3.
Agriculture, marketting, food security and food
processing
Budget 2019-20
Examples
1. Mission Kakatiya -- Restoring minor irrigation sources of water with
community participation. Pani Panchayat -- Orissa.
2. Traditional irrigation techniques such as Tankas, khadins, vav, ahar
pynes are significant in areas such as arid and semi-arid regions.
Modernising Agriculture
1. The existing yield levels of a majority of crops remains much lower
than the world average.
2. Current situation
1. Staple crops (cereals, pulses and oilseeds) occupy 77 percent of
the total gross cropped area (GCA) but contribute only 41 percent
to the output of the crop sector. High value crops (HVCs)
contribute an almost similar amount to total output as staples do,
but they occupy only 19 per cent of the GCA.
2. Low irrigation. Close to 53 percent of cropped area is water
stressed. Rainwater management practices and services are
resource starved. This limits a farmer’s capacity to undertake
multiple cropping and leads to inefficient utilization of land
resources.
3. Low quality seeds.
4. Use of outdated and inappropriate technology is the main reason
for low productivity of crops and livestock. Knowledge deficit
about improved agricultural practices. Given the pre-dominance
of small and marginal farmers in Indian agriculture, affordability
becomes a significant constraint on technology adoption by
farmers.
5. Inefficient extension delivery systems have led to the presence of
large yield gaps as well. Agricultural research in the country is
constrained by resource inadequacy, regulations and intellectual
property rights (IPR).
6. On-farm adoption of technology developed in public sector also
has many challenges.
3. Way forward
1. Increase area under irrigation.
2. Investment subsidies for micro-irrigation: Rather than power and
water subsidies, investment subsidies for micro-irrigation can be
provided through the DBT mode.
3. Increase adoption of hybrid and improved seeds. Strengthen seed
testing facilities.
4. Efficient fertilizer usage. The current lopsided fertilizer subsidy
policy needs to bring secondary and micronutrients on the same
nutrient-based subsidy (NBS) platform as phosphorus (P) and
potash (K). Provide subsidies on liquid fertilizers. Targeted
subsidy should be provided on liquid fertilizers to encourage
fertigation with micro-irrigation. Regulate pesticide use.
5. Custom hiring centres: Madhya Pradesh has had demonstrable
success with their custom hiring centre model to hasten the pace
of farm mechanisation.
6. Strengthening extension systems: Public Private Partnership in
KVKs.
4. Diversification: Promotion of high value crops (HVCs)
1. Encourage diversification to HVCs: Design an incentive
mechanism to wean farmers away from cereal crops to HVCs.
2. Establish regional production belts: As in the cluster-based
approach, regional production belts for HVCs need to be
identified and supported through the Mission on Integrated
Development of Horticulture (MIDH).
3. Use of hybrid technology in vegetables.
4. Root stocks technology for production of fruits: Rootstock
technology has shown the capacity to double production and be
resilient to climate stress.
5. Smart horticulture: There have been pockets of success spread
throughout the country, using techniques such as high-density
plantation, protected cultivation and organic production.
6. Strengthen market for organic products: Targeted efforts to create
a market for niche products is recommended.
Policy and Governance in agriculture
1. Promote through government policies the emergence of ‘agripreneurs’
so that even small and marginal farmers can capture a higher share of
value addition from ‘farmgate to fork’.
2. Current situation
1. In the years post-independence, the policy structure was focused
on increased production and productivity to ensure food security
for India. However, to achieve the target of doubling farmers’
income by 2022-23, we need to shift our focus from agriculture to
agri-business.
2. The current government has taken several steps to improve private
investment in agriculture. 100 percent foreign direct investment
(FDI) was allowed in 2016-17. Similarly, the SAMPADA scheme
targets creation of food processing infrastructure. The budget
allocation to the food processing sector was doubled in the Union
Budget 2018-19. Introduction of the Model APMC act, Model
Contract Farming Act, new guidelines for agro-forestry are some
other key policy initiatives taken over the past few years.
3. Constraints
1. Fragmented land holdings. This makes it difficult for them to
access credit or new technology, severely affecting farm
productivity.
2. Low price realisation. Prices also tend to fall below the minimum
support prices in a good production year, leading to agrarian
distress.
3. Non-farm employment.
4. Agricultural credit.
5. Agricultural trade. Exporters of agro-commodities are not
successful in raising their share in global markets.
4. Way forward
1. Marketing reforms: Model APMC provides for progressive
agricultural marketing reforms, including the setting up of markets
in the private sector, allowing direct sales to exporters/processors
and customers, farmer-consumer markets, e-trading, single point
levy of market fee, and the launch of the e-NAM.
2. Amend Essential Commodities Act: The Essential Commodities
Act, which has proven a disincentive to large investment in
agricultural technology and infrastructure, should be replaced with
a modern statute that balances the interests of farmers and
consumers.
3. Stable export policy.
4. Price realisation: Replacing the minimum support price (MSP)
by a minimum reserve price (MRP), which could be the starting
point for auctions at mandis. Raising MSP or prices can only be
a partial solution to the problem of assuring remunerative returns
to farmers. A long-term solution lies in the creation of a
competitive, stable and unified national market to enable better
price discovery, and a long-term trade regime favourable to
exports.
5. Contract farming: Encourage states to adopt the Model Contract
Farming Act, 2018.
6. Land aggregation
1. Encourage states to adopt the Model Agriculture Land
Leasing Act, 2016: The Model Act aims to improve land
access to small and marginal farmers through land leasing,
whilst also providing for a mechanism for tenants to avail of
institutional credit.
2. Digitise land records: Complete digitiza- tion of land records
is a must for effective implementation of land leasing.
3. Promote farmer producer organizations (FPOs): There are
now 741 FPOs in the country, managed under the aegis of
Small Farmers Agribusiness Consortium (SFAC). They have
demonstrated that aggregating farmers can help achieve
economies of scale.
7. R&D
1. Focus on precision agriculture.
2. Create a knowledge hub to disseminate best practices.
8. Innovation
1. Several breakthroughs have the clear potential for quickly
doubling farmers’ income. One is the recorded success of
zero budget natural farming by Subhash Palekar. Rapid
progress has also been made in organic farming techniques,
which have also helped improve incomes of cultivators and
dairy farmers.
2. Two, there are patented herbal inputs that improve soil
quality and make plants more pest resistant.
9. Non-farm income
1. Create and nurture agripreneurs for achieving greater value
addition through agro-processing and propagation of modern
extension services.
5. We should transform agriculture from a way of life to an enterprise and
agricultural workers as agripreneurs.
Contract farming
1. Contract farming is the contractual arrangement between farmer and the
firm specifying one or more conditions of production and/or marketing
of an agricultural product.
2.
3. Advantages
1. Farmers have a guaranteed market outlet, reduce their uncertainty
regarding prices and often are supplied with loans in kind, through
the provision of farming inputs such as seeds and fertilizers.
2. Purchasing firms benefit from having a guaranteed supply of
agricultural products that meet their specifications regarding
quality, quantity and timing of delivery.
4. Challenges
1. Uneven nature of the business relationship between farmers and
their buyers. While contract farming appears to provide financial
security to farmers, it can also lead to greater insecurity as farmers
become dependent on these companies for their livelihoods.
2. On the supply side, the most important constraint has been the
scale of farm produce. 86% land holdings are less than 2
hectares. Buyers have no incentive for contract farming with a
large number of small and marginal farmers due to high
transactions (ex. costs related to negotiation) and marketing costs
(ex. cost of collecting produce).
3. Further the problem is heterogeneity in quality of produce with a
large number of small farmers.
4. Contract farming caters primarily to the production of items which
requires high doses of fertilisers and pesticides, it is often not
ecologically sustainable.
5. Contract farming of export oriented products such as flowers
means that agricultural land is diverted away from food grains.
6. Contract farming makes indigenous knowledge of agriculture
irrelevant.
7. Another, and more widespread aspect of the globalisation of
agriculture is the entry of multinationals into this sector as sellers
of agricultural inputs such as seeds, pesticides, and fertilisers.
8. On the demand side, we have not allowed the big foreign retail
chains like Amazon, Tesco to invest in India (FDI in food retail
was opened in 2016). These retail chains have an efficient supply
chain and a successful business model running in other countries.
5. Model Contract farming act, 2018
1. Contract farming to remain outside the ambit of APMC act.
2. No right, title of interest of the land shall vest in the sponsor.
3. No permanent structure can be developed on farmers’
land/premises.
4. Setting up of a state level agency called “Contract Farming
(Development and Promotion) Authority” to popularise it among
the stakeholders.
5. Constitution of a “Registering and Agreement Recording
Committee” at district/block/taluka level for registration of contract
farming sponsor and recording of contract, so as to implement
effectively contract farming.
6. In addition to contract farming, services contracts all along the
value chain including pre-production, production and post-
production have been included.
7. Ensuring buying of entire pre-agreed quantity of one or more of
agricultural produce, livestock or its product of contract farming
producer as per contract.
8. Enables production support, including extension services to the
contracting farmers or group of farmers through supply of quality
inputs.
9. Promoting Farmer Producer Organization (FPOs) / Farmer Producer
Companies (FPCs) to mobilise small and marginal farmers to
benefit from scales of economy in production.
10. Accessible and simple dispute settlement mechanism at the lowest
level possible provided for quick disposal of disputes.
ZBNF
1. ZBNF has been practiced for over a decade at small scale level across
India. But in the recent times, it has been adopted at a much larger scale
in South India. Andhra Pradesh government in an effort to make
transition to 100% chemical free farming became the first state to adopt
ZBNF. However, few steps like scientific validation of ZBNF, scaling
up of investment, diverting existing subsidies away from chemical
fertilizers and strengthening the existing KVK network can help in
widespread adoption of ZBNF.
2. According to UN Environment, ZBNF also creates the social capital
necessary for vibrant and inclusive agricultural production, by
establishing farmers’ federations and SHGs, and placing farmers at the
forefront of knowledge creation and dissemination.
Organic farming
1. Organic farming is a form of agriculture that relies on techniques such
as crop rotation, green manure and biological pest control. Organic
farming aims to keep the soil alive and in good health by use of organic
wastes and other biological materials along with beneficial microbes to
release nutrients to crops for increased sustainable production in an eco-
friendly pollution free environment.
2. Advantages
1. Increased nutrient content in the food.
2. Free from poisonous content.
3. Better and organic taste.
4. Longer storage life.
5. Reduced costs for farmer.
6. Less resource utilisation. Ex: reduced water and fertiliser usage.
7. Minimising environmental degradation.
8. Reduced soil erosion.
3. Challenges
1. Lower productivity.
2. There is a serious shortage of good quality organic inputs, which
increases the risk of loss of yield.
3. Supply chain is underdeveloped and small and mid-sized farmers
located in hilly regions and tribal belts find it extremely difficult
to access the market.
4. There is a shortage of pack houses and refrigerated vehicles,
which leads to spoilage. Organic products have to be stored
separately from conventional products to avoid cross-
contamination and the existing supply chain does not often
provide that facility.
5. Indian Agricultural Research Institute findings, 33% of organic
products sold contained pesticides residues.
6. Organic farmers are forced to sell their produces at premium
prices due to reduced produce. This makes it unaffordable for the
common man.
4. Organic farming brings back human's harmonic way of life with nature.
This is way forward for the world which is riddled with climate change
and other ecological problems.
Agricultural export policy, 2018
1. Policy changes: Reforms in APMC Act and streamlining of mandi fee.
2. Infrastructure: Creating inland transportation links
alongside dedicated agricultural infrastructure at ports with 24x7
customs clearance for perishables.
3. Quality regimen: A holistic response to Sanitary and PhytoSanitary
(SPS) and Technical Barriers to Trade (TBT) barriers faced by Indian
products.
4. Focus on clusters: Involvement and engagement of small and medium
farmers for entire value chain as group enterprise within cluster of
villages at the block level for select produce.
5. Creation of Agri-start-up fund: Entrepreneurs are to be supported to
start a new venture in Agri products exports.
6. Promote value added organic exports. Organic products in North
East development of ‘AMUL’ style cooperatives.
7. Marketing and promotion of Brand India.
8. Attract private investments in export oriented activities and