Agriculture allied activities
Allied activities are the important components of the agriculture sector and have a high revenue earning potential which is still not fully utilized in India. In this section, we will provide you with updates on the allied activities of the agriculture sector.
Allied activities News/updates
Sub-Mission on Agricultural Mechanization (SMAM)
What is the News? The Government of India released funds for various activities to empower Sub-Mission on Agricultural Mechanization(SMAM).
Various activities include the establishment of Custom Hiring Centres, Farm Machinery Bank and distribution of various agricultural machinery to different states.
Note: Agriculture mechanization is the process of replacing human and animal labour with machines in the agriculture sector. The use of tractors, threshers, harvesters, pump sets is a part of farm mechanization.
About Sub-Mission on Agricultural Mechanization(SMAM):
- The Sub-Mission on Agricultural Mechanization(SMAM) was launched in 2014-15 by the Ministry of Agriculture and Farmers Welfare.
Read Also:-Important Government schemes & Programs
Objectives of the Scheme:
- To increase the reach of farm mechanization to small and marginal farmers. Also, to increase the reach in regions where availability of farm power is low;
- To promote ‘Custom Hiring Centres’ to offset the adverse economies of scale arising due to small landholding and high cost of individual ownership;
- Also, to create hubs for hi-tech & high-value farm equipment;
- To create awareness among stakeholders through demonstration and capacity building activities;
- To ensure performance testing and certification at designated testing centres located all over the country.
Mission Strategy: To achieve the above objectives, the Mission will adopt the following strategies:
- Conduct performance testing for various farm machinery and equipment at the four Farm Machinery Training and Testing Institutes (FMTTIs), designated State Agricultural Universities (SAUs) and ICAR institutions;
- Promote farm mechanization among stakeholders by way of on-field and off-field training and demonstrations.
- Provide financial assistance to farmers for procurement of farm machinery and implements
- Establish custom hiring centers of the location and crop-specific farm machinery and implements
- Provide financial assistance to small and marginal farmers for hiring machinery and implements in low mechanized regions.
Govt Launches “Seed Minikit Programme”
What is the News?
The Ministry of Agriculture has launched the Seed Minikit Programme.
About Seed Minikit Programme:
- Seed Minikit Programme aims to distribute high yielding varieties of seeds of pulses and oilseeds to farmers.
- Nodal Agencies: The seed mini-kits are being provided by the following central agencies –
- National Seeds Corporation(NCS)
- Gujarat State Seeds Corporation
- Funding: The programme is wholly funded by the Center through the National Food Security Mission.
- Significance: This programme is a major tool for introducing new varieties of seeds in fields and instrumental in increasing the seed replacement rate.
- Seed Replacement Rate (SRR): Out of the total area of a crop planted in a season, SRR is the percentage of total area sown using certified/quality seeds other than the farm-saved seed (the practice of saving seeds to plant in the next season).
Pulses and Oilseeds Production in India:
- The Government of India in collaboration with states has been implementing programmes to enhance the production of pulses and oilseeds under the National Food Security Mission.
- Since 2014-15, there has been a renewed focus on increasing the production of pulses and oilseeds. The efforts have yielded good results.
- Oilseeds production has increased from 27.51 million tonnes in 2014-15 to 36.57million tonnes in 2020-21.
- On the other hand, pulses production has increased from 17.15 million tonnes in 2014-15 to 25.56 million tonnes in 2020-21.
- However, India still imports a lot of pulses and edible oils to meet domestic demand.
About National Food Security Mission(NFSM):
- The National Food Security Mission(NFSM) was launched in 2007-08 by the Ministry of Consumer Affairs.
- Aim: To increase the production of rice, wheat and pulses through
- area expansion and productivity enhancement
- restoring soil fertility and productivity
- Creating employment opportunities and
- enhancing farm level economy.
- Coarse cereals were also included in the Mission from 2014-15 under NFSM.
Union Minister launches “Horticulture Cluster Development Programme”
What is the News?
The Union Minister of Agriculture and Farmers Welfare has launched the Horticulture Cluster Development Programme(CDP).
About Horticulture Cluster Development Programme(CDP):
- Horticulture Cluster Development Programme(CDP) aims at growing and developing identified horticulture clusters to make them globally competitive.
- A cluster is a group of enterprises. They are located within an identifiable and, as far as practicable, contiguous area and producing similar products or services.
- Nodal Agency: The nodal agency for the programme will be the National Horticulture Board(NHB). It will implement the programme as a Central Sector Component of NHB.
- The Ministry of Agriculture and Farmers’ Welfare(MoA&FW) has identified 53 horticulture clusters. Of which 12 have been selected for the pilot launch of the programme.
- Based on the learnings from the pilot project, the programme will be scaled up to cover all the identified clusters.
- These clusters will be implemented through Cluster Development Agencies(CDAs). CDAs are appointed on the recommendations of the respective State/UT Government.
Key Features of the Programme:
- Firstly, the programme will address all major issues related to the Indian horticulture sector. This includes pre-production, production, post-harvest management, logistics, marketing and branding.
- Secondly, the programme is designed to leverage geographical specialisation and promote integrated and market-led development of horticulture clusters.
- Thirdly, the programme is expected to converge with other initiatives of the Government such as the Agriculture Infrastructure Fund.
Significance of the Programme:
- The programme will benefit about 10 lakh farmers and related stakeholders of the value chain in the Horticulture Sector.
- The programme is expected to improve the exports of the targeted horticultural crops by approximately 20%.
- Moreover, the programme is expected to attract an estimated investment of INR 10,000 crore. It is when implemented in all the 53 clusters.
- Horticulture Cluster Development Programme(CDP) aims at growing and developing identified horticulture clusters to make them globally competitive.
“Agriculture Infrastructure Fund” crosses Rs. 8,000 crore mark
What is the News?
After receiving around 8,665 applications worth Rs. 8,216 core Agriculture Infrastructure Fund(AIF) has crossed the Rs.8000 crore mark.
Sectors: The largest share of the fund has gone to Primary Agricultural Credit Societies (PACS) (58%). This is followed by agri-entrepreneurs (24%) and individual farmers (13%).
States: Andhra Pradesh has received the highest amount of funds. This is followed by Madhya Pradesh, Uttar Pradesh, Karnataka and Rajasthan.
About Agriculture Infrastructure Fund(AIF):
- Nodal Ministry: It is a Central Sector Scheme launched by the Department of Agriculture Cooperation and Farmers Welfare(DAC&FW).
- Aim: To provide medium – long term debt financing facility for investment in viable projects. This includes post-harvest management Infrastructure and community farming assets through incentives and financial support.
- Funding: Under the scheme, banks and financial institutions will provide Rs. 1 Lakh Crore as loans to eligible beneficiaries.
- Eligible Beneficiaries: Farmers, FPOs, PACS, Marketing Cooperative Societies, SHGs, Joint Liability Groups(JLG). The beneficiaries also include Agri-entrepreneurs, startups and Central/State agency or Local Body sponsored Public-Private Partnership Projects.
- Lending Institutions: Multiple lending institutions including Commercial Banks, Cooperative Banks, NCDC, NBFCs etc.
- Duration of the Scheme: FY2020 to FY2029 (10 years)
Other Key Features of Agriculture Infrastructure Fund:
- Firstly, Interest Subvention: Loans will have an interest subvention of 3% per annum up to a limit of Rs. 2 crores. This subvention will be available for a maximum period of seven years.
- Secondly, Credit Guarantee: A credit guarantee coverage will be available for eligible borrowers from the scheme. This coverage is provided under Credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE) scheme for a loan up to Rs. 2 crores. The government will pay fee for this credit coverage.
- Thirdly, Project Management Unit to provide handholding support for projects including project preparation.
- Fourthly, The moratorium for repayment of a loan under this financing facility may vary subject to a minimum of 6 months and a maximum of 2 years.
- Fifthly, Need-based refinance support will be made available by NABARD to all eligible lending entities.
Need of State Support for Agricultural development
Synopsis: The current situation of the agricultural sector demands state support to tackle future challenges. This will ensure sustainable benefits for both – farmers and consumers.
- Countries across the globe are focusing on the gradual reduction of state’s role in almost every sector (including agriculture). Their objective is to bring greater economic development.
- In India, the government’s focus is more on developing the industrial and service sector since the 2nd five-year plan of 1956. Its aim is to move excess people from agriculture into other sectors and attain better growth.
- However, some experts still believe that state support is necessary for agricultural development.
Factors inducing the state support:
- Poor State of Resources: The fertility of agricultural land is declining coupled with scarce water availability.
- Resistance to other occupation: People in agriculture don’t shut down their farming in case of rising costs. Rather they employ family labour in farm and non-farm activities. This allows them to stick to farming despite lower returns and excessive work.
- Difficult to streamline the production: The production process can’t be strengthened by building an assembly line. It is connected to the annual climatic cycle which is volatile and makes farming difficult.
- Size of Farmers: Around 86% of farmers are small and medium. They can’t access good storage, transportation and marketing facilities. This leads to distress sales in agriculture.
- Price Inelastic nature: It means demand for Agri products will not witness a major change with a change in the price of Agri products.
- For instance, a bumper crop reduces the price of Agri product as supply gets increased. This is not followed by a corresponding increase in demand that can push the price upwards. Hence, less income is generated by farmers.
- Tackling Emergencies: State support is desirable to provide quality food grains at affordable price in case of emergencies like drought, pandemic etc.
- Accommodating the Demographic profile: Despite the push towards urbanization, the UN estimates that around 800 million people will reside in rural areas in 2050. It requires proactive action by the state.
Past Performance with State support:
The state initiated the green revolution in the 1960s. It established the Food Corporation of India (FCI) and Agricultural Prices Commission in 1965.
- Surplus production allowed India to attain food security.
- Farmers were incentivised to grow as they enjoy a safety cushion based on FCI’s procurement guarantee.
- Quality grains at low prices through the PDS enhanced consumer welfare.
- Post green revolution, a decline in quantity as well quality of water is witnessed.
- The yield from chemical-based farming is also declining.
- The sector is mainly growing rice and wheat due to MSP (minimum assured price) availability. This is hampering crop diversification and encouraging more water usage as they are water-intensive crops.
- Agriculture became unviable in some regions. It led to over 3 lakh farmer suicides in the last 3 decades. This is an unprecedented event for the country.
- Firstly, the government should diversify the procurement basket. It should include more crops (like pulses, millets etc.) and more regions.
- It can procure 25% of the actual production of the commodity for that particular season. This was proposed under the 2018 Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) scheme.
- Secondly, further the procurement process should respect the regional agroecology. Eg – don’t procure water-intensive crops from water-stressed regions.
- Thirdly, the locally procured crops must be linked to Anganwadi and mid-meal centres. This will give a good market to farmers and improve nutrition of children.
- Fourthly, the government should do greater investment in specific infrastructure for pulses, millets, etc. crops that are low-priced and provide better nutrition.
- Fifthly, the network of Mandis should be expanded. This will protect farmers from exploitation of large retailers.
- Currently, there are 2,477 mandis and 4,843 sub-mandis and only 17% of farm produce pass through them. However, the need is to create a network of 42000 mandis that will enable the selling of goods within a 5 km radius.
Source: The Hindu
Government should initiate steps to make Agriculture remunerative
Synopsis: Government should avoid handing over India’s agriculture to agribusiness companies. Instead, it should take steps to make agriculture remunerative.
Development of Agriculture during the green revolution period
- During the mid-1960s, the green revolution resulted in increased productivity in India and, especially, Punjab.
- Further, the growth in agriculture was aided by public investment in irrigation and market infrastructure. Also, the guaranteed minimum support price incentivized the cultivation of wheat and rice.
- Consequently, the area under paddy cultivation in Punjab jumped from 4.8 percent of the total cropped area in 1960-61 to 39.19 percent in 2018-19. Similarly, the wheat area shares too increased from 27 percent to 45 percent.
What are the reasons for India’s deep agrarian crisis?
- First, the adverse consequence of the Green revolution.
- Monocropping: Though the production of wheat and rice increased, the cultivation of other crops started to decline. For example, Punjab had a total of 21 crops in 1960-61, which fell to nine in 1991.
- Long-term economic and ecological effects: Wheat-rice cropping monoculture led to the depletion of groundwater levels. Excessive use of chemical pesticides reduced land productivity. For example, currently, the growth rate of yield has reduced to 2 percent per year due to water scarcity.
- Second, the absence of land reforms has increased inequalities among farmer communities. For example, According to the 10th agriculture census of 2015-16,
- Small and marginal farmers (< 2 hectares of land): account for 86.2 percent of all farmers in India. But own just 47.3 percent of the crop area.
- Whereas, semi-medium and medium land holding farmers (2-10 hectares of land) : account for 13.2 percent of all farmers, but own 43.6 percent of the crop area.
- Third, the widening rural-urban divide also contributed to the rural distress.
- For example, according to the NSO household consumer expenditure survey for 2017-2018, Consumer expenditure by rural residents in 2017-18 decreased by 8.8 percent compared to 2012 statistics. Whereas, urban consumer expenditure for the same period increased by 2 percent.
Will the new farm laws address these problems?
The three contentious farm bills seek to deregulate and dismantle the APMC network. However, dismantling APMCs will not address the above-said issues. The Bihar experiment of scrapping APMC markets in 2006 can illustrate it better,
- The scrapping of APMC markets in Bihar (2006) did not improve its agricultural performance. According to the study by the National Council of Applied Economic Research (NCAER),
- Even after the scrapping of APMC markets, farm growth in the state averaged 2.04 percent, lower than the all-India average of 3.12 percent.
- Also, the scrapping of APMC markets has not led to any private investment in new marketplaces according to the study by the National Institute of Agriculture Marketing (CCSNIAM).
What needs to be done?
- First, since market accessibility is a major issue, the state should help smallholder farmers to have access to the market.
- The role of the private sector will be limited as evident from the Bihar example. Hence, Public investment in infrastructure and MSPs needs to increase.
- Worryingly, the Public sector investment in agriculture is inadequate. As per the RBI, India has spent only 0.4 percent of the GDP between 2011-12 and 2017-18.
- Second, shifting towards agroecological farming that includes crop diversification, will ensure sustainability for Indian agriculture.
- Agroecology emphasizes using locally available resources thereby minimizing external and artificial inputs.
- Recently, in 2018, the Andhra Pradesh government announced to bring all 80 lakh hectares of its cultivable land under agroecological farming by 2024.
- A study by Azim Premji University has shown that following sustainable agroecological principles has resulted in increased yields. For example, 79 percent increase in brinjal.
Source: Indian Express
Why India Needs a Strong Regulatory Framework for Agriculture?
Synopsis: There is a need for developing a strong regulatory framework to promote India’s agricultural growth.
The farmers in the country face various constraints such as accessing agricultural inputs, markets, finance, human resources, and information. All these factors are critical for increasing farmers’ competitiveness.
The existing institutional structure controlling farm production fails to handle these issues. Thus, there is a need to develop a suitable regulatory system.
How did India perform in the World Bank publication, “enabling the business of agriculture”?
The World Bank recently published a report ‘Enabling the Business of Agriculture (EBA) 2019’. It measures the extent to which government regulatory systems make it easier for their farmers to operate agricultural activities. It covers 101 countries worldwide.
- The 8 indicators of evaluation are supplying seed, registering fertilizer, securing water, registering machinery, sustaining livestock, protecting plant health, trading food, and accessing finance.
- India ranked 49 out of 101 on the EBA aggregate score. Out of 20 emerging countries, India has the second least favourable regulatory environment for farming activities.
- India has the weakest performance on five out of eight indicators compared to China, Brazil, and Russia. Indicators are; registering fertilizer and machinery, securing water, sustaining livestock, and protecting plant health indicators.
- The comparative score of India on supplying seed, trading food, and accessing finance indicators is high.
Why India needs a strong regulatory framework for agriculture?
Governments need to develop a regulatory framework that enables farmers’ access to agricultural inputs, reduces the cost of production, improves farmers’ participation in agricultural markets and value chains. It is important due to the following reasons:
- Firstly, The regulatory system that runs irrigation management is important for reducing the inconsistency of farm output, prices, and incomes, reducing vulnerability to natural shocks, and incentivizing the production of riskier and high returns crops.
- Secondly, India requires a sound regulatory framework on SPS. For instance, with the active involvement of the SPS authority called as National Agrarian Health Service (SENASAPeru), Peru had become one of the world’s leading exporters of asparagus.
- Thirdly, a healthy seed supply system is required for improving yield and adopting new crop varieties.
- Fourthly, a warehouse receipts system helps the farmers to obtain the credit needed to invest in agriculture. Warehouse receipt operators accept deposits of crops and provide warehouse receipts to farmers as evidence of deposited crops. By using warehouse receipts as security, farmers can receive credit.
- Lastly, Insufficient access to quality agricultural inputs such as fertilizers, water, and mechanical power can cause:
- Productivity loss.
- Higher cost of food production and uncertainty.
- Lower capacity of farmers to produce surpluses.
The future of world agriculture and food production is expected to increasingly depend on middle-income countries such as China, India, Brazil, and Indonesia. India needs to put in place an agricultural regulatory system that would make it easier for its farmers to conduct agricultural activities. Thereby improving their productivity, competitiveness, and income.
Source: click here
Lessons from Operation Flood for Operation Green
Synopsis: A closer inspection of the Operation Green scheme shows that the scheme is nowhere near achieving its objectives.
The Finance Minister during budget presentations announced the expansion of Operation Green (OG). It will be expanded beyond tomatoes, onions, and potatoes to 22 perishable commodities.
- Operation Green was launched in 2018 with three basic objectives:
- Firstly, it should control the wide price instability in the three largest vegetables of India (Tomatoes, Onions, and Potatoes).
- Secondly, it should build efficient value chains so that a larger share of the consumers’ money is received by the farmers.
- Thirdly, it should reduce the post-harvest losses by building modern warehouses and cold storage.
How is the operation green performing currently?
The Ministry of Food Processing Industries (MoFPI) has invited some program management agencies to see the implementation of OG.
- Rs 500 crore budget was outlined initially. However, only Rs. 8.45 crore has been actually released.
- A closer examination of the scheme reveals that OG is progressing in slow motion and is nowhere near achieving its objectives.
- Research at ICRIER tells that price instability remains high. Farmers’ share in consumers’ money is very low with 26.6 percent for potatoes, 29.1 percent for onions, and 32.4 percent for tomatoes.
- In cooperatives like AMUL, farmers get almost 75-80 percent of consumers’ money.
What can operation green learn from the operation flood?
Operation Flood (OF) changed India’s milk sector and made India the world’s largest milk producer. There are some important lessons OG can learn from OF:
- Firstly, OG will not get any immediate results and one has to be patient. There should be a separate board to strategize and implement the OG scheme, like the National Dairy Development Board (NDDB) for milk.
- Secondly, a respectable leader with commitment and competence is required to head this new board of OG. The person should be given at least a five-year term, sufficient resources, and should be made accountable for delivering results.
- The MoFPI can have its evaluation every six months.
- Thirdly, at present, the criterion for the selection of TOP commodity clusters is not transparent. This process should be transparent to keep the politics away.
- Fourthly, the subsidy scheme will have to be made innovative with new generation entrepreneurs, startups, and FPOs.
- For instance, the announcement to create an additional 10,000 FPOs along with the Agriculture Infrastructure Fund and the new farm laws are all promising but need to be implemented fast.
- Operation Green was launched in 2018 with three basic objectives:
“First Trade Minimum Price” (FTMP): A model to increase farmer’s income
Synopsis: Industrial revolution 4.0, will reduce employment opportunity. The “First Trade Minimum Price” model can be used for increasing farmer’s income.
How Industrial Revolutions are changing employment dynamics?
- The subsequent three Industrial revolutions reduced the dominance of the agriculture sector. They made the service and manufacturing sector dominant.
- This helped the agrarian workforce to shift to secondary and tertiary sectors of the economy.
- The advent of the Industrial Revolution (IR) 4.0 will make this situation more complex.
- The use of new technologies in IR 4.0 will lead to job losses in the service and manufacturing sectors. New techs include Artificial Intelligence, robotics, cognitive analytics, 3D printing, genomics.
- Thus, the industries employing a huge population from the agriculture sectors will have a reduced capacity for employment.
Present status of Agriculture sector
- However, according to the FAO, about 60 percent of the global population, directly or indirectly, is still dependent on agriculture.
- Yet, its contribution to the world GDP is just about 4 percent. Whereas, the contribution of secondary and tertiary sectors to the economy is 90%.
- In India, the contribution of the agriculture sector to GDP is 12-15 percent. Though it is higher than the world average, it is still much less, compared to the contribution from other sectors of the economy.
- Centre and state governments are continuously trying to improve the economic status of farmers. Yet, their efforts are unable to deliver a sustainable increase in their per capita income.
Thus, there is an urgent need to think about the way to avoid the possible employment crisis of the future. It involves increasing the productivity of the agriculture sector and farmer’s income.
What is the solution to improve the farmer’s income?
The author suggests a new economic model for fixing farm prices. If this model is employed it will address the issue of the agrarian economy, and will also retain the population in the agriculture sector. Also, it will make agriculture more prosperous by bringing rural average household income closer to those engaged in manufacturing and services sectors.
- The author proposes for “First Trade Minimum Price” (FTMP). According to this model, the local farming community will fix the prices of all the agricultural primary goods on a day-to-day basis or periodically.
- Also, this will make it mandatory for the first trader to procure the commodity at a price, not below the price fixed by the above criterion.
- He also suggests the use of robust digital technologies for the exercise of fixing prices.
- This proposal is based on the present market-based pricing of services and products. Here, the prices of products or services are determined and decided by the manufacturers or providers.
- Similarly, the farming community also can decide the prices of their products. It will increase their per capita income. This will also help to retain the agriculture workforce in the farm sector thereby decreasing the unemployment rate.
Arka Vyapar App to connect farmers with market
What is the News?
Indian Institute of Horticultural Research(IIHR) has launched an app called Arka Vyapar App.
About Arka Vyapar App:
- The app aims to connect farmers with traders. It will help farmers get the best available prices for their products.
- How the app would work? The app would have details of farmers and traders who have enrolled with the IIHR. At the same time, the app would also provide prices for different products in different markets of India.
- Example: If a farmer has grown papaya in Karnataka, he can know the trends related to prices for papaya in different markets through the app. He can accordingly decide upon the market which is offering the best price. He can then contact the traders there for further transactions.
Source: The Hindu
Agricultural Exports- India’s potential, initiatives, challenges and solutions
What is the News?
US Department of Agriculture(USDA) has forecasted 1.8 million tonnes of wheat and 14.4 million tonnes of rice to be imported from India. This will be the highest ever wheat export from India to the US in the last six years. Despite the Indian government’s various steps to improve agricultural exports, there are few challenges associated with the exports.
Status of India’s agricultural exports:
The 2019-20 Economic survey mentions a few important figures of India’s agricultural exports. Indian agricultural/horticultural and processed foods are exported to more than 100 countries/regions in the world.
India is one of the 15 leading exporters of agricultural products in the world.
India’s major export destination for agricultural products are the USA, Saudi Arabia, Iran, Nepal, and Bangladesh.
India’s major agricultural export basket includes rice (both Basmati and non-basmati), spices, cotton, and wheat apart from this India also exports marine products and buffalo meat.
As per APEDA (Agricultural and Processed Food Products Export Development Authority), India exported pulses worth US$ 163.90 million and dairy products worth US$ 89.50 million from April–September 2020.
Initiatives to encourage Agricultural exports in India:
Firstly, India encourages agricultural exports by creating a dedicated body named the Agricultural and Processed Food Products Export Development Authority(APEDA). The government created APEDA under the APEDA Act 1985.
- Under the Export Promotion Scheme of APEDA, the government is providing assistance to the exporters of agricultural products.
Secondly, The Government has introduced a comprehensive Agriculture Export Policy in 2018. The policy aims to double farmers’ income by 2022 by doubling agricultural exports from the country. The policy also aims to integrate Indian farmers and agricultural products into the global value chain.
Thirdly, The Government has also brought out a Central Sector Scheme – ‘Transport and Marketing Assistance for Specified Agriculture Products’. The scheme aims for assisting the international component of freight handling and marketing of agricultural products.
Fourthly, As per the present FDI Policy, 100% FDI is allowed in the following activities of agriculture through the automatic route.
However, the total agricultural export basket accounts for only a little over 2.15 percent of the world agricultural trade. This is because of various challenges associated with the exporting of agricultural commodities.
What are the challenges associated with Agricultural exports?
Firstly, The yield levels of the majority of crops in India remains much lower than the world average. This is compounded by fragmented landholdings. The average farm size in India is only 1.15 hectares.
- Majority of the Indian farmers belongs to small and marginal category. The agricultural products produced were used majorly for own consumption.
Secondly, In India, no study has been conducted to assess the long term impact of exports on the agricultural and horticultural sector by the Department of Commerce.
Thirdly, exporters of agro-commodities are not successful in due to uncertainty in the foreign trading regime
Fourthly, The government’s pro-consumer bias in India’s farm policy is unfair. Indian government putting export restrictions on imported food items to prevent inflationary pressures in the domestic economy. This hurts Agricultural exports.
- The policy deprives farmers of higher prices in the international market and also adds an element of income uncertainty.
- For example, If the government is going to impose export restrictions when international prices are at a peak. Farmers would lose part of the incentive to cultivate exportable crops.
Lastly, there is an International demand & supply situation, international prices and quality concerns also restrict India’s agricultural exports.
How to improve agricultural exports?
Firstly, the Government can provide Infrastructure status to agricultural value chains, such as warehousing, pack-houses, ripening chambers, and cold storage, etc.
Secondly, As per NITI Aayog recommendation, the Government can create village level procurement centres. This will benefit small and marginal farmers to improve agricultural exports.
Thirdly, Government can Re-invigorating agricultural research and education, this will increase lab to land connectivity.
Fourthly, APEDA has suggested augmenting cargo handling facilities at airports, ports, etc. This will reduce the waiting time.
Along with this government can create a Green channel clearance for perishable agro products in toll, air, and freight cargo stations.
Fifthly, the Government can establish regional production belts. This can be achieved by linking the Mission for Integrated Development of Horticulture and Self Help Groups.
India occupies a leading position in the global trade of agricultural products. But the share can be improved to a greater level if certain bottlenecks are resolved. The key to doubling farmer’s income is not only focusing on internal agricultural productivity but also encouraging India’s global share in the agriculture export basket.
Issue of single law for different regions of agriculture
Synopsis: Present agriculture reforms have not considered the ground level issues faced on the regional level and vertical level.
Introduction New farmers laws
Recently, the current government has opened up the output market with the purpose to let market forces improve effectiveness and create more value for farmers and the economy.
- New farm laws state that farmers are now free to sell all their products anywhere and to anyone beyond the APMC markets.
- The laws also promote contract farming by creating partnerships between farmers and food-processing companies and license unlimited notice of food except in special conditions.
However, reforms cannot be forceful and should be implemented as per the requirement of farmers.
What do the farmers want?
The farmers gave 3 main suggestions in the enquiries held with them:
- Firstly, the selling price of their produce should include the cost of production and reasonable profit margin.
- Secondly, rise and fall in prices should be nominal.
- Thirdly, Farmers are not comfortable in dealing with legal or administrative officials, so there should be little or no interface between them.
What are the issues with new laws?
There will be no control over the new markets by anyone which creates a lot of uncertainty.
- First, concerns related to Mandi-market system:
- Farmers could go to local leaders in case of malpractices in Mandis but there is no authority to report to in the new system.
- There is no certainty over the continuation of the mandi-MSP system as if the alternative traders offer better prices, farmers will go there and not to the mandis.
- Second, Issues related to contract farming:
- There is an advantage to the corporate-buyers as they can choose to not buy the full quantity and delay payments. The corporates have access to several lawyers, so the poor farmers can’t complain or compete against them.
- This is a contract between unequal and will result in unequal outcomes. Farmers do not have the resources or are not educated enough to deal with traders or corporates.
- Third, Issues related to similar solution for different problem
- The conditions of different regions are not similar as country is diverse with some 15 agroclimatic zones and has over 50 crops grown.
- It is also the reason behind farmers from outside the wheat-rice belts in northern India are not protesting.
- Thus, a comprehensive law for all the regions with different cropping patterns and climatic conditions might create troubles for farmers later.
What are the steps should be taken?
- The problem of lack of progress and high input prices in agriculture can be resolved through an efficient approach suggested in the M.S. Swaminathan Commission and/or the Ashok Dalwai Committee.
- For example, a solution should be worked out for farmers to switch from water-soaking paddy crops to other crops in Punjab and Haryana in the next five years.
- They would reduce the area under paddy by 25-30%, and the loss they suffer in the short run, will be compensated for by the government. This could also be done for sugarcane in western Maharashtra.
Guaranteed MSP will claim half the Budget
Context: Procurement of 23 crops at MSP which will amount to ₹17-lakh cr and to support this annual allocation, rich farmers should pay tax.
What is the farmers ’demand?
- The protesters have rejected the offer of amendments to farm laws and are firm on their demand for repeal of the three laws.
- Farmers want MSP guarantee.
Is it feasible to accept demand of MSP guarantee?
- Not economical: India has about 14 crore farmers (as per PM-KISAN enumeration). Cost of procuring all 23 crops is 50 per cent of India’s annual expenditure
- Unsustainable burden: The cost of MSP and subsidised food supplies are being met by heavy borrowings from the National Small Savings Fund (NSSF).
- Rising subsidies: In 2019-20, 11 per cent of the country’s total budget was spent on farmer welfare schemes. Subsidies on food and fertiliser and expenses on irrigation schemes in 2019-20 noticed a 65 per cent jump from 2017-18.
- Direct benefit: introduction of the PM-KISAN scheme resulted in leap in food subsidy.
- Rise in procurement: Procurement of food crops including paddy, wheat, pulses and oilseeds under MSP has seen a dramatic increase. For example, compared to 1,395 lakh tonnes of wheat procured between 2009 and 2014, 1,627 lakh tonne of wheat have been procured in the last five years.
What are the other issues?
- Disparities: MSP’s poor implementation has created problems of equity with large farmers of just two States Punjab and Haryana.
- Faulty policy: As per CACP, more than 95 per cent paddy farmers in Punjab and about 70 per cent farmers in Haryana are covered under MSP operations. States such as Uttar Pradesh (3.6 per cent), West Bengal (7.3 per cent), Odisha (20.6 per cent) and Bihar (1.7 per cent), have only a minuscule number of farmers benefit from procurement.
Why blanket exemption on taxing agriculture income is bad policy?
- Agriculture income including that from sale of farmland is exempt under Section 10 (1) of the Income Tax Act, 1961 without any limit.
- Rich farmers and politically influential people use the provision to convert black money into white.
- Rich farmers include many corporates who run seed companies and whose profits run into crores.
- In 2019, a Comptroller and Auditor General report red-flagged the irregularities in exemptions given by the taxman on agriculture income.
- It said that claims of tax exemption on farm income were given based on “inadequate verification or incomplete documentation” in more than a fifth of the 6,778 cases.
- Exemption was granted in hundreds of cases where land records or proof of farm income was not available.
- According to an article published in the Economic and Political Weekly by Govind Bhattacharjee, a retired Director General from CAG, assesses who had reported agricultural of more than ₹5 lakh each between 2014-15 and 2016-17 were 22,195.
The blanket exemption on agriculture income should be stopped and it should continue for roughly 86 per cent of the peasants of the country. The 14 per cent rich farmers should come forward to help the rest get MSP support.
Why green revolution states should shift from MSP crops to high value crops and Non-farm activities?
Source – Click Here
Context: Green Revolution states are required to shift their focus from MSP crops to high-value crops and Non-farm activities due to the consequences
Punjab, Haryana, and western Uttar Pradesh were early adopters and major beneficiaries of Green Revolution technology and enabled India in becoming a nation close to self-sufficiency in food in just 15 years.
How green revolution states benefitted from the MSP system?
Due to the following factors, the share of rice and wheat in the total cropped area rose from 48% in Punjab and 29% in Haryana in the early 1970s to 84% and 60%, respectively in recent years;
- Firstly, farmers were insulated against any price and market risk due to the Government procurement of marketed surplus of paddy (rice) and wheat at MSP.
- Secondly, the best resources were allocated for technological advancement for rice and wheat crops by public sector agriculture research and development for technological advantage.
- Third, free power, and fertilizer subsidy together with MSP resulted in higher income per unit area from wheat and paddy cultivation.
The above factors made the cultivation of Paddy and Wheat beneficial in terms of productivity, income, price, Land-labour ratio, and yield risk, and ease of cultivation among all the field crops (cereals, pulses, oilseeds).
Then, why green revolution states must shift to Non-farm activities?
Since the Mid-1980s, many reports and policy documents started suggesting the following serious consequences of the continuation of the rice-wheat crop system in general and paddy cultivation in particular;
- On the demand side, Per capita intake of rice and wheat is declining in India and consumers’ preference is shifting towards other foods. For ex; average spending by urban consumers is more on beverages and spices than on all cereals.
- On the supply side, rice production is rising at the rate of 14% per year in Madhya Pradesh, 10% in Jharkhand, and 7% in Bihar.
- On the government procurement side, Rice and wheat procurement in the country has more than doubled after 2006-07 and buffer stocks have expanded to an all-time high, with fewer options available to dispose of such large stocks. It is putting a heavy burden on the government exchequer.
- On the farmer’s side, More than 50 Years of the MSP system has affected the entrepreneurial skills of farmers required to sell the produce in a demand-supply based market system.
- On the resources side, paddy cultivation and availability of free power for pumping out groundwater for irrigation, has resulted in the drastic decline of the water table in 84% of observation wells in Punjab and 75% in Haryana. At this pace, both these states might run out of groundwater in a few years. Stubble burning is also a consequence of this system.
- At present, most of the farm work in green revolution states is being undertaken by migrant labor as the younger generation is not willing to do manual work and looking for better paying salaried jobs in non-farm occupations.
All the above-listed factors do not favour an increase in MSP, which is demanded every year by farmers.
How to shift to non-farm activities?
The government in these states must facilitate the private investment in a large number of area-specific enterprises tailored to State specificities by
- Promotion of food processing in formal and informal sectors;
- A big push to post-harvest value addition and modern value chains;
- A network of agro- and agri-input industries;
- Setting up high-tech agriculture;
- A direct link of production and producers to consumers without involving intermediaries.
Besides agriculture-based industries, State needs large-scale private investments in modern industry, services, and commerce.
Thus, the demand of time is that these traditional Green Revolution States of Punjab and Haryana should focus on innovative development strategy in agriculture and non-agriculture to develop a better future for the farmers and aspiring youth of the state.
Green revolution 2.0 and new farm laws
Context: The next Green Revolution 2.0 will come through in-depth research, better investment opportunities and access to the market.
What led to the green revolution?
- Scarcity of grain: After the China war, when India was standing at the cusp of economic destruction, Pakistan attacked India. There was an acute scarcity of food grains in the country.
- Change in farm sector: Scientist Norman Borlaug brought a revolutionary change in the farm sector in Mexico with his semi-dwarf varieties of rice and wheat. Borlaug analysed the farm sector in Punjab and concluded that production can be doubled.
- Beginning of green revolution: Subramaniam promised the farmers that if they implement the new farming techniques, the central government will compensate them. This scheme was initially implemented in around 150 farm holdings with the assistance of Punjab Agriculture University, Ludhiana.
- The Green Revolution worked on three fronts: better seeds, irrigation and optimum use of fertilisers.
The new laws have set the tone for second green revolution. Discuss.
- For the rich farmers of Punjab, Haryana and western Uttar Pradesh: Things are different; but for crores of small landholders in Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, West Bengal, Odisha, etc., it is now possible to feed their families.
- Landholdings in many states have shrunk: In eastern UP, the cultivators are largely marginal farmers now.
- Farmers with less than an acre of arable land are identified as marginal farmers.
- Small farmers are those with landholdings between 1 acre and 2.5 acres.
- It is difficult for a farming family to sustain themselves with just an acre of arable land. The farmer will have to explore other avenues to improve his financial position.
- Agrarian transition development: The latest farm policy reforms of the government are also called agrarian transition development and were implemented in Europe and the US early on. Today, around 45 per cent of the country’s workforce is involved in agriculture.
- Agriculture after independence: When India attained Independence, the contribution of agriculture to the country’s GDP was huge, which today has come down to around 15 per cent. The old model has been a drag on the economy as well as the villages.
- Develop models of contract farming: It is an avenue to develop an organised corporate model of agriculture in the country. This will speed up urbanisation in the villages and the development of industries and the service sector there.
- These sectors will be able to absorb the excess workforce in the farm sector.
- Structure and potential of contract farming: For instance, if a village has a thousand farmers who have an acre of arable land, then, through contract farming, someone can sow crops on the entire 1,000 acres of land.
- The land continues to belong to the farmer, while on the other hand, he/she will earn the profit from the sale of produce generated from his/her part of the landholding. This also frees him/her to pursue other employment opportunities.
- The next revolution: Green Revolution 2.0 will come through in-depth research, better investment opportunities and access to the market. The three farm laws are a revolutionary step in that direction.
Why farm laws are enacted?
Context: A minuscule minority of farmers is protesting against the farm laws. They don’t want an end to the system that has benefited them.
- The creation of the Agricultural Produce Marketing Committee (APMC) came into existence almost 150 years ago to feed the colonial master’s raw cotton for their Manchester mills.
- The farmers were forced to sell to the masters in a regulated market whose regulation was set by, the colonial masters.
- The corrosive monopoly power held by the APMCs has been recognised by almost all political parties and farmer unions. For example, the Bharat Kisan Union took out a protest in 2008 arguing for the right of farmers to sell produce to corporates.
- Till now, Farmers are forced to sell their marketable produce only through a mandi regulated by the government.
- However, the new Farm bills allows the farmer to sell through the APMC, and to sell outside the APMC.
Why the protest for farm bills is skeptical?
- Only Fraction of Farmers rely on APMC: The government procures all of its food through APMCs but only about 6 per cent of the farmers in India sell through the APMCs to the government.
- Serves the Interest of few states only: Those 6 per cent are all large farmers, primarily residing in the two states of Punjab and Haryana. These two states typically account for close to 60 per cent of wheat procurement and close to a third of rice procurement.
- Leakages in distribution: The government procures from farmers in order to re-distribute the food via ration shops to the bottom two-thirds of the population. But there are leakages. For example, former Prime Minister Rajiv Gandhi in 1985 stated that only 15 per cent of the food procured by the government reached the poor.
Why Farm Bills are needed?
- Neither APMC, nor subsidies, has resulted in higher output growth in Punjab-Haryana, the pioneers of the Green Revolution.
- Subsidised electricity to farmers has destroyed the water table, the extensive use of fertiliser has destroyed the environment.
- None of the Developing and Developed countries prohibit an individual farmer from selling their produce in the market.
- It does not serve the Interest of very small and small farmers in India.
- Unlike the Industries which are freed from regulation agriculture was not freed or thereafter, until now.
Will Farm laws reduce Farmers income?
Context: The present farm laws alter the bargaining landscape in favour of the corporate players to the detriment of the farmers.
What is current issue with farm laws?
- The three recently enacted farm laws assented have led to a showdown between the peasantry and the Union government.
- No consultation undertaken by the central government at the time of promulgating the ordinances and then pushing the bills.
- Despite repeated demands of the oppositions to refer the farm bills to the standing/select committee for reconsideration and necessary consultation with all stakeholders.
- Present dispensation believes that its shock-and-awe methods are to be the main medium of governance.
- The Union government has bypassed the federal structure by legislating on subjects that exclusively fall within the domain of the state government under the state list of the Seventh Schedule of the Constitution.
What are the salient features of the bill?
- Reducing role of MSP: The farm laws open the field to an alternate set of markets/private yards, where the buyer will have no statutory obligation to pay the minimum support price (MSP).
- No fee: Markets/private yards will not be charged any market fee/levy. The agricultural sector will see the gradual shifting of trade from the APMC mandis to these private yards.
- Reduce APMC role: The shifting of trade to avoid payment of any levy/market fee by private players and the Food Corporation of India (FCI) will eventually witness the redundancy of the APMC mandis, leaving the famers at the mercy of the corporate sharks.
- Exclude the jurisdiction of the civil court: It will leave the farmers remediless and with no independent medium of dispute redressal mechanism. The farm laws empower the Sub-Divisional Authority (executive) to adjudicate on disputes between the farmers and traders.
- Increased bureaucracy: The increased bureaucratic control over the adjudication of disputes between the farmers and corporate players will open the floodgates for corruption and rent-seeking.
How the bills are anti-farmers?
- There are several pro-corporate and perceived anti-farmer provisions in the farm laws.
- The global experience across agricultural markets demonstrates that corporatisation of agriculture without a concomitant security net in the form of an assured payment guarantee to the farmers results in the exploitation of farmers at the hands of big business.
- The primary cause for concern is the systematic dismantling of the APMC mandis which have stood the test of time and have provided farmers the remuneration to keep themselves afloat.
What needs to be done?
- The legality of laws should be expeditiously decided by the Supreme Court to halt the central government’s repeated encroachment on states’ rights.
- There is need of robust system to annually re-calculate the MSP keeping in mind the rising input costs of diesel, fertilisers, etc to make farming a viable and lucrative vocation.
- A statutory regulator in the field of agriculture akin to regulators in other fields would fill the gap to address information access and market distortions.
The three legislative nails in the farmer’s aspirations might lead to a bitter harvest.
Government policies – harder to implement
Context- The government’s dismissal of the concerns of farmers and workers with bold reforms is not only bad for democracy, it reduces quality of policies and also makes them harder to implement.
What is the core problem in agriculture sector in India?
Largest source of livelihood – there are too many people employed in agriculture.
- The agriculture sector contributes 17 per cent of India’s GDP. As per estimate, about 57 per cent of the working population is engaged in agriculture.
- 70 percent of its rural households still depend primarily on agriculture for their livelihood.
- Increase productivity– India needs to shift from basic farming to more efficient, sustainable, productive farming.
- More technology and automation will be required to improve productivity.
- Reduce the number of employed– The agriculture sector should employ only 17 per cent of the workforce as to become more productive like other sectors.
- India must figure out a way to provide meaningful employment to hundreds of millions of people outside agriculture.
What are the issues with new farms and labour laws?
- Issues in new Farm reforms-
- Agriculture is a state subject and regulation of agri-markets is very much in the domain of the states. Yet states have not been consulted on changes in agriculture laws.
- Deregulation– The new farm laws that aim to double farmers’ income in two years by deregulating agricultural markets may further widen the inequalities in the sector,
- The deregulation of Bihar’s APMC led to no significant changes.
- These changes will affect the small farmers the most because their low output does not allow them any bargaining power.
- Issues in new Farm reforms-
- Worker’s right of association in unions– In the labour reforms underway, it is the dilution of this fundamental right of collective representation that bodes badly for India’s workers
- The rights of the trade union to go on a lightning strike is sought to be curtailed heavily.
Therefore, new farm and labour reforms laws are the examples of diminishing democracy in India.
What are the set of reforms required to make India’s growth more inclusive?
- Policymakers must listen to the institutions that represent small people — associations and unions of farmers, informal workers and small enterprises.
- Formation of cooperatives of producers and workers- By aggregating the small into larger-scale enterprises.
- Government regulations must encourage the formation of strong cooperatives, and improve the ease of doing business.
- Indian agriculture marketing reforms should derive inspiration from Barbara Harriss-White, a scholar of India’s agricultural markets, who once observed, “deregulated imperfect markets may become more, not less, imperfect than regulated imperfect markets.
- Policymaker needs acknowledge public fears and reassure people, especially in periods of uncertainty.
- The concept of democracy should not be reduced to elections and political parties. Democracy is also a process of listening to all stakeholders.
Indian Agriculture Reforms
Source- The Indian Express
Syllabus- GS 3 – Land reforms in India.
Context- Farmers and state governments across India don’t want APMCs.
How many farmers are there in India?
- Based on the self- declaration- Almost 111 million farmers are registered for the Pradhan Mantri Kisan Samman Nidhi(PM-Kisan). The eligibility criteria for this scheme are-
- Registration requires the family to hold cultivable land, duly registered.
- If a family member is relatively privileged (MP/MLA, pension exceeding Rs 10,000, an income-tax payer, or a professional), one can’t opt for the PM-Kisan benefits.
- For any false declaration there are penalties also.
Therefore, 111 million is a lower bound figure. Other than some categories being barred from PM-Kisan benefits, not every eligible farmer has necessarily registered for PM-Kisan.
- Based on Agriculture Census- In India, in every five years people have an agriculture census.
- 2010-11 – There was 138 million holdings.
- 2015-16 – It gave 146 million holdings which is a result of further fragmentation.
If the agricultural landholding is conditional on being a farmer, apart from a possible further increase since 2015-16, 146 million is possibly the upper bound.
- Based on various acts-
Every definition of “farmer” is not contingent on the ownership of land.
- The Protection of Plant Varieties and Farmers’ Rights Act, 2001– Where status as a farmer depends on cultivating land (or supervising cultivation), not owning it.
- Draft National Policy for Farmers, 2006–That issue was also flagged by the National Commission on Farmers, such as in the Draft National Policy for Farmers (2006), where “farmers” included agricultural labourers, sharecroppers and tenants and so on. When talking and generalising about farmers, it is necessary to specify which set one has in mind.
What is the quality of land records in various states when land is a prerequisite for defining someone as a farmer?
- The Committee on State Agrarian Relations and the Unfinished Task in Land Reforms, 2009-
- Absence of land holding data – The last extensive survey and settlement in India was conducted two to three decades prior to Independence which means in the 1920s.
- Department of Land Resources has a Digital India Land Records Modernisation Programme (DILRMP) –
- DILRMP is often about digitising/modernising existing land records.
- The DILRMP dashboard tells that digitisation of land records have been completed in only 11.5 per cent of villages.
For Example- Gujarat, West Bengal and Tripura score high on this (over 90 per cent). Punjab’s track record is 0 per cent.
What is 2015-16 Agricultural Census report?
According to the Agricultural Census report 2015-16 –
- Highest operated areas-The highest operated areas are in Rajasthan, Maharashtra, UP and MP, in that order. 86.1 per cent of holdings are small and marginal (less than 2 hectares) and only 0.6 per cent is large (more than 10 hectares).
- FCI procurement-There is increasing FCI procurement of rice from Telangana, Andhra Pradesh, Chhattisgarh and Odisha and of wheat from MP, UP and Rajasthan.
- E-NAM(National Agricultural Market) has more coverage from MP, UP, Rajasthan, Maharashtra and Gujarat than from Punjab or Haryana.
The face of Indian agriculture has changed and is no longer what it was in the Green Revolution days, centred on Punjab, Haryana and western UP. With realistic input costs, that form of agriculture is no longer viable in those Green Revolution tracts.