Rejuvenating India’s Agriculture Sector
Posted by Unknown in Agriculture and Farming, India, Problems in Agriculture on Friday, 25 January 2013
(The Economic Times)
Rejuvenating India's agriculture sector, which provides livelihood to
nearly 60% of the workforce, needs to be made central to the inclusive
growth endeavour. India's current policies for the agriculture sector
are geared towards short-term solutions and revenue expenditure rather
than long-term capital investment solutions. The dependence on subsidies
squeezes government spends on critical infrastructure, technology and
credit, in the absence of which farmers use inefficient methods of
cultivation.
The
need for increasing agricultural productivity through technology
infusion and market-led interventions is gaining urgency. It is
well-acknowledged that every rupee of contribution to GDP from farming
is twice as effective as other interventions in alleviating rural
poverty. Agriculture is an indirect growth driver, as a growth rate of
4% in agriculture translates into robust demand for other sectors.
High
agriculture growth also helps mute food inflation. Yields per hectare
of foodgrains, fruits and vegetables in India are far below global
averages. Our rice yields are one-third of China's, and about half of
Vietnam's and Indonesia's. Even India's most productive states lag
global averages. For example, Punjab's yield of rice in 2010 was 3.8
tonnes per hectare against the global average of 4.3 tonnes. The average
yield for apples in India (J&K ) is about 11 tonnes per acre
compared to the US, New Zealand, Israel or China, where yields range
30-70 tonnes per acre.
This
pattern is typical of most of our farm commodities such as pulses and
edible oilseeds whose demand has been rising faster than supply, adding
to food inflation. Substantial hikes in Minimum Support Price for rice
and wheat have distorted production patterns, resulting in loss of
benefits of crop diversification and inadequate focus on cash crops.
Lack of infrastructure , post-harvest linkages and technology further
results in losses across the supply chain. For example, gross capital
formation in agriculture and allied sectors has been below 3% for years.
The experience of other economies at similar stages of development is
instructive.
Brazil,
China, and several south-east Asian countries have leveraged technology
and instituted trade-friendly policies to bring in greater private
sector investments into agriculture. In India, where 80% of landholdings
are of less than two acres, it is essential to find economically viable
solutions to improve farmer incomes. Technologies for energy saving ,
environment protection, and satellite mapping need to be infused into
the sector. All this would require high investments . Such investments
can be attracted from the private sector, which has largely remained
outside the effort on agricultural capital expenditure . Legal and
policy interventions could help augment private investments. For
example, the Agriculture Produce Market Committees Act has yet to be
revisited in many states.
Supply
chain infrastructure creation such as warehousing , cold storage and
rural roads, would also bring in private funds. The private sector is
capable of large-scale technology infusion. Precision farming , which
leverages IT for matching inputs and provides real-time information on
soil, has been deployed to good use by the Argentine group Los Grobos in
an outsourcing structure . No-till farming is used in place of
ploughing in some countries, leaving residue of the last crop to enrich
the soil. Such new-age farming methods , if propagated, can transform
production and yields. So, it is essential to raise public research in
agriculture. Part of Brazil's success in the sector owes to its high
expenditure on agricultural research at 1.7% of its GDP, higher than in
China.
Investment
in R&D and sciencebased technologies would greatly benefit India as
well, which has 14 agri-climatic zones and potentially wide range of
agri produce. Private investment into agriculture R&D must be
encouraged through incentives such as tax breaks and availability of
land and infrastructure. Finally , trade-led agricultural development
must be considered . While self-sufficiency has been the primary
objective for the agriculture policy, export of agri-produce to other
markets must be explored. For example, countries such as Mexico and the
Philippines have taken lead positions in export of mangoes, one of
India's trademark fruits. Agricultural tariffs need rethinking in this
context.
As
the Indian economy expands , better productivity through technology
infusion and introduction of global best practices will ensure better
quality and prices for consumers . Also, Indian agriculture will be able
to meet to the changing needs of today's consumer and this will give a
major fillip to farmers to diversify to high value cash crops. But most
importantly, the true winner will be the farmer, in particular the small
and marginal farmer, who will be able to improve his income through
better productivity and be an equal partner in India's growth.
