Editorial : Agriculture sector

Headline : Time for India to relook the agricultural sector Editorial 30th Mar’19 FinancialExpress

Details :

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

 

Measuring productivity:

Productivity in agriculture can be looked at in two ways:

  1. 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.
  1. 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

  1. 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.
  1. 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.
  1. 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).

 

Conclusion:

  • 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.

 

Importance:

GS Paper III: Economy

 

Section : Editorial Analysis

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