Agri Business

Private investment in agriculture is falling

TV Jayan New Delhi | Updated on July 04, 2019

Representational image   -  Bloomberg

Falling profitability is keeping investors away from agriculture and the gross capital formation (GCF) in agriculture and allied sectors as a ratio of gross value added (GVA) has fallen to 15.2 per cent in 2017-18 from a high of 17.7 per cent in 2013-14.

The fall in GCF can be attributed to the decline in private investment which incidentally coincides with the government successfully checking food inflation. The Survey clearly showed that the share of private investment in agriculture has come down to 82.7 per cent in 2016-17. In 2013-14, 88.1 per cent of total investment in agriculture came from private investors.



The share of agriculture, forestry and fishing in the overall GVA has been sliding over the years and in 2018-19, it stood at 14.4 per cent. In 2013-14, the share was 17.8 per cent. The shrink is mainly because of the decline of crops in GVA. The share of crops in GVA plummeted to 8.7 per cent in 2017-18, from 11.4 per cent in 2013-14. Even though the share of livestock and fisheries in GVA marginally improved, they weren’t high enough to offset the decline in the share of crops. There is a need to have more focussed policies on dairying, livestock and fisheries to improve their share in the overall development of the agriculture and allied sectors.

The Survey has rightly expressed the concern over the use of groundwater for water-guzzling crops like paddy and sugarcane. These two crops account for over 60 per cent of groundwater extracted for irrigation. It suggested that there was a need for formulating policies to incentivise farmers to improve water use and the focus should shift from land productivity to irrigation water productivity.

Organic farming

It called for redeeming soils which have been failing to respond to fertiliser use by adopting organic and other natural farming methods. As operational farm holdings are getting more and more fragmented, there is an immediate need to improve resource use efficiency by having more custom hiring centres across the country. There are currently around 8,200 custom hiring centres in the country.

Published on July 04, 2019

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