India's agriculture sector,
which provides livelihood to nearly 60% of the workforce, needs
to be made
central to the inclusive growth endeavour. India's current policies for the
agriculture sector are geared towards short-term solutions and revenue
expenditure
rather than long-term capital investment solutions. The dependence
on subsidies
squeezes government spends on critical infrastructure, technology
and credit, in the
absence of which farmers use inefficient methods of
cultivation.
The
need for increasing agricultural productivity through technology infusion and
market-led interventions is gaining urgency. It is well-acknowledged that every
rupee of
contribution to GDP from farming is twice as effective as other
interventions in alleviating
rural poverty. Agriculture is an indirect growth
driver, as a growth rate of 4% in
agriculture translates into robust demand for
other sectors.
High agriculture growth also
helps mute food inflation. Yields per hectare of foodgrains,
fruits and
vegetables in India are far below global averages. Our rice yields are
one-third of
China's, and about half of Vietnam's and Indonesia's. Even India's
most productive states
lag global averages. For example, Punjab's yield of rice
in 2010 was 3.8 tonnes per hectare
against the global average of 4.3 tonnes.
The average yield for apples in India (J&K ) is
about 11 tonnes per acre
compared to the US, New Zealand, Israel or China, where yields
range 30-70
tonnes per acre.
This
pattern is typical of most of our farm commodities such as pulses and edible
oilseeds
whose demand has been rising faster than supply, adding to food
inflation. Substantial
hikes in Minimum Support Price for rice and wheat have
distorted production patterns,
resulting in loss of benefits of crop
diversification and inadequate focus on cash
crops.
Lack of infrastructure ,
post-harvest linkages and technology further results in losses
across the
supply chain. For example, gross capital formation in agriculture and allied
sectors has been below 3% for years. The experience of other economies at
similar stages
of development is instructive.
Brazil, China, and
several south-east Asian countries have leveraged technology and
instituted
trade-friendly policies to bring in greater private sector investments into
agriculture. In India, where 80% of landholdings are of less than two acres, it
is essential
to find economically viable solutions to improve farmer incomes.
Technologies
for energy saving , environment protection, and satellite mapping
need to be infused into
the sector.
All this would require high investments .
Such investments can be attracted from the
private sector, which has largely
remained outside the effort on agricultural capital
expenditure . Legal and
policy interventions could help augment private investments.
For example, the Agriculture Produce Market Committees Act has yet to be
revisited in
many states.Supply chain infrastructure
creation such as warehousing , cold storage and
rural roads, would also bring
in private funds.
The private sector is capable of large-scale technology
infusion. Precision farming , which
leverages IT for matching inputs and
provides real-time information on soil, has been
deployed to good use by the
Argentine group Los Grobos in an outsourcing structure . No-
till
farming is used in place of ploughing in some countries, leaving residue of the
last crop
to enrich the soil. Such new-age farming methods , if propagated, can
transform
production and yields. So, it is essential to raise public research
in agriculture. Part of
Brazil's success in the sector owes to its high
expenditure on agricultural research at 1.7%
of its GDP, higher than in China.
Investment in R&D and
sciencebased technologies would greatly benefit India as well,
which has 14
agri-climatic zones and potentially wide range of agri produce. Private
investment into agriculture R&D must be encouraged through incentives such
as tax
breaks and availability of land and infrastructure. Finally , trade-led
agricultural
development must be considered . While self-sufficiency has been
the primary objective
for the agriculture policy, export of agri-produce to
other markets must be explored. For
example, countries such as Mexico and the Philippines have taken lead positions in export
of
mangoes, one of India's trademark fruits. Agricultural tariffs need rethinking
in this
context.
As the Indian economy
expands , better productivity through technology infusion and
introduction of
global best practices will ensure better quality and prices for consumers .
Also, Indian agriculture will be able to meet to the changing needs of today's
consumer
and this will give a major fillip to farmers to diversify to high
value cash crops.
But most importantly, the true winner will be the farmer, in
particular the small and
marginal farmer, who will be able to improve his
income through better productivity and
be an equal partner in India's growth.
