programme (IWMP) and
      • On Farm Water Management (OFWM) – should be merged into the Prime Minister’s Krishi Sinchayi Yojana (PMKSY) offers the possibility of convergence of investments in irrigation, from water source to distribution and end-use.
    • key factor undermining the efficient use of water is subsidies on power for agriculture
      •  According to an analysis by National Aeronautics and Space Administration (NASA)5 , India’s water tables are declining at a rate of 0.3 meters per year
    • Micro Irrigation
      •  to increase productivity while conserving water (more for less), is to adopt micro irrigation methods.
  • Policies

    • Minimum Support Price and Procurement Policy

      • future prices are guaranteed by the government through the MSP. But while the government announces MSP for 23 crops, effective MSP-linked procurement occurs mainly for wheat, rice and cotton.
      • there is no government procurement per se in sugarcane, a crop with assured irrigation, mills are legally obligated to buy cane from farmers at prices fixed by government, an effective MSP-like engangement.
      •  Public procurement at MSP has disproportionately focused on wheat, rice and sugarcane and perhaps even at the expense of other crops such as pulses and oilseeds.
      • Awareness of the MSP policy among farmers are remains very less Public procurement at MSP has disproportionately focused on wheat, rice and sugarcane and perhaps even at the expense of other crops such as pulses and oilseeds.
      •  Public procurement at MSP has disproportionately focused on wheat, rice and sugarcane and perhaps even at the expense of other crops such as pulses and oilseeds.
      • the lack of awareness and proper public procurement resulted in regional bias in farm incomes
      • One way of rationalizing MSP policy is to make these price signals reflect social rather than just private returns of production
        • Eg:social returns to pulse production is higher than the private returns, because it not only uses less water and fertiliser but fixes atmospheric nitrogen naturally and helps keep the soil porous and well aerated because of its deep and extensive root systems. These positive social benefits should be incorporated into MSP estimates.
    • Farmers could also be assured a floor price for their crops through a “Price Deficiency Payment” (NITI Ayog)
      • Under this system if the price in an Agriculture Produce Market Committee (APMC) mandi fell below the MSP then the farmer would be entitled to a maximum of, say, 50 per cent of the difference between the MSP and the market price
        •  subsidy could be paid to the farmer via Direct Benefits Transfer (DBT). Such a system would keep the quantum of the subsidy bill in check and also be consistent with India’s obligations to the WTO.
  • agricultural research and education

    • India’s National Agricultural Research System (NARS) (comprising the Indian Council of Agricultural Research (ICAR), other central research institutes, and national research centres set up by ICAR)
    • In more recent years, however, agriculture research has been plagued by severe under investment and neglect.
    •  system has been sapped by three weaknesses
      • First: in states where agriculture is relatively more important (as measured by their share of agriculture in state GDP), agriculture education is especially weak if measured by the number of students enrolled in agricultural universities
        • especially true in states in the Northern (except Punjab and Haryana) and Eastern regions.
        • agriculture universities have been plagued by:
          • (i) resource crunch,
          • (ii) difficulty in attracting talented faculty,
          • (iii) limited linkages and collaborations with international counterparts,
          • (iv) weakening of the lab-to-land connect; and,
          • (v) lack of innovation
        • The weaknesses of state agriculture universities (SAU) imply that extension systems critical for the diffusion of new agricultural innovations and practices, or even dissemination of information about public programs such as MSP, are unable to achieve their intended objectives.
      • Second investment in public agricultural research in India needs to be augmented.
        • India’s current spending on agriculture research is considerably below that of China and as a share of agriculture GDP even less than that of Bangladesh and Indonesia
      • Third resource augmentation can go only so far unless accompanied by changes in incentives.
        • as the majority (63.5 per cent) of scientists [had] low to very low level of productivity.
        • India should also fully leverage new lowcost technologies that have wider benefits for agriculture. Cellphones have been creatively used by countries like Ghana, Kenya, Nigeria and Thailand to provide information on prices and cultivation to farmers which has led to massive increases in farm incomes. Since the costs of drones have fallen sharply, they can be used by SAUs to provide crucial information on crop health, irrigation problems, soil variation and even pest and fungal infestations that are not apparent at eye level to farmers.
  • market failure for agricultural output
  • Market Segmentation

    • Market segmentation reduces overall welfare because it prevents gains through competition, efficient resource allocation, specialization in subsectors and fewer intermediaries.
    • The causes of market segmentation are many
      • differences in remoteness and connectivity (rural roads)
      • local market power of intermediaries
      • degree of private sector competition
      • propensity of regional exposure to shocks
      • local storage capacity,
      • mandi infrastructure and farmers access to them
      • storage life of the crop and crop specific processing cost
    • Market segmentation results in large differences in producer and consumer prices.
  • PrIce WedGes

    • Several layers of intermediary networks exist between farmers and wholesale markets and also between wholesale and retail markets, data for which is unavailable
    • wedges between farm-gate and wholesale prices and then between retail and wholesale prices for certain crops
    • the large magnitude of price wedges both across commodities as well as across states1
    •  greater market integration is essential for farmers to get higher farm gate prices.
    •  GST bill is a step in the right direction, a lot more needs to be done by the states, including, creating better physical infrastructure, improved price
    • dissemination campaigns, and removing laws that force farmers to sell to local monopolies, etc.