Agriculture Economics Editorial✍

structural issues in agriculture

Minimum Support Price was increased to one and a half times the farmer's cost of production. The devil, though, lay in the detail, viz., the method of calculating MSP.

Present scenario of Indian agriculture:

  • The aggregate Share of Agriculture and Allied Sectors, Including agribusiness, domesticated animals, and ranger service and fishery sub segments as far as rate of GDP is 13.9 percent during 2018-19 at 2004-05 prices. 
  • Indian is an agriculture based country, where more than 50% of population is depend on agriculture.
  • India is the world’s largest producerof pulses, rice, wheat, spices and spice products. India has many areas to choose for business such as dairy, meat, poultry, fisheries and food grains etc.
  • India has emerged as the second largest producer of fruits and vegetables in the world

Structural issues of Indian agriculture:

  • Water concerns: agriculture users use 80% of the water resources in India, out of which 60% goes into paddy and sugar cultivation. From independence onwards mainly focussed on constructing large scale irrigation projects and flood irrigation.
  • Chemical farming: before independence agriculture is predominantly organic and localised in nature. After independence due to rising population government focussed only chemical farming, which is high- capital intensive and lead to destruction of soil fertility. Even this year budget announces around RS 79,996crore on fertilizer subsidy
  • Rural roads: Only 74% of villages are connected to an all-weather road with more than half (51%) of the country’s small villages (populations of less than 250) adrift from the road network. Lack of connectivity will further deprive agricultural growth.
  • About 50% of all new road construction since 2014 has been concentrated in just five states-Bihar, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh. In terms of village connectivity to roads, the North-East lags behind. Even regional wise inequality prevails in rural road development.
  • Terms of trade: the terms of trade are unfavorable to a farmer. That is the difference between the input prices that farmer buys and the prices that farmers sell at is not in the farmer’s favor, therefore, the farmer’s income keeps falling.
  • e-NAM: was intended as a significant advance in agricultural marketing and trade, but not all states have amended their APMC acts to be able to join eNAM. It is also inaccessible to small and marginal farmers who make up 86 per cent of India’s farming population. There is still no mechanism to assess quality
  • Lending: the banks are hesitating to increase farm lending due to the high cost of reaching farmers, high rate of Non Performing Assets (NPAs) and threat of loan write-offs. Still majority of farmers are taking loans from moneylenders.
Image result for Indian agriculture

Short-term measures of government:

  • Minimum Support Price (MSP): Minimum Support Price was increased to one and a half times the farmer’s cost of production. The devil, though, lay in the detail, viz., the method of calculating MSP.
  • While farmers’ organizations have been demanding the C2 method of calculation in which land, rent, supervision and management costs are included in the cost of production, the NDA government is using the A2+FL method (actual paid-out costs plus an imputed value of unpaid family labor).
  • Prime Minister Kisan Samman scheme: direct cash transfer of 6000RS to farmers account under some conditions. 6000RS covers only 13-15% of rural farmer income. This short term measure will not improve the farmer’s plight.
  • Loan waivers: by the state governments like Telangana, Andhra Pradesh, Maharashtra and Madhya Pradesh covers only some farmers only. Without structural measures loan waivers only a short term measure.

Structural measures to rejuvenate Indian agriculture:

  • Water productivity: instead of increasing yield per acre, there should be focus on increasing productivity per litre of water. It is time now to move Indian agriculture from flood irrigation to micro irrigation methods like drip, sprinkler methods. These methods can save up to 60% of water and also help in preventing pest incidence
  • Zero Budget Natural Farming (ZBNF): economic survey 2018-19 reports that 1.6 lakh farmers followed ZBNF. The government advised the farmers to adopt zero-budget farming to double their income. So the governments should take proper measures to penetrate ZBNF throughout India
  • Allied sectors: focus of the government should also on the allied sectors like fisheries, poultry and dairy farming. Allied sectors contribution to agriculture GDP is almost 25%. So government should take measures to supplement allied farming to crop farming to improve the income of farmers.
  • Lending: banks are hesitating to provide loans to farmers. This reluctance of banks should taken away by the government by announcing a first-loss guarantee to banks on agricultural lending
  • APMCs act: to improve the farm gate prices, state governments should revamp the Agriculture Produce Marketing Committee (APMCs) as soon as possible.
  • National agriculture council: agriculture is a state subject, so to improve the plight of farmers and increase in the growth in agriculture sector need of the hour. So government should create a national agriculture council on the lines of GST council.

Way forward: Government should facilitate and support community level action by private voluntary organizations, including farmers groups aimed at improving food security, reducing poverty, and assuring sustainability in the management of natural resources.

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