The abysmal growth rate in the State’s agriculture sector as against a reasonably robust annual growth in the gross domestic product (GSDP) has a crippling impact on the economy and is a serious concern.
Growth and performance of the farm sector has been fluctuating across the plan periods, according to the Economic Review, 2012.
The sector witnessed negative growth rate of 1.3 per cent in the 11th five-year plan (+1.8 per cent in 10th Plan).
Quick estimate for 2011-12 indicated a negative growth rate of 1.6 per cent over the previous year. Provisional estimate of farm income showed a negative growth of 4.5 per cent in 2010-11.
Agriculture has undergone significant structural changes in the form of decline in share of GSDP from 26.9 per cent in 1990-91 to 9.1 per cent in 2011-12.
This is indicative of the shift from a traditional agrarian economy towards a service sector-dominated economy. But a large share of rural population is still dependent on agriculture for employment and livelihood. Reviving the farm sector requires a quantum leap in productivity.
This in turn requires technological interventions given limited supply of land and other structural rigidities.
The Review has warned that implications of a drought in a perennial crop-based agricultural economy such as the State could be quite long-lasting.
New uncertainties for farm growth emerged from the failed southwest monsoon, which deepened the crisis with respect to most of the crops.
To add to this, commodity forecasts issued by the World Bank have projected lower international prices for most commodities of State’s interest.
The debt crisis in Europe has intensified and China’s growth slowed, which could affect the export prospects of commodities, including marine products.
Instability in farm production is causing serious shocks to both supply and farm income. There is growing concern about increased volatility in farm production, prices and farm income.
Increased intensity and frequency of moisture stress, altered hydrological cycles and variation in precipitation on view in recent times have negative implications for the farm economy.
Conservation and management of natural resources is required for building a drought-proof and drought-resilient system in the State. This calls for putting in short, medium and long-term strategies.
Risk management strategies targeting both production as well as price are crucial for improvement of livelihoods for the revival of the farm sector in the State, the Review said.
On the supply side, Kerala State Civil Supplies Corporation (Supplyco) is now providing the second line of public distribution system through effective market intervention.
In contrast to previous years, a major share (35.4 per cent) of assistance provided by National Bank for Agriculture and Rural Development (Nabard) has been availed of by plantation and horticulture sectors.
But fisheries and poultry, which have crucial implications for the rural economy, were largely neglected from disbursement of refinance by Nabard.
Commercial banks stood first in disbursement of priority sector advances followed by cooperative banks, regional rural banks and Kerala Financial Corporation. The same pattern was discernible in farm sector also.