Responding to Challenges for Long Term Value of Agriculture Sector

Responding to Challenges for Long Term Value of Agriculture Sector

Agriculture still remains the most important sector in the Indian economy. Agriculture and its allied sectors still remain an important sector because of its continued role in employment (about 48%), income, and most importantly in national food security. As agriculture supports the majority of the Indian population and with government efforts to double farmer’s income it is imperative to deal with the challenges of agriculture – Challenges like low productivity, lack of agronomic practices, poor soil health, inadequate irrigation, and post-harvest losses are the key challenges that must be addressed as part of a holistic approach for doubling farmers’ income by 2022.

Challenges in realisation of the objective of doubling farmers’ income

Availability of institutional credit: Farmers often do not receive full amount of institutional credit. The objective and most Common is to have access to institutional credit by the farmers. Though there are several programs for providing institutional credit, still 40% of farmers are not getting timely access to institutional credit which has high interest rates.

Insurance coverage: Insurance in Agriculture is not a new concept. In fact, it has been practiced even in ancient times for protecting the interest of farmers against hazards affecting agricultural production like crop failure and natural calamities. The objective of insurance is to provide remunerative prices to the farmers commensurate with the farmer's own costs than the notional rate fixed by the market and to safeguard him from the vagaries of nature. Insurance against natural calamities (floods, drought, hail, etc.) on an equitable basis brings huge uncertainty to the farm production system resulting in its collapse. Unfortunately, less than 24% of the gross cropped area is covered under Pradhan Mantri Fasal Bima Yojana leaving the rest farmers vulnerable to farm risks.

Irrigation: Irrigation programs have been in place since the independence of India. The existing irrigation equipment is highly inadequate and the same has been brought to attention in fourteen rounds of CACP. Inadequacy of available irrigation facilities not only affects yield but also in that farmers are mostly forced to depend on the high cost of power to pump water to their fields. The installation and running expenses are added burden for the farmers. The crop production is lost due to a reduction in irrigation facilities. Farmers are dependent on rains for cultivating rabi crops. The majority of farmers including small, marginal & landless farmers lack irrigation facilities or access to cheaper power for pumping water during the post-monsoon season and this situation demands urgent focus. As per economic survey, around 52% of the farm area is still unirrigated and dependent on rainfall.

Investment in agriculture: Low levels of investment in the agriculture sector continue to be a major constraint to economic growth. Presently, the rate of return on investment in agriculture is higher than in other sectors.

Seed availability: The challenge of ensuring the availability of quality seed at an affordable cost to the small farmer is very real and vital. It needs a new approach to procurement, storage, supply chain management, promotion, and distribution. These issues need to be addressed for clearly revamping the entire seed sector is as necessary for doubling farmers’ income as a strong public distribution system or good roads. Progeny seed and seed multiplication will have to be revolutionized, while the link between input and output also emerges as an equally important issue.

Land fragmentation: Land fragmentation is one of the big challenges to double farmers’ income in India. Difficulties of commuting and movement to semi-urban markets, low power connectivity, poor infrastructure, lack of mechanization, and skill development capacities are other reasons for farmers' inability to sell their produce at remunerative prices.

Farm mechanisation: The government should aggressively promote agricultural mechanization. The fact that India’s agricultural mechanization is far lower than that of China, Brazil, and Thailand is a clear indication that farm mechanization is not receiving due importance in our country. This must change drastically.

Steps to be taken for Agriculture Sector

The agriculture sector is an important sector that not only ensures food security of the country but also ensures livelihood security of the farmers. Following steps are to be taken for improved performance and quality in agriculture and allied services Sectors:

Irrigation facilities: To improve India's agricultural productivity, irrigation facilities need to be broadened to cover another millions of hectares while water conservation solutions such as micro-irrigation and tubewells need to be popularized.

Credit: Agricultural credit is important for the welfare of farmers and rural communities. Farmers should be allowed to avail agricultural credit with competitive interest rates, without any discrimination on the basis of gender or social status.

Boosting allied sector: The Indian agriculture sector, which is socially and economically the most important sector, has to be strengthened further to provide an assured market to the allied sectors. The main objective is to achieve the overall development of the agricultural sector with special emphasis on increasing the total net sown area and productivity of land under all crops.

Increasing coverage: The Food Processing Sector can be supported by increasing the number of processing units, providing access to finance, and by creating the required infrastructure for the storage and transport of commodities. It is important that a uniform mandate for 100% procurement is created so that procurement is not arbitrated by state-specific policies. The micro, small and medium enterprises sector in the food processing sector needs a boost from Government policies and incentives to make it a viable option for farmers.

Land reforms: Land reforms are necessary for our farmers. They can improve the living standards of the poor by enabling them to have access to land. Focusing on ensuring the safety of tenure for tenants will go a long way in improving productivity as smallholders will not be compelled to switch from crop production to other types of farming. Landowners are often in collusion with local political leaders, and this complicates matters further.

Mechanisation: Mechanization can be a cost-effective means for increasing the productivity per unit of land. This is based on the premise that an increase in income per unit area is possible for those small farmers who are able to adopt farm mechanization and reap the benefits of increased production at affordable costs.

Income support: Farmers need to be assured of a minimum income even when crop prices fall below the MSP.  Apart from procurement price, they will also require a direct income support or investment subsidy to enable restructuring of loans and improve infrastructure facilities.

Focus on global markets: India is the major food producer in the world. The country holds a dominant position in various crops such as rice, cotton, sugarcane, and jute which are exported globally. Being an agrarian economy, the country has always depended heavily on its agriculture output; therefore, giving focus to global markets will allow more exports which will bring a good amount of foreign exchange into the country.

Developing new technologies: Developing a new technology for an agricultural process is one of the ways through which this sector can revive itself. Novel food products must also be developed in order to improve upon what is already in the market.

Increasing Facilities: This will require an increase in the number of food processing facilities and an FDI policy that encourages the setting up of processing units. Better coordination between government and non-government actors, including private sector companies, is essential to ensure the availability of growth input for food crop production.