Agriculture in India. Why in news? Overview

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1 Agriculture in India Why in news? For a variety of reasons, farmers in several states have been agitating aggressively for some time now. Due to poor crop productivity and failing monsoons, several states like Uttar Pradesh, Maharashtra, Punjab and Karnataka, (which account for around one-third of India's population) have announced farm loan waivers. States like U.P and Punjab announced it in an election year. Thus, this issue has become socio-politically important. Further, this may lead to competitive populism and other states may also resort to such measures. Overview The history of Agriculture in India dates back to Indus Valley Civilization and in some parts of Southern India, it was found to be practised even before the Harappans. Today, India ranks second worldwide in farm output. The economic contribution of agriculture to India's GDP is steadily declining with the country's broad-based economic growth, yet, having nearly 50% of the population dependent on it for livelihood. Agriculture, along with fisheries and forestry, is one of the largest contributors to the Gross Domestic Product (GDP). As per the estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) is expected to be 17.3 per cent of the Gross Value Added (GVA) during at prices. The Department of Agriculture and Cooperation under the Ministry of Agriculture is responsible for the development of the agriculture sector in India. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied agricultural sectors.

2 Indian agriculture: Potential, Prospects and Prescriptions Potential: Facts about Agriculture in India Index Gross cropped area Net sown area Agricultural irrigated land (% of total agricultural land) Animal husbandry output Agricultural growth Figure 195 million hectare 141 million hectare 36% (As per 2014 World bank data) Constitutes about 32% of country s agricultural output 4.1% in the current year from 1.2% in (Economic survey) Horticultural crops occupy 10% of Gross cropped area and producing m tones. Total production of fruits is at m tones and vegetables are at 93 m tones. Animal husbandry output constitutes about 32% of country s agricultural output. The contribution of this sector to the total GDP during was 5.26%. India is the highest producer of milk and second highest producer of fruits and vegetables. India accounts for 57% of the world s buffalo population and 14% of cattle population. India holds 6th place with 7% world s market share in medicinal and aromatic plants. Problems faced by Indian Agricultural sector:

3 Productivity Although India has attained self-sufficiency in food staples, the productivity of its farms is below that of Brazil, the United States, France and other nations. Indian wheat farms, for example, produce about a third of the wheat per hectare per year compared to farms in France. Rice productivity in India was less than half that of China. Other staples productivity in India is similarly low.

4 Indian total factor productivity growth remains below 2% per annum; in contrast, China's total factor productivity growth is about 6% per annum, even though China also has smallholding farmers. Several studies suggest India could eradicate its hunger and malnutrition and be a major source of food for the world by achieving productivity comparable with other countries. Infrastructure: Poor penetration of forward and backward linkages Food processing units needs to have strong backward linkages with the farmers, farmer producer organizations, self-help groups, farmer s groups etc. Further, to be able to sell its processed food, it needs to develop strong forward linkages with wholesalers, retailers, exporters etc. India has poor rural roads affecting timely supply of inputs and timely transfer of outputs from farms. In other areas regional floods, poor seed quality and inefficient farming practices, lack of cold storage and harvest spoilage cause over 30% of farmer's produce going to waste, lack of organised retail and competing buyers thereby limiting Indian farmer's ability to sell the surplus and commercial crops. Agriculture Price policy The agricultural price policy in India has succeeded in establishing certainty and confidence in respect of the prices of agricultural commodities through the fixation of minimum support prices by Commission for Agricultural Costs and Prices. But due to the variations in the degree of enforcement of procurement in different years, some degree of uncertainty and instability in prices were experienced by the Indian farmers. Again raising the minimum support prices and procurement prices offered incentive to the producers to increase their production but these benefits were mostly restricted to large farmers. Moreover, the public distribution system in India is also subjected to various limitations such

5 as its restricted operation in wheat and rice only, insufficient coverage of rural areas, inadequate coverage of the people lying below the poverty line and it s too much expensiveness due to lack of targeting. As argued by several economists, continuous increase in the procurement prices has resulted inflationary pressures in the economy. This increase in the price of food grains has also resulted in huge hardships to the rural poor consisting of marginal farmers and landless labourers who constitute the bulk of rural population. Other problems include: Falling water levels, Expensive credit. A distorted market. Many intermediaries who increase cost but do not add much value. Laws that stifle private investment. Produce that does not meet international standards. Inappropriate research. Crop pattern. Related issues: Farmer suicides In 2012, the National Crime Records Bureau of India reported 13,754 farmer suicides. Farmer suicides account for 11.2% of all suicides in India. Activists and scholars have offered a number of conflicting reasons for farmer suicides, such as Natural: Monsoon failure, frequent El-Nino events, and draught have decreased the production substantially. Economic: Less fund at their disposal, higher interest rate since many buy from local zamidars and landholders often result into burgeoning effect of actual & interest money which in adverse case sometime

6 take away their land and hence their livelihood. Social Farmers from rural areas have big families which are dependent on the small farmland which leads to economic burden. Dowry for daughters Farmers either offer their property or give away the land as dowry to the groom. Policy paralysis: Poor targeting of Subsidies mostly benefiting the rich creating wide gap in earning profit. Local administration is often insensitive to the demands and requirements of farmers. Personal issues such as illness, alcohol addiction, stress and family responsibilities. Farm loan Waiver The farm credit system in Indian agriculture, evolved over decades has been instrumental in enhancing production and marketing of farm produce and stimulating capital formation in agriculture. Credit for Indian agriculture has to expand at a faster rate than before because of the need to step-up agricultural growth to generate surplus for exports, and also because of change in the product mix towards animal husbandry, aquaculture, fish farming, horticulture and floriculture, medicinal plants, which will necessitate larger investments. Why is it important? Agriculture Growth has decreased since to around 1% Input cost is increasing due to rise in prices of seeds, fertilisers etc. Distress migrations- causing burden on destinations. Growth of unorganised credit sector- lack of access to organised sector lending, many farmers resort to unorganised credit sector. Increasing attrition rate in agriculture

7 Concerns: A farm loan waiver undermines an honest credit culture and discipline... It engenders moral hazard and entails transfer from tax payers, there s a need to create consensus that farm loan waiver promises are eschewed. - RBI Governor Urjit patel Loan waivers provide some relief to farmers in such situations, but there are debates about the long-term effectiveness of the measure. Critics demand making agriculture sustainable by reducing inefficiencies, increasing income, reducing costs and providing protection through insurance schemes. They point out that farm loan waivers are at best a temporary solution and entail a moral hazard even those who can afford to pay may not, in the expectation of a waiver. Such measures can erode credit discipline and may make banks wary of lending to farmers in the future. It also makes a sharp dent in the finances of the government that finances the write-off. A blanket waiver scheme is detrimental to the development of credit markets. Repeated debt-waiver programmes distort households incentive structures, away from productive investments and towards unproductive consumption and wilful defaults. These wilful defaults, in turn, are likely to disrupt the functioning of the entire credit system. Economic cost of farm loan waiver: The loan waiver for small and marginal farmers will push up states' fiscal deficit to 2.71% (Budgeted: 1.53%) in FY 18 of gross state domestic product (GSDP). The unintended outcome of this could be reduced availability of credit to the farmers from banks, forcing them to resort to the unorganised lending sector. It affects credit discipline and demand for debt waiver may also come in from other states as well. Criticisms

8 According to Parshuram Ray, director of the New Delhi-based Centre for Environment and Food Security, the loan waiver was "an electoral sop that involves a lot of statistical jugglery and very little of real hope for Indian farmers." An important feature of the program which has been heavily criticized is that it covers only formal sources of credit and excludes any kind of informal loan. Thus, while it benefitted wealthy and large-scale farmers who had access to institutional credit (about 23% of the total number of farmers), small and marginal farmers, who borrow the majority of their funds from private moneylenders, would not benefit from the scheme. Another criticism of this scheme was that it might cripple the agricultural credit system.

9 Recent reformative steps taken by Government: Budget 2017 Government to Double the Income of Farmers by 2022 Why Double Farmers' Income? Past strategy for development of the agriculture sector in India has focused primarily on raising agricultural output and improving food security. The net result has been a 45 per cent increase in per person food production, which has made India not only food self-sufficient at aggregate level, but also a net food exporting country. The strategy did not explicitly recognise the need to raise farmers' income and did not mention any direct measure to promote farmers welfare. The net result has been that farmers income remained low, which is evident from the incidence of poverty among farm households.

10 Doubling real income of farmers till over the base year of , requires annual growth of per cent in farmer s income. This implies that the on-going and previously achieved rate of growth in farm income has to be sharply accelerated. Therefore, strong measures will be needed to harness all possible sources of growth in farmers' income within as well as outside agriculture sector. The major sources of growth operating within agriculture sector are: Improvement in productivity Resource use efficiency or saving in cost of production Increase in cropping intensity Diversification towards high value crops The sources outside agriculture include: Shifting cultivators from farm to non-farm occupations, and Improvement in terms of trade for farmers or real prices received by farmers. Niti ayog Agricultural Marketing and Farmer Friendly Reforms Index The index ranks states based on their initiatives taken in implementing provision of seven farm sector reforms. These reforms have been proposed under model APMC Act, joining e-nam initiative, special treatment to fruits and vegetables for marketing and level of taxes in mandis. States are ranked based on score on the scale ranging from 0 to 100. The minimum score of 0 implies no reforms at all and score of 100 means state is friendliest to farmers. The index identifies three major parameters. They are, Reforms in agricultural marketing Land lease

11 Forestry on private land. Pradhan Mantri Krishi Sinchai Yojana The primary objectives of PMKSY are: To increase the area of agricultural lands covered by irrigation and reduce dependency on monsoon. To improve on farm water use efficiency by adopting water management techniques adoption of precision-irrigation and other water-saving technologies to reduce wastage of water.

12 Enhancing recharge of aquifers and introducing sustainable water conservation practices. National Agriculture Market The Depart e t of Agriculture & Cooperatio for ulated a Ce tral Sector sche e for Pro otio of Natio al Agriculture Market through Agri-Tech Infrastructure Fund (ATIF) through provision of the common e-platform. Implications / Benefits for various stakeholders: Farmers They can sell produce without the interference of any brokers or middlemen thereby making competitive returns out of their investment. Traders Traders will be able to do secondary trading from one APMC to another one anywhere in India. Local traders can get access to larger national market for secondary trading. Buyers, Processers & Exporters Buyers like large retailers, processors or exporters will be able to source commodities from any mandi in India thereby reducing the intermediation cost. Their physical presence and dependence on intermediaries will not be needed. Consumers NAM will increase the number of traders and the competition among them increases. This translates into stable prices and availability to the consumers. Paramparagat Krishi Vikas Yojana Paramparagat Krishi Vikas Yojana is an elaborated component of Soil Health Management (SHM) of major project National Mission of Sustainable Agriculture (NMSA). Under PKVY Organic farming is promoted through adoption of organic village by cluster approach and PGS certification. The Scheme envisages: Promotion of commercial organic production through certified organic farming.

13 The produce will be pesticide residue free and will contribute to improve the health of consumer. It will raise farmer's income and create potential market for traders. It will motivate the farmers for natural resource mobilization for input production. Pradhan Manthri Fasal Bima Yojana The new Crop Insurance Scheme is in line with One Nation One Scheme theme. It incorporates the best features of all previous schemes and at the same time, all previous shortcomings / weaknesses have been removed.

14 Objectives To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases. To stabilise the income of farmers to ensure their continuance in farming. To encourage farmers to adopt innovative and modern agricultural practices. To ensure flow of credit to the agriculture sector. Mechanisation Mechanisation has the potential to change many agricultural output challenges as it will lead to higher productivity and economic contribution. Yet, it has been inaccessible to farmers for long largely due to economic reasons. With small land ownership and constant fragmentation, small and marginal farmers find it almost impossible to own a tractor. To make agriculture economically viable ICAR started many initiatives. It is working towards developing need-based and region specific engineering technologies and is engaged in planning, co-ordination and monitoring of R&D programmes in a national and international level. It has developed many improved machinery such as laser and leveller, self-propelled sprayers, precision seeders and planters, harvesters for cereals and sugarcane etc. It has introduced gender friendly tools for reduction in the drudgery for women farm workers. Lab to Land programme recently set up of modern mechanised farm units. Infrastructure interventions Mega food park scheme The Scheme of Mega Food Park aims at providing a mechanism to link agricultural production to the market by bringing together farmers, processors and retailers so as to ensure maximizing value addition,

15 minimizing wastage, increasing farmers income and creating employment opportunities particularly in rural sector. The Mega Food Park Scheme is based on Cluster approach and envisages a well-defined agree/ horticultural-processing zone containing state-of-the art processing facilities with support infrastructure and wellestablished supply chain. 9 Mega Food Parks namely Patanjali Food and Herbal Park, Haridwar, Srini Food Park, Chittoor, North East Mega Food Park, Nalbari, International Mega Food Park, Fazilka, Integrated Food Park, Tumkur, Jharkhand Mega Food Park, Ranchi, Indus Mega Food Park, Khargoan, Jangipur Bengal Mega Food Park, Murshidabad and MITS Mega Food Park Pvt Ltd, Rayagada are functional as on Cold Storage India is the largest producer of fruits and second largest producer of vegetables in the world. In spite of that per capita availability of fruits and vegetables is quite low because of post-harvest losses which account for about 25% to 30% of production. The Task Force on cold-chain development in India had suggested in its report to establish a National Centre for Cold-chain Development (NCCD) in India as an autonomous centre for excellence to be established as a registered society to work in close collaboration with industry and other stake holders to promote and develop integrated cold-chain in India for perishable F&V and other perishable allied agri commodities to reduce wastages and improve the gains to farmers and consumers substantially. Food processing and Safety Food processing levels are quite low in India at 3% when compared to 30-70% in developed countries and wastage of agriculture produce is as high as 40%. National Food Processing Mission was launched to address these problems and create potential for higher revenues. The objectives of the program are:

16 Promote Primary processing centres close to the farms and link them with Clusters through hub and spoke models. Facilitate exports of high value products like Cheese, Peanut butter etc. and encourage such facilities through subsidies. Develop food processing clusters, Food parks and Agriculture SEZs; Contract farming, Warehouses (Cold chains) development was also given an important role by providing tax rebates. This scheme has resulted in some positive outcomes like Exports from Agriculture SEZs have increased over the years. Exports of Meat, Marine products have improved. But the performance of this scheme on the whole has left us much to be desired with warehouses, processing facilities have not been developed. In the absence of APMC reforms, contract farming and private procurement is virtually absent. Crop pattern Record productions of sugarcane, ground nuts, and vegetables were seen but wastage was higher as export opportunities shrunk. Indian farming suffers from excess cropping of water-intensive crops like sugarcanes in dry areas. This is one of reason for agricultural and farm distress. The high dependency on Monsoon adds to worry. The recent initiative from government which has emphasized the crop diversification and climate-appropriate agriculture and cropping are helping the shift from switch to value added and less water intensive crops. Model Land Leasing Law Taking note of increasing incidents of leasing in and out of land and suboptimal use of land with lesser number of cultivators, NITI Aayog has formulated a Model Agricultural Land Leasing Act, 2016 to both recognize the rights of the tenant and safeguard interest of landowners. A dedicated cell for land reforms was also set up in NITI.

17 Soil Health Card The campaign to provide soil health card with nutrient information of soil would help the farmers to educate about most viable and appropriate cropping pattern suiting the climatic conditions in region. Shortage of infrastructure like soil testing labs is hindrances but it s a move in right direction. Higher MSP increase in Pulses and Oil Seeds From last two years, the MSP has tried to address the issues of higher MSP in cereal and lower in Pulses and oil seed. The recent move to increase pulses MSP by 7% in move towards the Crop-neutral MSP regime. DEPARTMENT OF ANIMAL HUSBANDRY, DAIRYING AND FISHERIES Two National Kamdhenu Breeding Centers opened in the country, one in the North and one in the South. National Gokul Mission started for development and conservation of indigenous cattle breeds. Blue Revolution initiated to increase fisheries production. Coverage under National Livestock Mission (NLM) extended to entire country. AGRICULTURE RESEARCH AND EDUCATION New schemes such as Mera Gaon Mera Garav, Mission 2050, Farmers First, and Student Ready started in Krishi Vigyan Kendras (KVKs) are the frontline agricultural extension center funded by the Indian Council of Agricultural Research (ICAR). The KVKs focus on training and education of farmers, rural youth, on field demonstration of new and improved farming techniques etc. Web-based Farmers Portal and mobile based mkisan SMS portal along with two mobile Apps ( Kisan Suvidha & Pusa Krishi ) have been launched. Information is also being disseminated through the Kissan Call Centre and DD Kisan Channel.

18 Future Prospects: Irrigation: Per Drop More Crop India also has much less per capita water as compared to other leading agrarian countries. This problem exacerbated because India has been exporting virtual water embedded in crops, which is marked by its feature of non-replenishment. Once it is exported, it cannot be recovered. Given this scenario, it is time to make a shift to micro irrigation so that the efficient and judicious use of scarce water resources can be made. High initial costs deter farmers to adopt this technology. While big farmers can easily avail this technology, the government should consider giving subsidies to small farmers to boost the adoption of this technology. Second green revolution: India needs second green revolution to bring food security to its billion plus population, to remove distress of farming community and to make its agriculture globally competitive. To achieve these goals, yield rates of food grains, pulses, oil seeds, dairying and poultry, horticultural crops, and vegetables need to be enhanced; and forward-backward linkages of agriculture with technology, food processing industry needs to be strengthened to match soil to seed and product to market. High productivity and better value addition by agro-processing are its key parameters. R&D is the future: India spent 31% of its agricultural GDP on research and development in 2010, in the same year China spent almost double that amount. Even our neighbour Bangladesh spent 38% of its agricultural GDP on research and development in that year.

19 As a result of this resource crunch there has not been diffusion of new agricultural innovations and practices that is critical for enhancing farm productivity. As the Economic Survey notes, even 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. There has also not been any major contribution from the private sector towards research and development. Government should thus woo private players by giving them incentives to play a major role in agricultural research and development. Other Initiatives needed: More from less should be the aim of agriculture because rapid industrialization and climate change have raised the scarcity value of land and water. Indian agriculture is the victim of the Green Revolution s success. It has become cereal-centric, regionally-biased and resource-intensive. A rainbow revolution must follow the green and white revolutions. Genetically modified crop technologies have significant net benefits. Evolved regulation is needed to allay public fears so they can be deployed. Pulses and oilseeds must be supported with procurement and support prices that reflect their social contribution less water use and enrichment of soil with atmospheric nitrogen. Advancements in Seed Technology - New varieties need to be tested and seeds of these varieties should be made available to the farmers for cultivation in the regions in which it is suitable. Regulatory measures for quality seed production have to be tightened so as to discourage the sale of spurious seeds to the farmers.

20 Subsidies on power must end to curb water wastage. Cheap power makes India a net exporter of water through commodities like cotton, sugar and soybean, while China is a net importer of water through soybean, cotton, meat and grains. Agricultural research has the biggest impact on yield and profitability but it is weak in states where agriculture is relatively more important (eastern and northern states, except Punjab and Haryana). The private sector must be enticed into pulses research (which it has shunned) by offering a disproportionately large enough award to the winner for innovating in desirable traits, but the intellectual property rights must vest with the government. There should be equal treatment of the private, public and citizen sectors in this respect. Conclusion The recent initiatives taken by the Government are definitely steps taken in the right direction. The agreements signed between India and Israel further underscore the fact how water management, and judicious usage of limited resources is vital for a thriving agricultural sector. Recent developments further underscore the fact that India urgently needs to diversify its cropping pattern- this will help conserve moisture and thus help in judicious usage of resources. Efforts described above can further the objective of the Government of doubling farmer s income by the year Such an effort would involve the collective participation of various stakeholders, including the wider farming community, pressure groups, private sector, banking sector, and both the central and state governments. Approach to Civil Service GS-2

21 GS-3 Government policies and interventions for development in various sectors and issues arising out of their design and implementation. Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e- technology in the aid of farmers Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing. Food processing and related industries in India- scope and significance, location, upstream and downstream requirements, supply chain management. Land reforms in India. GS-4 Values- empathy in admin Farm suicides- Possible case study Practice questions 1. What are the impediments in marketing and supply chain management in developing the food processing industry in India? Can e-commerce help in overcoming these bottlenecks? (250 words) 2. Critically discuss the ethical aspects of farmer suicides in India. (250 words) 3. Livestock rearing has a big potential for providing non-farm employment and income in rural areas. Discuss suggesting suitable measures to promote this sector in India. (250 words)