1. Climate change could reduce annual farm income by up to 20-25% in "unirrigated" areas in the country and there is a need for urgent expansion of irrigation networks as a crucial adaptation measure to ward off the challenges of extreme weather events. At present, about 45% of farm land is under irrigation. The Indo-Gangetic plain, and parts of Gujarat and Madhya Pradesh are well irrigated. But parts of Karnataka, Maharashtra, Madhya Pradesh, Rajasthan, Chhattisgarh and Jharkhand are still extremely vulnerable to climate change for not being well irrigated. Analysing a trend of rising temperature and declining rainfall during 1970-2015, the economic survey noted that the impact could reduce farmers' income across the country by 15-18% in the medium term with areas without irrigation facilities facing the brunt.
2. Government should take "radical follow-up action" to achieve its objective of addressing agricultural stress and doubling farmers' income. The survey suggested the use of new technologies and better targeting of power and fertiliser subsidies. "Minimising susceptibility to climate change requires drastically extending irrigation via efficient drip and sprinkler technologies and replacing untargeted subsidies in power and fertiliser by direct income support," said the survey.
3. It also called for a review of the cereal-centric policy where the government has over the years been focussed more on production and productivity of foodgrains. The review may shift the focus to horticulture and agro-forestry.
4. The survey also noted 'feminisation' of the agriculture sector because of growing migration of men from rural to urban areas and called for gender-specific interventions to support women. Noting that the contribution of women to food production cannot be ignored for sustainable development of agriculture and rural economy, the survey called for an inclusive transformative policy that should aim at gender-specific interventions to raise productivity of small farm holdings, integrate women as active agents in rural transformation, and engage men and women in extension services with gender expertise.
5. Since agriculture is a state subject, the survey also strongly advocated a mechanism similar to the GST Council to bring more reforms in the agriculture sector and boost farmers' income.
6. Stating that climate change will increase farmer uncertainty, the survey called for effective crop insurance and use of technology to make farming resilient. "Building on the current crop insurance programme (Pradhan Mantri Fasal Bima Yojana), weather-based models and technology (like use of drones) need to be used to determine losses and compensate farmers within weeks," it said.
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The doubling of farmers’ incomes by 2022, requires an annual growth rate of 10.4% which translates roughly into an investment of Rs 6.4 lakh crore (according to Niti Aayog). To place this in context, agricultural growth has hovered at a meagre 1.8% in the last three years.
We are staring, currently, at a period of record agrarian distress. Though it is impossible to summarise the myriad issues affecting farmers across the country, it is vital that we acquaint ourselves with their struggle. Last year several farmers marched to Delhi to impress upon the government that their lives have been devastated. Suffering farmers adopted all sorts of mechanisms to try and catch the government’s attention. Farmers from Tamil Nadu brought along skeletal remains of their kin who committed suicide. Such protests are wake-up call for all of us irrespective of different political ideologies.
Protesting farmers identify one demand as being more urgent than others: market driven price for their produce (in line with the Swaminathan Committee recommendation of minimum support price plus 50% profits).
Farmers’ suicides have increased at an alarming rate. There has been a recorded increase of 40-46% in the number of farmer suicides in some states. However, a report from Agro-Economic Research Centre (which submitted its report in July 2017) found that still there are few states without a policy to compensate the families of farmers who have committed suicide.
There are some bizarre policies which need to be corrected. For one, under GST, tractors and other agricultural implements were taxed at 12%, with some of their components such as tyres and tubes being taxed at 28%. The tax on fertilizers has risen from 1.03% to 5%. Pesticides, which even a layman would attest are essential for farming, are taxed at 18%.
Another illustration demonstrates the sheer disjointedness between policy making and ground realities. Last year we saw the highest ever domestic production of pulses at 22.95 MMT. This would have been sufficient to meet domestic demand but instead, due to fear of political uncertainty government imported a record 6.6MMT of pulses (at zero import duty no less). This excessive supply led to a crash in prices affecting farmers and the domestic market. Further, import duty was withdrawn on wheat from 25% to zero just as farmers were preparing to harvest their crop. This led to a massive increase in wheat imports (5.9MT) from abroad crashing domestic prices.
Agriculture is the new industry:
Move over Industry. Agriculture is the next frontier. The US and EU are currently supporting agriculture the way they promoted industry in the 1930s. Which was, to put it in a nutshell: using the latest technology to maximise output, high tariffs to discourage imports and massive subsidies to push exports.
Outsmarting everyone, China has acquired large tracts of land along the proposed “New Silk Road” to grow food and avoid food imports from the US and Oceania. And the UN’s Food and Agriculture Organisation says that by 2030, most developing countries will be dependent on imports from developed countries for their food requirements. Where does India stand?
These developments add a ticking clock to our plans to transform agriculture. Doubling farmers’ income in next five years can be an apt metaphor and goal for this transformation.
Indian agriculture suffers from low productivity, low quality awareness and rising imports. To improve, we must understand the underlying causes for each of these.
Droughts in 2014-15 reduced agricultural income substantially as over 60% of farming is rain dependent. Mechanised farming is not possible in over 65% of land holdings as they are less than one acre in size. And most farmers cannot buy quality seeds or expertise as they have little money. Together these factors result in low crop yields or productivity for most farmers.
On quality awareness, offering fresh and cheap produce for sale is no more enough. One cannot just buy fruits from a mandi and export. Food safety and quality regulations of most countries need proof of traceability. This means keeping records that prescribed norms have been followed at farm, storage, packaging and transportation levels.
India could export more grapes by improving quality standards and creating an integrated supply chain. We account for 4% of global production of grapes but our share in global exports is 1.6%. The case of bananas is even starker: our share of global output is 30% but of exports is less than 0.4%. Creating product-specific integrated supply chains is the most critical factor in increasing exports.
Agriculture imports have increased six times faster than exports in the past 20 years. Large imports in FY2017 are edible oil ($10.9 billion), pulses ($4.2 billion) and apples, kiwi fruits, almonds and cashews ($3 billion). These three groups account for 73% of India’s agriculture imports. They must be cultivated in India as we have the required soil and climatic conditions.
The following 4 initiatives will transform the sector and make it profitable to farmers and other participants.
ONE: Encourage contract farming. Much of India’s exports and supermarket supplies originate from Contract/Corporate Farming Ventures (CFVs). A CFV takes land on lease from a group of farmers and pays an agreed amount and a share of profits to them. Or it may supply inputs and expertise to farmers, supervise production and buy the products.
CFVs apply knowledge and latest techniques and oversee an integrated supply chain. No wonder most CFVs have reported higher yields for wheat, rice, sugar, cotton, potato, gherkin, tomato, groundnut, safflower, marigold, poultry and milk.
CFVs benefit farmers and increase quality and productivity, hence are welcome. But it is not easy to start a CFV and despite many decades of operation, they cover less than 3% of arable area.
Simplification of land pooling laws, online verification of land records, standard contract format, and streamlined contract registration and dispute settlement process will make the CFV process transparent and nudge many to venture into this area. CFVs will ultimately lead to collaborative farming where a group of farmers who benefited from the CFV experience will pool land to start their own venture.
TWO: Convert the top 10 agriculture universities into centres for excellence. They will make region-specific strategies to raise crop yields, advise on the creation of integrated supply chains, and prepare a plan to promote exports and cut imports. The centre will also publish product reports after extensive field and market trials for use by farmers.
THREE: Create 2,000 farmer centres, one in each sub-district. These should be the go-to places for all farmers’ needs. Here he can meet representatives from banks, insurance companies, seed and equipment suppliers and buyers. Farmer centres would integrate with the electronic National Agriculture Markets (e-NAM) to help farmers sell direct to the consumer. Each centre will also have free water, soil and nutrient testing labs.
FOUR: Ensure active monitoring of government schemes. For example, many of the 35 million farmers who opted for the Pradhan Mantri Fasal Bima Yojna in the last kharif season got their compensation late, as more than half the states did not pay the premium on time. The e-NAM, another useful initiative, needs to check wrong reporting. Many mandis show normal sales as e-NAM sales.
Also, we need to divert funds towards drip and sprinkler irrigation systems. Such micro-irrigation techniques use far less water than open canals and flood irrigation systems, on which most of our irrigation money is being spent. Many countries including the US and Israel have already switched to micro-irrigation techniques.
A rising agriculture sector will upgrade the lives of 70 crore people, most of whom live on the margins. The results will be humbling and transform the entire fabric of nation building.
