Agri sector needs re-orientation to face climate change impact

The Economic Survey for 2022-23 has said a well-developed food processing sector will help reduce wastage, improve value addition, ensure better farmers’ returns, promote employment and increase export earnings. These observations were made even as it highlighted several of the Centre’s initiatives such as PM-Kisan, PMFBY, interest subsidy on credit, e-NAM and FPOs that led to sustainable and inclusive development of the farm sector.

Noting the good performance of agriculture and allied activities, the Survey called for re-orientation in policies and programmes amid challenges from climate change impact, fragmented landholdings, sub-optimal farm mechanisation, low productivity, disguised unemployment and rising input costs.

The Indian agriculture sector has recorded an average annual growth rate of 4.6 per cent during the last six years and it was lower at 3 per cent in 2021-22 and 3.3 per cent in 2020-21.

Higher rural inflation

The “buoyant performance” has been attributed to measures such as the promotion of farmer producer organisations (FPOs), crop diversification, productivity improvement, mechanisation and creation of the Agriculture Infrastructure Fund (AIF). “Further, income support to farmers through the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the promotion of allied activities has led to diversification in sources of farmers’ income, improving their resilience to weather shocks,” it said.

The Budget for 2023-24 may see increased allocation under PM-Kisan if the government accepts farmers’ demand to raise it from current level of ₹6,000/year.

However, experts said the gain from Government policies could have been better realised had the inflationary impact in rural areas been contained. “As the government itself has noted that rural population are spending more than urban population due to higher food prices, farmers should have been given an inflation-linked incentive through direct benefit transfer,” said S K Singh, an agriculture economist.

Most of the States have witnessed higher rural inflation than urban inflation in the current year, mainly owing to marginally higher food inflation in rural areas. Assam, Haryana, Madhya Pradesh, Odisha, Uttarakhand and West Bengal experienced a higher rural inflation than urban inflation.

‘Incentivise R&D’

“Increase in foodgrain production, record agricultural exports, enhancement of MSP levels, focus on millets, oilseeds and pulses, greater coverage of crop insurance, increase in institutional credit and continued progress in e-procurement amongst various other highlights indicate that agribusiness continues to show strong potential for growth and enhancement of farmer livelihoods,” said Anand Ramanathan, Partner, Deloitte India. However, the Survey could have had more coverage from an agri-tech perspective to address some of the key challenges like productivity and market linkages, he said.

As India’s average per acre production is one-third compared with China, the Government should further incentivise research and development activities in farm sector, said RG Agarwal, Chairman of pesticides manufacturer Dhanuka Agritech.

According to official data as of December 2022, as many as 21,628 Custom Hiring Centres (CHCs) and 467 Hi-Tech hubs and 18,306 farm machinery banks have been established in the country. The Survey said farm mechanisation helps increase productivity through the timely and efficient use of other inputs and natural resources while at the same time, also reducing the cost of cultivation. But it asked the government to ensure machines that are viable and efficient for small farm holdings as average size of household ownership holding has declined to 1.08 hectare in 2015-16 from 1.23 hectare in 2005-06.

Improving techniques

Noting that crop yield prediction models using artificial intelligence and drones for monitoring soil and crop health have been initiated, it said “smart farming” enables crop diversification, which will help farmers reduce their dependence on monsoon for water. There are over 1,000 agritech start-ups who have been assist farmers in improving farming techniques.

An early heat wave during the wheat-harvesting season in 2022 had adversely affected its production. In last kharif season, there was a decline in the paddy acreage due to delayed monsoon. Still, production of kharif rice during 2022-23 is estimated at 104.9 million tonnes (mt), higher than the previous five seasons (2016-17 to 2020-21) average of 100.5 mt.

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