Editorial : Agriculture sector
Headline : Time for India to relook the agricultural sector Editorial 30th Mar’19 FinancialExpress
India’s progress in agriculture:
- India has made significant strides in agriculture and food security since independence.
- It has transformed from a food deficit nation to ensuring its food security despite an almost four-fold increase in population.
But time has come to relook at agriculture in India:
- India needs to shift from subsistence agriculture to robust agricultural systems that do all of the following:
- Provide food security for all its citizens
- Ensure income security for its farmers
- More diversified and better nutrition for its citizens
- Globally competitive farm productivity levels
Productivity in agriculture can be looked at in two ways:
- On a per hectare basis – India lags but is doing ok
- Over the past few decades, India has increased its productivity on a per hectare basis.
- However, India still lags behind many emerging market peers and most developed nations on this metric.
- On a per farm worker basis – India is doing very poorly
- India is one of the least productive in agriculture on a per farm worker basis amongst major economies.
- Due to small size of farm holdings:
- About 45% of India’s workforce is involved in agriculture compared to national best practices of less than 1%.
- The disproportionately large labour force in agriculture is related to the size of India’s landholdings.
- From an average of 2.7 hectares in 1970, India’s farms have become progressively more fragmented, with the latest Agriculture Census 2015-16 showing that India’s average farm size is now 1 hectare.
- Compare this to say, Canada (~300 hectares), Argentina (~500 hectares) and Ukraine (~1,000 hectares).
- Small landholdings have constrained mechanisation, technology adoption, and economies of scale do not accrue at such levels of landholding.
Ways to improve per-farm productivity
- Farms need to get bigger:
- Land is a state subject, and so states must take the lead in reforms in this regard to allow farm sizes to grow.
- Land Leasing:
- One way to achieve bigger land sizes is land leasing.
- States can come up with their own laws with suitable modifications to NITI Aayog’s Model Land Leasing Act, 2016, as per their needs.
- Digitisation of land records critical for this:
- Accelerating the digitisation of land records is critical for smooth implementation of this game-changing reform.
- Telangana has made significant progress in this regard and other states must follow their example.
- Farmers’ collectives:
- A stronger push is needed to collectivise farmers through various farmer producer companies (FPCs), farmer producer organisations (FPOs) and cooperatives, for bringing collective benefits from scale.
- Reducing wastage by strengthening supply chains:
- The benefits of rising productivity will not accrue to farmers unless the supply and value chain is strengthened, especially in the case of horticulture products.
- NITI Aayog’s Strategy Document points out that the annual cost of post-harvest losses can be nearly Rs. 1 lakh crore.
- The study by the Central Institute of Post-Harvest Engineering & Technology (CIPHET) indicated that the largest amount of losses accrue at the harvesting stage, then at the sorting/grading stage, followed by the transport one.
- Markets and packaging closer to farms:
- We need to target the creation of packhouses much closer to the farm gate.
- Gramin Rural Agricultural Markets (GrAMs):
- The GrAMs scheme is targeting the transformation of 22,000 rural periodic markets close to the farm gate.
- An important component of this scheme is that these GrAMs be kept out of the purview of the State APMC Acts.
- Promoting FPC and FPO ownership of these GrAMs should be considered.
- Similarly, private sector enterprises willing to establish backward linkages should partner with state governments in organising their sourcing through GrAMs.
- Taking farmers out of farming:
- Larger farms with a strengthened supply chains, marketing reforms etc. are incremental solutions to agrarian distress which could collectively serve to double the final output of the overall food supply chain in the country.
- However, even with these reforms, the problem of dismally low productivity per farm worker is not yet suitably addressed.
- Pulling cultivators into non-farm or off-farm activities is also required.
- Remunerative jobs outside agriculture:
- This requires more remunerative jobs being created outside agriculture.
- Creating blue collar jobs in and around agriculture is an attractive option.
- The food processing industry has the potential to generate substantial employment.
- The ‘Make in India’ initiative could be a driver of absorbing some of the labour from rising farm productivity. For speedier progress, labour intensive sectors like the construction sector can absorb labour rapidly.
- Farming as a Service (FaaS):
- FaaS – delivering farm mechanisation solutions, transport solutions or extension services etc. – offers employment generation capacity as well.
- It has the potential to reduce costs for farmers besides generating rural employment.
- For example, Madhya Pradesh has had success in promoting the custom hiring centre (CHC) model.
- PPPs in extension services:
- Partnering with the private sector in delivering extension services is another avenue towards generating rural employment.
- NITI’s Strategy for New India @ 75 pitches for public-private partnership in extension delivery through Krishi Vigyan Kendras (KVK).
- As productivity increases, systems need to be in place for farmers to benefit from the produce, and avoid distressed sales and depressed prices (especially in the case of horticulture products).
- We have to focus more on efficient evacuation with marketing facilities and processing facilities closer to the farm gate.
- Improving productivity should be accompanied by developing an efficient value chain, with adequate grading/sorting and assaying facilities, marketing reforms, encouraging contract farming, and boosting investment in the food processing industry.
- It should also be accompanied by boosting construction and manufacturing in rural areas to absorb the labour generated by higher farm productivity.
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