Skewed govt policies to declining yields: Do we really care about agriculture?
Instead of spreading limited resources available across the geography, the govt should be targeting the vulnerable regions to bring about a transformation
Agriculture has once again occupied the centre stage, though for a different set of reasons. Monsoon failures, unseasonal rains, farmer suicides are not new subjects and are typical every year to the extent that they are non-issues until such time there is high food inflation or a debt waiver scheme is announced.
This time, however, the political motivations have put the issue back on the table with the Land Bill providing the backdrop and the suicides and their aftermath forcing a debate.
The hard truth is that while everyone has views and sympathies for agriculture, the fact remains that it is one sector that has been repeatedly ignored by the policy makers to the extent that it no longer looks workable even for farmers.
Farmer migration has become quite common given the security provided in other jobs especially construction, and makes sense for these people. Remaining in farming carries the multiple uncertainties of monsoons and volatile output as well as the repercussions on debt build-up and its servicing when the crop fails.
Let us look at the state of agriculture. The share of agriculture and allied activities has come down to 13.9% in FY14 from 19% in FY06. Growth in output has seesawed, rising in one year and coming down subsequently and a trend growth rate has never been achieved to keep pace with the rising population and changing tastes. It is not surprising that specific crop failures - and almost every year there are such instances, results in high food inflation.
Two other statistics are significant here. The first is productivity in this sector. Put in a global perspective, the yields per hectare are low in India by global standards except for wheat. The yields are as follows: wheat 3177 kgs (3090 kgs is the world average), rice 3721 kg (4548kg), maize 2556 kgs (4888 kgs), ground nut 984 (1646 kgs).
The reason for wheat being higher is not surprising as the Green revolution which was in vogue in the seventies had focused on wheat in the northern states which brought about such enhancements in productivity.
The Green Revolution was a combination of high yielding variety of grains (HYV), fertilizers, pesticides and irrigation. Surprisingly rice, the staple was not a part of this programme which has made it lag wheat. Quite clearly we have lost direction along the way for other crops and regions.
The second factor is irrigation. Today the monsoons are critical because access to alternative irrigation facilities is limited. The latest data on irrigation coverage shows that rice has access to the extent of 59%, while it comes down to 25% for maize, 8.5% for bajra and 4% for tur. In case of groundnut it is 24% and less than 1% for soybean.
Quite clearly while the average for the country is around 60%, it is skewed heavily towards specific crops like wheat and to an extent rice, while the rest are vulnerable to shocks. The same picture is reflected when the spread across states is viewed.
States like Punjab, Haryana, UP have access to irrigation. But Maharashtra has cover of only 19% while MP and Rajasthan have coverage of 35-36%. These are the states which are afflicted regularly with scanty rainfall, lower output and increased farmers’ debt levels.
Hence, while we do talk a lot on agriculture and the need to bring in a new green revolution, unfortunately nothing much is being done. The Centre would argue that it is a state subject and the latter has limited resources and hence the discussion moves around in circles.
The government is more proactive when it comes to taking remedial measures after the crop fails, with focus on employment or loan waivers and interest subventions. This though essential, does not quite solve the problem but defers it.
Interestingly, if one looks at the public expenditure in this sector, it is quite low. For the 11th plan period it was 4.4% of total expenditure and in FY13 it was just 2.9%. In FY15 out of a total public sector outlay of Rs 4.84 lakh crore, the allocation for agriculture and allied activities was just Rs 11,530 cr or 2.4%.
If the same is looked at from the public investment side, the share of agriculture in gross capital formation was 6.7% in FY05 but came down to 5.5% in FY13. The private sector had actually increased the share to 9.6% from 7.8%.
Quite clearly, the government’s involvement in directly propping up the farm sector through allocations has been low and its focus has been more on the consumer end. Even the MSP, which is announced for various crops, is linked with procurement largely for rice and wheat and the others work their way through affecting the market benchmarks without leading to assured procurement. The issue really is that we do not have the administrative machinery to enable such procurement.
Hence, agriculture does remain a sector that has not gotten a concerted push as a package to enable sustainability and most of the efforts are in piece meal. Broadly the segments that get involved are: inputs, pre-harvest and post-harvest credit, productivity, post-harvest storage, transportation and packaging and final sale.
There are different entities addressing these issues with the government involvement coming mostly in terms of mandated credit, procurement to the extent that it happens and addressing some issues on inputs through the fertiliser subsidy and expenditure on seeds and irrigation to an extent.
The farmers are otherwise on their own when it comes to marketing and logistics and while there has been talk of a national market, in the absence of access given the distances, it would be still a challenge to sell anywhere outside the existing system.
The focus has to shift back to agriculture and a way out is to address all the issues in the drought prone areas in states and provide access to the back-end and front-end structures. The initiative has to be collaboration from both the central and state governments.
Hence instead of spreading the limited resources available across the geography they should be targeting these vulnerable regions to bring about a transformation. This may just work to partly alleviate agricultural distress.
The author is chief economist, CARE Ratings. Views are personal
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