Revamping Indian Agriculture

I Satya Sundaram

Agriculture prosperity is the key to rural prosperity. In India, nearly 70 percent of the population still lives in villages. Farming is both a way of life and the principal source of livelihood for nearly two-thirds of Indian population. As such, it is not sagacious to skirt India’s Rs $ 600 billion worth agriculture.

According to some studies, over 40 percent of farmers would like to quit their occupation, if they have an option. Some changes are taking place in agriculture sector. For instance, horticulture output in 2021-22 at 336 million tonnes (MT) outpaced food-grain production at 316 MT. The stress on productivity is also welcome. However, the changes should benefit small and marginal farmers, tenant farmers and agricultural labourers.

Using land productively is also important. Experts say there are no waste lands, only wasted lands. Of course, when there are substantial gains in productivity, some land can be diverted to non-agriculture use. Between 2001-02 and 2011-12, one million hectares (MH) were diverted for other purposes.

In India, subsidies are on the high side–fertiliser subsidy, Rs 2.76 lakh crore, and food subsidy Rs 2.37 lakh crore. Is free power yielding good results? Economists suggest it is necessary to recast farm subsidies. Market distorting fertiliser and power subsidies should go. Instead, the amount saved should be used to promote non-market distorting support as it would enhance farmers’ incomes.

While the number of farming households increased from 90 million to 93 million between 2013 and 2019, the number of families not engaged in farming increased from 66 million to nearly 80 million in the same period. This means, for most farmers, agriculture is un-remunerative. They are searching for non-farm sources of income.

Agriculture share in employment generation declined from 69.40 percent in 1951 to 43 percent in 2021. However, agriculture and allied sectors constitute the major source of livelihood for more than half of the population. Even now, around 54 percent of the total workforce derives its sustenance from direct employment in agriculture either as cultivators or as agricultural labourers.

In the Global Food Security Index 2021, India ranks 71st out of 113 countries. Food security (FS) means that food is available at all times, that all persons have means of access to it, that it is nutritionally adequate in terms of quantity, quality and variety and that it is acceptable within the given culture.

It needs to be noted that food security and food-grain security are not one and the same. There is enough food grain stocks. With the change in food habits, people are facing serious shortage of non-food–grain items. Even the poor are devoting around 60 percent of food expenditure on non-food--grain items like edible oils, sugar, milk, meat, eggs, vegetables and fruits.

Indian agriculture has shown remarkable resilience. When the over-all growth rate was declining, agriculture experienced an average growth rate of 4.8 percent GVA (gross value added) in the last five years—significantly higher than the GVA growth of the economy as a whole at 3.6 percent during the same period.

Food–grain Production (in MT)
Year                                 Production
2014-15                               252.0
2015-16                               251.5
2016-17                               275.1
2017-18                               285.0
2018-19                               285.2
2019-20                               297.5
2020-21                               310.7
2021-22                              315.7*
2022-23                              323.5*
*estimates

The size of the agricultural holdings is becoming smaller. Farming in India is dominated by marginal (1 to 2 hectare land holdings) and small farmers (below 1 hectare). They account for nearly 86 percent of all the farmers in the country, but own just 47.3 per cent of the crop area. In comparison, semi-medium and medium landholding farmers, owning between 2 to 10 hectares account for 13.2 percent of all farmers, but own 43.6 percent of crop area. Some studies indicate small farmers are more efficient, especially in cultivating labour-intensive crops or keeping livestock. However, landholdings are too small to generate sufficient household income. Small farmers are generally economically impoverished, earning only 39 percent of what medium holders earn, and only 13 percent of what large holders earn.

According to the National Sample Survey (77th Round, 2019), 50.2 percent of agri-households in India are in debt and an average household has debt equivalent to 60 percent of its annual income. The annual income of farm household was Rs 1.23 lakh, and the average debt was Rs 71,100 from July 2018 to June 2019.

Average Monthly Income per Agriculture Household in some States

State                       Average Monthly Income (Rs)
Meghalaya                      29,348
Punjab                            26,701
Haryana                          22,841
Kerala                             17,915
Karnataka                      13,441
Gujarat                            12,631
Rajasthan                       12,520
Tamil Nadu                    11,924
Maharashtra                  11,492
Andhra Pradesh           10,480
Telangana                        9,403
West Bengal                   6,762

NSS Report No. 582.Year, 2019

Official data show that real incomes from cultivation have fallen in absolute terms after 2015. Between 2020-21 and 2022-23, annual growth rates in agriculture and allied sectors have been stagnant between 3 percent and 3.5 percent. Experts say the cut in food and fertiliser subsidies would worsen the plight of farmers. The Budget 2023-24 reduced the food subsidy from Rs 2.87 lakh crore in 2022-23 (RE) to Rs.1.97 lakh crore in 2023-24 (BE). Fertiliser subsidies have also been cut from Rs 2.25 lakh crore to Rs 1.75 lakh crore.

Major Problems
Indian agriculture is greatly handicapped by low productivity, limited diversification, inadequate irrigation facilities, poor marketing facilities, post-harvest losses, unhelpful minimum support price (MSP) and crop insurance scheme, capricious use of scarce resources like water, price volatility, climate aberrations and machinations of the middlemen.

There has been a steep fall in incomes of farm households from agriculture. According to NSS (2019), the average monthly income stood at Rs 10,218. The maximum (Rs 4,063) came from wages; Rs 798 from crop cultivation and production; Rs 1,582 from animal farming. Farmers owning less than one acre get a monthly income of Rs 6,400. Most farmers depend on wage work, animal farming, non-farm business and land lease.

The crop procurement scheme is defective. Procurement has benefited only two crops, wheat and paddy. Wheat procurement increased from 51 lakh tonnes (LT) in 1975-76 to 390 LT in 2020-21. During this period, paddy procurement also increased from 35 LT to 380 LT. Such procurement advantage is not available to coarse cereals, pulses and oilseeds. Even in respect of wheat and paddy, procurement has been uneven across the States. Also, for long the procurement of crop has not been linked to the production of different States. Also, the Government procurement agencies come late in the market and by the time procurement starts, most farmers sell out their produce to private players. The Centre should study the practical utility of MSP. Produce should be procured at MSP at the right time. Muzzling the middlemen is also important.

The subsidized fertilisers are not scientifically utilised. For instance, against the prescribed N: K: P ratio of 4:1:6:1, in Punjab, the actual usage was 33.9:7.9:1—a serious imbalance. There should be judicious use of farm inputs. Fertiliser use efficiency can be improved by around 80 percent through fertigation. The yields may go up 25 to 50 percent. Nutrients and water are supplied near the active root zone through fertigation.

Food wastage impacts the poor, raises food prices and hurts the environment. Losses and wastes contribute 8 to 10 percent of world’s greenhouse gas emissions. Globally, around 14 percent of the food is wasted. Developing countries account for 44 percent of the 1.3 billon tonnes of global food loss. India accounts for 7 percent of global food waste. Post-harvest losses are estimated at Rs 2 lakh crore per annum. Products like tomatoes are often thrown on the roads because the farmers could not get even the transport costs. The Budget 2023-24 announced India will have world’s largest decentralised storage capacity in the cooperative sector which will help farmers store their produce and sell at the right time to get a fair price.

The use of genetically modified (GM) crops has become polemical. Some have advanced a case for GM technology to boost output. The hybrids require modern chemical fertilisers, tractors and other farm equipment. The focus of the green revolution is on the rich farmers. One vital aspect of hybrid was their lack of reproductive capacity. Farmers have to buy seed every year. Experts say research should go beyond crops.

The role of Research & Development (R&D) as a driver of economic growth is well-known. Yet, India continues to neglect this segment. India’s gross expenditure on R & D is low at 0.7 percent of GDP. For OECD countries, it is above 2.5 percent. The Commission for Agricultural Costs and Prices (CACP) has recommended enhancing the public spending on R & D in agriculture to a modest level of 1 percent of the agricultural gross value added (GVA), against just 0.6 percent now. A research study (Gulati et al 2018) has shown that every rupee spent on agriculture R & D yields higher returns (11.2), whereas it is 0.88 in the case of fertiliser subsidy, 0.79 in the case of power and 0.97 in the case of education.

World Soil Day is observed on 5th December. For healthy plant growth, superior soils are needed. Such soils help maintain a landscape that is more resilient to the impacts of droughts and floods. In India, nearly 3.7 MH suffer from nutrient loss in soil. The situation worsened because of excessive use of fertilisers and pesticides. The Government introduced Soil Health Card scheme in 2015. The Pradhan Mantri Krishi Sinchayee Yojana attempts to prevent soil erosion, improve regeneration of natural vegetation, rainwater harvesting and use of fertilisers and pesticides.

Measures Initiated/Needed
The too much importance given to water-intensive crops led to deterioration of soil health and over-exploitation of groundwater. Hence, farmers need to diversify cropping pattern to crops such as millets, oilseeds, fruits and vegetables and adopt integrated farming along with dairy, poultry and fisheries. However, diversification should take into account food security issue.

Indian agriculture badly needs precision farming (PF) which aims at improving efficacy of inputs for maximising yields. It is an approach where inputs are utilised in precise quantities to get increased yields. Of course, PF uses technologies like Global Positioning System (GPS), grid sampling, variable rate technology (VRT). Yield monitors, remote sensors and computer technology. The success of PF also depends on the kind of support from the Government.

The current focus is on Natural Farming (NF). Research is going on regarding the viability of NF. The Government has been promoting variants of NF. The Budget 2023-24 has allocated Rs 459 crore to a new National Mission on Natural Farming. One fear is, NF may reduce yields by 25 to 30 percent. If yields fall, farming cannot stay viable.

However, some case studies have demonstrated that NF is a profitable proposition. It needs to be noted that NF too involves some costs–cost of labour for fieldwork and cattle rearing, collection of dung and urine, and the preparation of Jeevamrutha (Article in Economic & Political Weekly, March 11, 2023. P, 28).

Over the next three years, the Government will facilitate one crore farmers to adopt NF for which Finance Minister unveiled a detailed plan. The PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM) will be launched to incentivise States to promote alternative fertilisers and balanced use of chemical fertilisers. The Agriculture Accelerator Fund announced by the Budget 2023-24, together with PM-PRANAM, is expected to provide necessary boost to NF. It is time to look at NF afresh, validate it scientifically and practise it on scale.

The food security is there, but India badly needs nutrition security. The current stress is on paddy and wheat though they are water-intensive crops. Pulses and coarse grains remain neglected. Production of fruits and vegetables is comfortable. People should increase their consumption.

The UN declared 2023 as the International Year of the Millets. Millets are climate resilient staple food crops grown in dry-land agriculture. They require less water than paddy, wheat, sugarcane, and are suitable for small farmers. India is the largest consumer of millets, and accounts for 38 percent of global demand. Food industry is being encouraged to launch millet-based products by providing sales based incentives.

In India, there is tremendous pressure on water resources. The average per capita water availability will decline from 1588 cubic metres to less than half of that by 2030. Water crisis continues. In India, dry-land agriculture accounts for 68 percent of the area under cultivation and provides 44 percent of food requirement.

Augmenting water resources and judicious use of available water can transform agriculture, and make it remunerative. Yet, water is wasted. There is too much dependence on water-intensive crops and groundwater. The groundwater extraction in India increased from 58 percent to 63 percent between 2004 and 2017. The situation worsened because of climate change. Approximately, 54 percent of Indians are experiencing water scarcity.

For one thing India’s performance is very poor on rainwater harvesting front. Rainwater is abundantly available during some months. Measures should be undertaken to conserve every drop of water. It is not a difficult task. In Kadwanchi (Maharashtra), a drought prone area, farmers wanted to conserve every drop of water. They grow grapes. The farmers use water judiciously. They now earn four times as much as the average income of farmers in the country (Business Line, June 1, 2018). In Rajasthan, small water bodies have been neglected for decades. Now, they have been brought under use. Waste water would be a future source. Micro irrigation reduces water use by 30 to 60 percent, depending on the method of irrigation employed (drip or sprinkler).

The current stress is on Direct Benefit Transfer (DBT). The Prime Minister’s Kisan Samman Nidhi (PM-Kisan) is a flagship central scheme launched in 2019 to pay eligible farmer families Rs 6,000 a year in three installments of Rs 2,000 each. A recent survey has revealed the scheme meets famers’ non-agriculture expenses too (Business Line, March 2, 2023).

The Government declared DBT could save more than Rs 50,000 crore in 2021-22, up from Rs 44,000 crore in 2020-21. This is made possible mainly because of the elimination of 4.2 crore duplicate/fake ration cards during 2013 to 2021.

It is time the class of agri-entrepreneurs is provided all incentives. January 16 is National Start up Day. Young entrepreneurs are encouraged under ease of doing business. Adequate emphasis has been accorded on digital infrastructure for infusion of agriculture technologies in Public Private Partnership (PPP) mode. Tax incentives for agri-business benefit agriculture.

Climate change has affected agriculture also. The heat waves are reducing paddy and wheat output. In some parts of the country, there are droughts, in others, there are floods. Over 75 percent of India’s districts are vulnerable to extreme climate. Apart from climate change, government policies proved counter-productive. For instance, Punjab accounts for 1.53 percent of land area of India. It uses about 23 percent of the total pesticides used in the country. Environmental problems are neglected.

India needs to rejuvenate around 30 MH by 2030. Economists say India can adopt sustainable traditional practices like crop rotation, using bio-fertilisers, and integrating pest management through the judicious use of pesticides. Of course, more funds are needed for adaptation of farming to climate change. The National Adaptation Fund for Climate Change (NAFCC) was established in 2015 to meet the cost of adaptation to climate change for the States.

Indian agriculture has become a victim of natural calamities like droughts and floods. Hence, crop insurance has special significance. Pradhan Mantri Fasal Bima Yojana (PMFBY) offers farmers compensation for crop losses arising from non-preventable risks. Farmers are expected to pay nominal premium (1.5 to 2 percent); the premium burden is equally shared between the Centre and the States. The States are not showing interest. They say while premiums are distributed evenly across participants, claims are cornered by a few.

An expert committee headed by Ashok Dalwai revealed between 2016 and 2021, PMFBY saw a decline in participating farmers (362 lakh to 248 lakh), and States (22 to 19), with shrinking coverage (474 to 387 LH), despite a sharp rise in premiums.

Access to institutional credit for our farmers needs to be stepped up. The Budget 2023-24 promised to increase agriculture credit target to Rs.20 lakh crore, with focus on animal husbandry, dairy and fisheries. The agriculture credit has increased from Rs 4.75 lakh crore in 2011-12, to Rs 18.5 lakh crore in 2022-23.

The performance of cooperative banks is good. They have achieved 95 percent of target in agriculture loans disbursed in 2021-22, accounting for 12.8 percent of the total agriculture loans. These loans increased from Rs 1,57,367 crore in 2019-20 to Rs 2,17,849 crore in 2021-22.

Of course, there has been misuse of agriculture credit. There is also skewed regional distribution of credit. Also, agriculture credit is directed towards production, while marketing and post-harvesting remain neglected.

The Government is depending on the new technology. Data collection through drones leads to resource efficient nutrient application. The data facilitates crop production forecast, and evidence-based planning. They are helpful in a number of spheres ---relief packages, water use efficiency and irrigation, crop loss estimation. The farmers are given Rs 6,000 per hectare by the Government, if they hire drones from custom hiring centre.

There is a plea for regenerative farming. A project undertaken by Chennai-based food and agri-tech start-up, WayCool through its model farm Outgrow Agriculture Research Station (OARS) in regenerative farming has shown that cultivation costs can be reduced, while enriching the soil organic carbon value. Research revealed when the regenerative farming is integrated with right crop selection, know-how and resources, the results are rewarding. Crop diversification is the major principle of regenerative farming (Business Line, January 23, 2023).

The farmers should be provided with new sources of income. For instance, agri-tourism offers opportunities to farmers to get additional income. It is making progress. Agri-tourism includes a variety of activities and services. It is a low-investment, low-risk sector. Rural youth should be trained. Launching of an awareness programme is badly needed. Local administration should be strengthened.

Farmer Producer Organisations (FPOs) present the power of aggregation—famers come together, form an organisation which collectively buys inputs and sells the produce. They assume importance because in India nearly 46 percent of land holdings are small, and contribute 51 percent of output. Strengthening FPOs will raise farmers’ bargaining power and help them achieve economies of scale. The Government wants to promote 10,000 FPOs.

Cooperative farming has not become popular. Group farming should be encouraged. In Telangana, some women agriculture workers/farmers have sown the crop collectively, and shared the cost and the income too collectively. These small groups enjoy financial and social autonomy by doing collective farming on leased land (The Hindu, March 8, 2021).

Scientists at the Central Research Institute for Dry-land Agriculture (CRIDA), an organ of ICAR, have developed an early warning system called Farmers Distress Index. The index can sense imminent distress at least 3-4 months ahead of its actual occurrence, allowing to take preventive steps. It also indicates the level of distress (Business Line, April 17, 2023).

At the Agri & Commodity Summit 2023, arranged by Business Line (January 6, 2023), Ashok Dalwai, CEO, National Rain-fed Area Authority (who headed the Committee on Doubling Farmers’ Income), has said technology and more land to horticulture would double farmers’ income. Also, Indian agriculture has to move from food security to nutrition security.

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Vol 56, No. 17-20, Oct 22 - Nov 18, 2023