Agrarian Distress in India

Agriculture in India is facing a lot of issues and recent incidents of farmer’s protest has brought this issue again in news.

About:
Kisan mukti march: Recently, thousands of farmers marched to Delhi demanding 3 week joint session of Parliament to discuss on prevailing agrarian crisis.
• In a similar incident in Maharashtra, 35,000 farmers marched from Nashik to Mumbai demanding, inter alia, implementation of Swaminathan committee recommendations.
• Earlier this year, farmers of Madhya Pradesh were protesting in Mandsaur district demanding better prices for their production and on the same lines farmers of Tamil Nadu were staging protest in Delhi demanding drought relief package and farm loan waiver.

In the light of the above widespread distress among the farmer community, let us analyse the different issues related to Indian Agriculture:

ISSUES RELATED TO MARKET AND PRICE REALIZATION
• Low agriculture income:
The ‘Situation Assessment Survey of Agricultural Households’ conducted by the National Sample Survey Office (NSSO-SAS) of Ministry of Statistics and Programme Implementation (MOSPI) suggests that average income of an agricultural household during July 2012 to June 2013 was as low as Rs. 6,426 as against its average monthly consumption expenditure of Rs. 6,223 and as many as 22.50 per cent of the farmers live below official poverty line.
Low price realisation: There is a large gap between what
the farmers get for their produce and the prices that the
final consumer pay for the same.

• Issues with MSP: The issue of Minimum Support Prices (MSP) is a recurrent theme where we see the farmers seeking higher MSP from the government. Lately, the farmers have been demanding for raising the MSP to 50% of input costs as per Swaminathan committee recommendations.

• Post-harvest Losses:
A study conducted by Indian Council of Agricultural Research (ICAR) in 2010 shows that the post-harvest losses of various commodities range from 4%-18% for cereals, pulses, fruits and vegetables.
The Ashok Dalwai report estimated losses worth of 34% and 45% in fruits and vegetables respectively.
Poor food processing capacity and inadequate cold storage chains are major reasons for this large scale post-harvest losses.

• Poor Market linkages: There is absence of a direct linkage between farm producers and consumers.
The limited spatial spread of Agricultural Produce Market Committee (APMC) markets and high market charges of APMCs are also responsible for the low price realization by the farmers.
Trade bans: Imposition of stock limits under Essential Commodities Act and restrictive agricultural export policy negatively impacts market access by farmers.
• Issue with Agricultural Credit:
• NSSO-SAS 2015 highlights that nearly 40 per cent of all loans came from informal sources with 26 per cent advanced by moneylenders at higher interest rates. This shows the lack of affordable agricultural credit to the farmers through institutional means like banks.
• More beneficial for big farmers: As per RBI data, as of March 2013, small borrowings (with limit less than Rs.2 lakh) is just 5 per cent of the total outstanding bank credit in the agriculture segment. This is despite the fact that, as per the agriculture census of 2010-11, small and marginal farmers account for 85.03 per cent of the total agricultural holdings in the country.
• Issues with agricultural insurance:
Low penetration of agricultural insurance due to high premium rates and capping of sum assured.
Delay in assessment and settlement of claims.
Farm suicides: As per the NCRB data shows over 3 lakh farmers have committed suicide in the last decade. Some breakup of the suicide data shows the following reasons:

Bankruptcy or indebtedness (38.7%): The high level of debt, especially from non-institutional sources (36% of the total credit) with high interest rates compel farmers for suicide.
Farming related issues (19.5%): For example, due to poor penetration of marketing and transportation facilities, farmers are unable to sell their produce at good prices.
• Failure of Crops (19.4%): Due to frequent droughts and floods.
Family Pressure (11.7% cases): Financial pressures for education health, marriage and other social function.

Steps taken to Address the Above Issues:
Doubling farmer’s income: The Government has set a target of doubling of farmers’ income by the year 2022. This is being done with the aim to reorient agriculture sector by focusing on farmer’s income centeredness.

Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA): This scheme, approved by the cabinet recently, aims to enable farmers realize the MSP in fuller measure via its three subschemes:
Price Support Scheme (PSS): Physical procurement of pulses, oilseeds and Copra.
Price Deficiency Payment Scheme (PDPS): Direct payment of the difference between the MSP and the selling/modal price.
Private Procurement & Stockist Scheme (PPSS): Involves procurement by selected private agencies in pilot district/selected APMCs, for MSP notified oilseeds.
SAMPADA Yojana: The Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA) is an umbrella scheme incorporating ongoing schemes like Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Food Safety and Quality Assurance Infrastructure, etc. and also new schemes like Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages, Creation/Expansion of Food Processing & Preservation Capacities.
• Operation Greens: It aims to boost production and processing of tomato, onion and potato (TOP) as part of an objective to check price volatility in these three key kitchen staples. It will promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management.

• Nivesh Bandhu: It is an investor facilitation portal for information dissemination on Central and State Governments’ investor friendly policies in the food processing sector.
• Agriculture Export Policy, 2018: It aims to double agricultural exports from present USD 30+ Billion to USD 60+ Billion by 2022 and reach USD 100 Billion in the next few years with a stable trade policy regime.

Interest subvention for short term crop loans: It aims to provide agricultural credit at low interest rates. It provides for:
• Interest subvention of 2% per annum for crop loans to farmers, up to Rs. 3 lakh at 7% rate of interest.
• Additional interest subvention of 3% for prompt payees of loans.
Priority Sector Lending: As per RBI directions, banks are required to lend 18% of their net outstanding credit towards agriculture.
Loans against warehouse receipts: In order to alleviate liquidity crunch for the farmer, they are provided loan against negotiable warehouse receipts.
• Negotiable warehouse receipts are given to farmers when they store their post-harvest produce in Warehouses accredited by Warehousing Development Regulatory Authority (WDRA).
Introduced the Kisan Credit Card (KCC) Scheme, for purchase agriculture inputs such as seeds, fertilizers, pesticides etc. and draw cash for their production needs.
Joint Liability Groups: To bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutional credit, Joint Liability Groups (JLGs) have been promoted by banks.

Waiving off agricultural loans: In 2018, Madhya Pradesh and Chattisgarh has declared farm loan waivers. Since 2014, 7 states have waived Rs. 1,82,802 crores worth of loans.
Model Agricultural Produce and Livestock Marketing Act (APLM), 2017: This is a model act prepared by the Union government for the states to adopt if they legislate on this matter.
• This 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, a unified single trading licence in a state, declaring warehouses/silos/cold storage as market sub-yards and the launch of the National Market for Agriculture.

Draft Model Contract Farming Act, 2018 is an attempt to provide an enabling environment for contract farming to thrive.

Way Ahead:
Despite many steps taken by the government to deal with the market and price realisation issues faced by the farmers, a lot more needs to be done which has been enumerated by the NITI Aayog in its National Strategy for New India as follows:

Marketing Reforms:
• Expeditious adoption of Model APLM Act, 2017 by states will remove the legal hurdles for farmers.
• Amend Essential Commodities Act such that it balances the interests of farmers and consumers.
• To have a stable export policy with a five to ten-year time horizon and a built-in provision for a mid-term review.
Price Realization:
Replace the Commission on Agricultural Costs & Prices (CACP) by an agriculture tribunal in line with the provisions of Article 323 B of the Constitution.
Replace the Minimum Support Price (MSP) by a Minimum Reserve Price (MRP), which could be the starting point for auctions at mandis.
Examine the possibility of including private traders operating in markets to complement the MSP regime through a system of incentives and commission payments.
Agriculture Advisory Service: An effective and technology driven Agriculture Advisory Service may be considered on the lines of those of the United States Department of Agriculture (USDA) and the European Union (EU). The mandate would be to ensure that farmers adopt an optimal cropping pattern that maximizes their income.
Crop insurance reforms: Pradhan Mantri Fasal Bima Yojana (PMFBY) needs to be modified in order to:
• Promote weather-based insurance.
• Increase non-loanee farmers’ insurance coverage.

• Allow for mixed cropping and increase the number of crops notified.

• Promote Contract Farming:
• Encourage states to adopt the Model Contract Farming Act, 2018.
• Contract farming to be kept out of the ambit of Agricultural Produce Marketing Committees (APMCs).

Markets and Value Chain Reforms:
Provide infrastructure status for agriculture value chains: This will enable them to avail of the fiscal benefits that come with infrastructure status.
Develop village level procurement centres: Developing Gramin Agricultural Markets (GrAMs) will help develop the agricultural marketing infrastructure and bring markets closer to the farm-gate.
Link production to processing: Village level collection centres for fruits and vegetables should be linked to larger processing units.
• Greater focus on the food processing industry should be put to enhance the value addition in vegetable and fruit crops.
• Upgrade wholesale markets with facilities for temporary storage, pack-house operations and cold storage facilities.

• Strengthen railway freight operations through temperature-controlled containers and loading and unloading facilities.

Export Enablers:

• Develop export oriented clusters containing a functional, end-to-end cold chain system along with processing facilities.

• Increase the number of testing laboratories:
• Promotion of Private laboratories to achieve international accreditation.
• Agricultural universities should also seek to get their labs accredited by APEDA.
Regulatory frameworks to combat rejections in export markets regarding use of pesticides, growth hormones, and antibiotics for marine produce need to be developed and implemented effectively.

ISSUES RELATED TO PRODUCTIVITY, EFFICIENCY AND RESEARCH
Low yield levels: Existing yield levels of a majority of crops remains much lower than the world average due to low irrigation, use of low quality seeds, low adoption of improved technology, and knowledge deficit about improved agricultural practices.
• Limited irrigation infrastructure:
• Only 47% of the total net sown area has irrigation facilities.
• Even when the irrigation facility is created, it is not adequately utilized as there is a widening gap between irrigation potential created (IPC) and irrigation potential utilized (IPU) in India.
• High dependence on ground water (>60%) for irrigation leading to and over-exploitation of groundwater resources and declining water tables.
• Deteriorating Soil health: Current consumption ratio of nitrogen, phosphorus and potassium (NPK) is 6.7:2.4:1 against their desirable ratio of 4:2:1 which is leading to deteriorating health of the soil.
Predominance of small and marginal farmers: As per the Agriculture Census 2018, the small and marginal holdings taken together (0.00-2.00 ha) constituted 86.21% (in 2015-16) of the total agricultural holdings in India.

• Seed related issues:
Poor quality of seeds which are used by the farmers.
Prohibitively high prices of hybrid variety of seeds.
• Indecisiveness with GM crops: There is indecisiveness on the use of GM crops with some sections highlighting their potential impact on productivity increase while the others highlighting their possible disastrous impacts on environment and human health. The case of GM mustard is an example.
Cereal centric production: 55 per cent of the net sown area is under cereals, of which rice and wheat occupy 33%. This leads to shortage of other crops like vegetables in some seasons. Also monoculture depleted the soil of vital nutrients due to repeated growing of the same crop.

Steps taken by Government To Resolve these Issues:
Pradhan Mantri Krishi Sinchayi Yojana (PMKSY): This scheme aims at providing irrigation facilities to all the farmers of India (Har Khet ko Pani) and increasing the water use efficiency of agriculture (Per drop more crop).
Soil health card scheme: The card provides information on fertility status of soil and a soil test based advisory on use of fertilizers.
Neem Coated Urea for improves nutrient absorption and stem diversion of fertilizers.
Paramparagta Krishi Vikas Yojana (PKVY): for promotion of organic farming.
• Capital investment subsidy scheme for promotion of use of biofertilizers.
Integrated nutrient management: The program aims to promote soil test based balanced and judicious use of chemical fertilizers in conjunction with organic sources of nutrients.
Sub-Mission on Agricultural Mechanisation (SMAM): It aims to increase the reach of farm mechanization to small and marginal farmers; promote Custom Hiring Centres; create hubs for hi-tech and high value farm equipment.

Way Ahead:
Therefore, the government is on the right track to provide solutions to the problem of low productivity and inefficacy in Indian Agriculture, but more needs to be done as follows:

Productivity and Efficiency:
Increase area under irrigation: Irrigation coverage needs to be increased to 53 per cent of gross cropped area (GCA) by 2022-23.3 The focus should be on increasing coverage through micro- irrigation.

• Increase adoption of hybrid and improved seeds:
• Dynamic seed development plans based on data such as crop wise area (each season separately), seed rate per hectare used, desired/targeted seed replacement rate and crop wise seed requirement.
• States should aim to increase the seed replacement rate (SRR) to 33 per cent for self-pollinated crops and 50 per cent for cross-pollinated crops in alternative years.
• Seed Replacement Ratio denotes how much of the total cropped area was sown with certified seeds in comparison to farm saved seeds.
Increase Variety Replacement Ratio (VRR): Phase out old varieties of seeds and replace them with hybrid and improved seeds to enhance productivity.

• Efficient Fertilizer Usage:
Strengthen the Soil Heath Card (SHC) scheme
Link the SHCs with the integrated fertilizer management system.
Link SHCs with Kisan credit cards and make SHCs mandatory for subsidies.
Ensure proper functioning of the SHC labs.
• Reorient fertilizer subsidy policy: 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).
• Regulate pesticide use: Align the pesticide regulatory framework with food safety laws to make adoption broad based.
Custom Hiring Centres: Nationn wide replication of successful model of Madhya Pradesh with CHCs to hasten the pace of farm mechanization.
• Subsidies on liquid fertilizers to encourage fertigation with micro-irrigation.
• Investment subsidies for micro-irrigation through the DBT mode.
Strengthening extension systems: Create synergy between Agriculture Technology Management Agency (ATMA) and Krishi Vigyan Kendras (KVKs) and promote Public Private Partnership in KVKs.

Replicate dealer training programme in state agricultural universities: The National Institute of Agricultural Extension Management’s (MANAGE) dealer training programme should be replicated in State Agriculture University (SAUs), with diploma holders granted licences to conduct
extension activities.

Promotion of High Value Crops (HVCs) and Livestock:
• Encourage diversification to HVCs to wean farmers away from cereal crops to HVCs.
Establish regional production belts: As in the cluster- based approach, supported through the Mission on Integrated Development of Horticulture (MIDH).

Use of hybrid technology in vegetables: Currently, only 10% under hybrids. Shifting to hybrids has the potential to increase yields by 1.5 to 3 times and provide a significant increase in income.
• Smart horticulture using techniques such as high-density plantation, protected cultivation and organic production.
• Strengthen market for organic products: Targeted efforts to create a market for niche products is recommended.
• Recycling of agricultural waste will also give fillip to farmers’ income.

Land Reforms:
Encourage states to adopt the Model Agriculture Land Leasing Act, 2016: This model act seeks to legalize land leasing; provides for a mechanism for tenants to avail of institutional credit; automatic resumption of land after end of lease period; establishment of land tribunals.

Digitize land records: Complete digitization of land records, Geo-tagging of land records to generate updated land records.

Promote Farmer Producer Organizations (FPOs): Economically viable, democratic, and self governing Farmer Producer Organisations (FPOs) will help in collectivization of producers, especially small and marginal farmers. This will give them greater bargaining power vis-à-vis the market.

Research & Development:
Focus on precision agriculture: Support research on energy friendly irrigation pumps, micro irrigation, climate smart technologies, internet of things (IoT), and use of technology in animal husbandry to monitor animal behaviour, health and production to prepare for future challenges.
Raise research spending: Research spending, currently at 0.3 per cent, needs to be increased to at least 1 per cent of agricultural GDP.
Create a knowledge hub to disseminate best practices: Regular review of performance of Krishi Vigyan Kendras (KVKs) and strengthening of KVK’s to disseminate best practices at the field level.
Develop models of integrated farming: ICAR and SAUs should focus on farming value chain, covering production, post-production, processing and other value- addition activities.

Innovation:
Zero budget natural farming: It increases in farmers’ net income by sharply reducing costs of production and improving incomes by raising yields and improving the quality of agricultural produce.
• Promotion of patented herbal inputs that improve soil quality and make plants more pest resistant.
• Promotion of organic farming techniques, which have also helped improve incomes of cultivators and dairy farmers.

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