Sowing Prosperity: Boosting Agricultural Productivity

MANTHAN THEME :

Team : SIDDHANT Members: Arun Soni Ashutosh Chandrakar Hansraj Palsania Mahaveer Bishnoi Sandeep Choudhary

Govt. policies Research

Extension

MSP market

economy

industries

Technological

Dynamics of Agriculture

• Lack of marketing facilities and market linkages at grass root level

• Lack of market linked policy Market Deficit

• Capital Investment has not increased as required

• Where as subsidy is increasing every year Investment Deficit

• Since green revolution research have been unable to deliver a game changer

• Where as our extension force has been unable to bring desirable changes Research and Extension Deficit

• Credit outflow in the agriculture is increasing every year

• Basic infrastructure like road, power are still lacking in many states Credit and Infrastructure deficit

• Since independence our agriculture policy concentrates only on those crops which our important for food security Diversification Deficit

Macro-Economy

Climatic Factors

Global Factors

Policy Factors

Market Forces

Performance of the agricultural sector

The performance of the agriculture sector is driven by several factors but rather than affecting the sector in isolation they interact with each other and consequently strengthening or weakening of specific trend The dynamics for each crop is different in different geographies due farmer awareness and psych , cost structure , government infrastructure So major constraints in the present era for boosting prosperity will be market deficit, investment deficit and research & extension deficit

Crop specific programme

Cost of cultivation Contract Farming

Market Price Availability of credit/ Insurance

Yield

Demand and supply regulation

Market Openness

Economic Growth

Consumption Pattern

Procurement by food

processing industry

Government policy on trade

Public & Private

investment in R&D

Input usage (Fertilizer, Seed etc)

Technology (Hybrid, GM

crop etc)

Food Retail

Economic Growth

Urbanization

Policy on Contract Farming

Government policy on

crop focus

Political Outlook

Demand and supply situation

Government policy on

rural finance

Penetration of Financial

sector

Penetration of Media &

IT

Labor Cost

Input Cost

Cost of fertilizer seed

etc.

Migration

Cost of living

Alternative Occupation

Profitability Irrigation Quality of Land New crop technologies Awareness

Cropping Pattern Cropping Intensity Input usage Intensity Changes in land use

One factor alone – cropping factor is a function of several interrelated drivers and sub drivers and we need to understand this interrelation to solve the problems

Interrelation among various factors

Govt. policies

farmers

MSP

Supply

Seed cost

Fertilizer cost

Export

Import

Water availability Extension

activity

Demand

Crop/s taken up

Market/s Creditor/

debtor

Default/not

Economic status

Nutritional level

Children’s education

status

Middle man

Market structure

Market forces

Dumping/ shortage

Crop portfolio

Export/ import level

Developments

Employment capability

Food processing

sector growth

Development policies

farmer

farmer farmer

farmer

Low Literacy rate

Less funds availability

Less technological advancement/ adaptation

Less or short term & costlier manpower

Highly volatile market

Less or no market securities

Lessor productivity due to high chemical toxicity

Very less cropping

intensity & Production

Ineffective results

Short term decision (for less than 6

months)

Factors affecting farmer’s decision

Common situations

Decisions taken

L E A D S TO

Vicious cycle of farmer’s decision

Diversification Deficit

26584 25694

6346 8036

3915

24222 26197 5844 7227 3659

25701 27474

6168 7246 3815

Rice Wheat Total Vegetables Total Oilseeds Total Pulses

2008-09

2009-10

2010-11

2.3

4.1

0.8 0.9 1.1 1.1

1.4

2.1

2.6

0.5 0.6 0.7 0.6 0.9

1992-97 1997-02 2002-03 2003-04 2004-05 2005-06 2006-07

PotentialCreated

PotentialUtilised

Over the years rice, wheat sugarcane have received the focus for irrigation provision, mainly because of the government ‘s paranoia about achieving self sufficiency in food and other crops have been neglected Studies have shown that the income from the per hectare land is much higher incase of non food grain crops with respect to the food grains Overall profitability rises with increase in the size of land holding but access to credit can raise e profitability up to 50% With access to credit farmers with smaller land holdings were found to be more profitable

Profit/acres (Farmers without credit)

table

Non Food Food Non Food Food

<1 42500 4000 73500 5900

1-2 60000 4500 70000 5675

2-3 62000 5000 65000 5200

>3 65000 5000 62000 5200

Avg 57375 4625 67625 5494

Major and Medium Irrigation Potential Created

Crop wise gross irrigated area

In the latter half of the 90s growth in the irrigation potential is much lower than past More importantly the utilization has dipped by more than 30%

Deficit in the Research and Extension

In Research

Concerns Major land mark in the field of agricultural research were

green revolution and white revolution, which happened back in the 60s and 70s but after that we have not been able to deliver a landmark

Specially in case of pulses and oilseeds , our present varieties have been unable to change the production and productivity scenario

In spite of huge supply and demand gap , higher MSP than of cereals still does not want to grow t pulses and oilseeds

Availability of timely certified seeds

In Extension

Concerns Our existing extension forces has not been able to deliver the

desired results

Most of the extension program's fail to achieve the target due to lack of accountability and transparency

Ressource constraint at lower level and huge population to be served

Proposed Solutions

To improve the transfer of technology at the grass root level, more and more private partners should be involved

This could be of to types

a) Extension by Input Companies

e.g. By Monsanto

b) Extension by the procurement companies

e.g. PepsiCo

c) Private extension,

e.g. In Jharkhand

This could be done by the entering into PPP model for providing subsidized inputs to the farmers and the input company will provide extension services to farmers

In case of company who are procuring large quantity of agricultural produce can be asked by making legislation to provide extension services necessarily

Both of this can be easily formulated and implemented by the Ministry of Agriculture at state level

Proposed Solution Better seeds can increase the productivity between 40 to 60% but it can be much higher More and more private investment in the field of agricultural research should be encouraged States should come with special policies to increase the productivity of the major crop s eg. State Agricultural Universities should collaborate with private companies and foreign agricultural institute to develop new varieties for their state Focus needs to be shifted from the food grain crops to non food grain crops to increase the income from agriculture More competition should be promoted in the seed industry, so that new product development can be come the basis of success

Investment and Infrastructure Deficit

43319

99495

64033 62301 67199

2007-08 2008-09 2009-10 2010-11 2011-12

Subsidies in '000' crore

10805 13019 15947 18755 22107 24197

42737 44830 50118

54530 57530 61367

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

PrivateInvstement

PublicInvestement

Fertilizer subsidy over the years

Investment in agricultural sector over the years

In ‘ooo’ crores

Proposed solutions There is urgent need to increase the agricultural investment in new irrigation projects and improvement of the existing canal system Warehousing corporation should be provided with money to increase their capacity across the country Huge investment is required to develop cold storage chain across the country Studies have shown that investment in the creation of rural infrastructure such as road and power have more positive effect on the life of rural people than the other modest policy of employment generation

Concerns Investment in the agriculture sector is much lower than the subsidy given to the sector Over the years gross capital formation in the sector is not encouraging In the rural areas infrastructure development is not adequate to carry out the industrial activities eg. Roads , Power etc

• Investment in Marketing infrastructure like warehouses, cold

storage and primary processing for perishable products

Allow Private or Cooperative players for direct marketing at

minimum prices at mandies

Independent regulatory authority at state level for

registration of market functionaries at state level and online

recording of trade and transection (Location, Volume & Price)

Single point levy & payment of market fee for market players

PPP for online management of market information and

market Intelligence and setting up of Market Extension Cell

at mandies

The Contract Farming Sponsor should be registered at

prescribed district level officer with the contract

specifications.

Protect farmers through provisions of Contract Farming at

benchmark market prices

Designing of action plan for decentralized primary processing

of perishable agri-products including setting up of

commodity specific food processing parks with common

facilities

No independent regulatory authority for

agricultural marketing

Private or Cooperative players are not

allowed for direct marketing

Limited access to market information and

marketing opportunities available

Fragmented supply chain, poor cold chain

& high post-harvest losses

Lack of fair price discovery mechanism

Proposed Modification in Agricultural Marketing System

Market deficit

Problems in Agricultural Marketing System

Central Government

(CACP)

State Govt. State Govt.

District District

Block Block Block

District

State Govt.

• 40% share • Crop selection for MSP • State list • Deciding MSP once in a year for 4 quarters (depending upon the growing seasons for particular states)

• Non conventional short duration crops including pulses, oil seeds, medicinal, aromatic etc.

• After few years conventional crops can also be added.

• Crop identify • Give seasons for crop production • MSP announcement • MSP promotion through selected

govt. dept.

• Promotion bodies - ATMA, Zilla Panchayats • Can go for technological promotions as well. • Crop mapping

Local promotion – including package of production, MSP, harvesting methods, & market address , organizational details.

MSP will be decided by CACP once in a year depending upon the demand for a particular crop produce & can be announced at once but it will be state government’s duty to announce it quarterly to the farmers through promotion bodies during the sowing season of the preceding crop to let them decide the next crop.

Central Govt. (40%)

State Govt. (60%)

Cost Sharing

District

Village

Village

Village

Small Entrepreneurs

Processing Industries

SHG

Govt. schemes

New PPP Venture

FCI/ State warehousing corporation

• Cultivation of selected crop • Information sharing with

block level through a particular linkage

• Collection of produces from villages & transfer it to FCI/SWC

• Crop mapping & storage or future planning

• Storage/ distribution from warehouse corporation to other state

• Employment generation

• Processing industry growth

• Lessor wastage

• SHG can be helped for production of processed products

Supply produce for mid day meal using food security/ nutrition policies

Joint schemes/ ventures for better development of the remote areas

District

District

Industrial/ institutional procurement

Through APMC

Government release

Overall impact of the policy on the economy

Central & State Govt.

Farmers Industries

• Increased overall productivity • Reduce dependency on imports • Higher export & higher foreign

exchange • More industrialization • Surplus of 1 state fills other’s

shortage • Self sufficiency in food • Growth of manufacturing sectors • Lessor wastage • Improved rural infrastructure • Growth of processing industries • Easy transfer of technology

• High Food Wastage • Unemployment • Burden on central Govt. • Food security • Increased dependence on imports • Less productivity & production

• Assured market with stable price • Positive attitude towards govt.

policies • Less or no volatile market • Better extension services by

private players • Better rural infrastructure – better

life style • High cropping intensity – high

annual income – better health status – better future education

• Desired quality of commodity • In time supply • Predetermined prices • Improved rural infrastructure • Availability of product in bulk • Increased farm income will

increase the purchasing power n hence higher growth of investors

• Very volatile market • No securities • No marketing facilities & information • Poor govt. extension • Timely unavailability of inputs • Poor rural infrastructure • Less cropping intensity – low income

• Highly volatile market • No/ less quality parameters • Fragmented cultivation areas • No changing policies • Poor infrastructure creates more

problems • No/ less skilled people availanilty

Before

IMPLEMENTATION

After

References:

• Directorate of Economics and Statistics

• Ministry of Agriculture

• World Bank

• Indian Journal of agricultural Economics

• IMA research analysis

• Mid tern appraisal of Planning Commission, 2009

• IBEF Agriculture Sector Report

• International Water Management Institute

• Ministry of Water Resources

• Indiastat

• Agrimarket

• Agmark