Innovative Approach for Sustainable Farming in Bharat

Despite seven decades after independence agriculture sector still plays a significant role in Bharat’s economy though the country has not taken proper care to address the issues and challenges in this sector.

Sectors

Share in Bharat’s

GDP 1950-51

Share in Bharat’s

GDP 2016-17

Agriculture and allied activities 51.81% 17.32%
Industry 14.16% 29.02%
Services 33.25% 53.66%

(Source- MOSPI, Planning Commission, GOI – 21, March, 2017)

Sectors

% of population employed

in Bharat 1950-51

% of population employed 

in Bharat 2016-17

Agriculture and allied activities 72.1% 49.7%
Industry 10.7% 21.5%
Services 17.2% 28.7%

(Source- www.statista.com)

According to the World Factbook of the CIA (Central Intelligence Agency) in 2014, Bharat ranks second in terms of global agricultural output ($.367 billion). Dairy, horticulture and inland fisheries are high value segments and Bharat has huge potential to expand in these sectors. Bharat ranks first in terms of milk production, accounting for 18.5% of world milk production (2014-15).

Bharat’s share of land used for agricultural land as % of total land area was 58.8% in 1961 which marginally increased to 60.4% in 2015 according to World Bank.

According to a FAO (Food and Agriculture Organisation of the United Nations) report in 2015, the average yield of rice in Bharat is 2.3 tonne/hectare against the global average of 4.4 tonne/hectare. China has an output of 197 million tonne and a per-hectare yield of 6.5 tonne; Australia produces 10.1 tonne, the US produces 7.5 tonne and Russia produces 5.2 tonne.

Compared to a global standard of 3.0 tonne/hectare of wheat, Bharat recorded an average yield of 2.9 tonne per hectare. Whereas, countries such as France with 7-tonne production, the US with 3.11-tonne production and China with 4.8-tonne production are much ahead of Bharat. Bharat’s agricultural lands are divided into small scattered holdings.

As per Agriculture Census 2010-11, small and marginal holdings of less than 2 hectare account for 85 percent of the total operational holdings and 44 percent of the total operated area. This is one main reason for low level of agricultural productivity in Bharat.

agriculture-bharat

Overall in the country, though the total number of suicides in the farm sector (both farmers and farm labourers) fell around 9.8 per cent between 2015 and 2016, the situation is still very disturbing.

Poor Infrastructure

Studies indicate poor infrastructure like bad roads and shortage of godowns and cold storage centres is resulting in around 10 percent additional transport and storage costs to the Bharatiya farmers. Food loss in Bharat  is estimated at 920 billion per annum (harvest and post harvest losses).

Globally the food loss is estimated at 24% during production, 24% during handling and storage and 35% at consumption. Therefore, strengthening the rural infrastructure can save the annual food loss of 920 billion in Bharat.

Faulty MSP Mechanism

It is a fact that the MSP (Minimum Support Price) mechanism of the government has neither completely benefited the farmers nor the final consumers. For example, the MSP for corn announced by the government couple of years back was 1,425.02 rupees. But the wholesale modal price for most of the procurement season was around 1,200 rupees, which was lower than the support price.

Middlemen continue to make money though the farmers are compelled to do distress sale sometimes due to surplus crops whereas the final price of the food products to the consumers continue to remain at a high level.

Only 20 percent of the farmers in Bharat are insured for crop losses and majority of them suffer from the risk factors associated with weather, repayment of debts and other factors. 

Bharat’s government has exempted the agricultural income from taxation in order to encourage the people to go in for agricultural activities. However, this has not benefited the small and marginal farmers who suffer a lot since they do not fall under the tax net whereas the rich agriculturalists and landlords who get huge income from agriculture are fully exempted from paying income tax!

Bharat’s Central government’s allocation of expenditure to agriculture in its overall expenditure was around 6.8% during the period 2009-14 whereas for countries like Nepal and Bhutan the same was 10.6% and 13.1% respectively as per FAO.

In 2018-19 budget a sum of Rs. 14.34 lakh crores were proposed to be allocated for creating livelihood in rural areas in Bharat. Despite all these efforts, the outcomes in Bharat’s agriculture sector are not to the desired level and much needs to be done to find a long term solution to address the challenges being faced by the Bharatiya farmer.

The author suggests few long term measures to find a solution to problems of Bharat’s farmer as under:

The government should disband the MSP mechanism and allow free market access to the farmer to get remunerative prices for his produce. This can become a reality only when there is a strong supply chain consisting of storage, transportation, distribution and wider market access as a viable alternative to come out of the clutches of the middlemen.

The existing network and infrastructure of both central government and the states under PDS (Public Distribution System) to be transferred to a SPV (Special Purpose Vehicle i.e., special purpose entity) and this SPV should take up the task of providing free market access to the farmer across the country. This SPV may retain a portion of the market price realized by selling the farm produce towards the cost of services provided under the SPV and share the balance revenues with the farmer.

In due course, the SPV can build a corpus that will not only take care of the maintenance of its assets but also development and expansion of the same to strengthen its overall supply chain. This mechanism will not only enable the government to save on its annual PDS expenditure but more importantly provide wider market access at remunerative prices to the farmer and eliminate the exploitation by the middlemen.

From the substantial annual savings on PDS expenditure the government can instead provide a comprehensive rural insurance cover to the farmer (i.e., the small, marginal and medium farmers) to protect them against the risks of crop failure, farm debt defaults and market price fluctuations, in addition to providing a reasonable insurance cover towards life and health of the farmer and his family.

Studies reveal that the farmer’s access to formal credit (i.e., banks and microfinance institutions) will improve when it is backed by credit insurance. A suitable mechanism can be devised by the government to fully fund the premium cost for small and marginal farmers and subsidize the premium cost for medium farmers for the above comprehensive insurance cover.

Greater attention needs to be paid towards the small, landless farmers who either work as labourers or till the land on lease basis to ensure that these people are duly covered under the comprehensive rural insurance.  

An integrated approach can be adopted in order to avoid overlapping of resources and duplication of expenditure by the Ministry of Agriculture and Farmers’ welfare and the Ministry of Health and Family Welfare at the central government. A similar integrated approach may be adopted by the states as well.

The recent initiatives of the government like-  e-NAM ( National Agricultural Market, an online trading platform for agricultural products proving market access to the farmers across the country) and  NCDEX ( National Commodity and Derivatives Exchange which has started providing the facility of hedging of commodities price risk to the farmers across the country) have to be scaled up in line with the suggested SPV mechanism of PDS so that the benefits reach larger farming population across the country.

Government has to build a robust IT infrastructure platform to track the demand and supply of the agricultural products in order to suitably guide the farmers on cropping patterns in order to reduce the gaps between the demand and supply in food products.  

Bharat’s Meteorological Department can coordinate with the agricultural insurance companies in order to develop a database for predictive analytics which can be used as an effective tool to propagate weather index based insurance. This can help to design a flexible, premium based weather insurance product which is linked to the estimated rainfall in different regions across the country.

The above comprehensive rural insurance and the SPV mechanism of PDS would protect the Bharatiya farmer against the down side market prices while allowing him to reap the benefits of the upward market prices.

Simultaneously the government can go for market price insurance to hedge against the risk of higher market prices of food products with commodities hedging agencies. This is to ensure the supply of food products to the poor people ( i.e., BPL, marginally above the BPL and poor people) who are currently covered under the PDS scheme at affordable prices.

Water Resources

Bharat has unfortunately followed the practice of excessive focus on highly expensive mega and large irrigation projects/ dams/ reservoirs rather than giving preference to check dams, small canals and ponds in the villages which cost less but are more effective in storage of rain water and improving the ground water levels.

Mega and large irrigation projects are mostly mired in controversies in terms of cost escalation, environmental and other hazards leading to time and cost overruns quite often. In spite of this experience, the policy makers and government agencies continue to spend more funds on mega and large irrigation projects.

These misplaced priorities have led to several fertile lands turning into barren lands and deserts over a period of time as the villages have neglected the conservation of rain waters through check dams, small canals and ponds in their region hoping that the large irrigation projects will give them access to water resources for cultivation.

It is high time that Bharatiya government realizes this mistake and takes swift corrective measures to encourage the villages to go in for check dams, small canals and ponds. Countries like Israel have proved that shortage of water resources will not be a constraint for food production if scientific measures like drip irrigation are followed.

Government should spread awareness of long term benefits of organic farming and cooperative and community based collective farming through effective training and education programmes targeting the small, marginal and medium farmers who hold small and scattered lands.

It is high time the political parties and the governments realize that the Bharatiya farmer does not need charity, subsidy or farm loan waivers and what he needs is a sustainable living through cultivation.

(Featured Image for representational purpose only. Source: Pinterest)


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About the Author

B.N.V. Parthasarathi
Ex Senior Banker, Management and Financial Consultant, Visiting faculty at premier B Schools and Universities. E mail- [email protected]