Shashanka Bhide

Case for generic farm policies

Shashanka Bhide | Updated on April 08, 2011

Generic support to raising overall production potential of agriculture is as important as specific programmes Photo: P.V. SIVAKUMAR   -  Business Line

The diversity of production conditions needs to be recognised and the potential for increased productivity across regions tapped better.

Indian agriculture is marked by huge variety in output and production conditions. There have been gradual changes in production patterns in response to policies, incentives, technology and production conditions. The coarse cereals gave way to rice and wheat, pulses to cereals and oilseeds, and oilseeds to some other crops.

The great diversity in farming conditions is both strength and vulnerability for the farmers, especially as they are faced with policies that seek to re-orient agriculture and the production patterns. The choice of what to produce is increasingly matter of public policy rather than merely the choice by farmers. Re-allocation of resources is not costless. Policies also do not get reversed easily once made.

Diversity does not necessarily imply wide range of choices for an individual farmer but wide range of situations in which farming is carried out.

Although it is hard to deny that at the core of agricultural development efforts, the objective is the overall development of agriculture, the policy approach is often driven by crises of specific nature. In this sense, the attention is on specific crops, regions or types of farmers.

Policy responses

Such an approach may be successful in meeting a specific crisis but may not address the diversity of farming conditions. What are the policy choices? Policies that address broad-based objectives, or those that address specific concerns of the day? When the crisis is one of excess demand or supply failures, leading to high prices, the policy objective is to facilitate production to meet demand for specific products. Such policy measures often override the concerns of the other producers.

When the crisis is in terms of low income levels of the farmers, the policy response may be generic, but will affect certain crops, regions or types of farms more than the others. Investments in irrigation combined with price incentives may promote production of specific crops such as sugarcane. Fertiliser subsidies, when they imply lower input prices, may help a wider range of producers.

Although there are, perhaps, hundreds of schemes and initiatives that address local issues relating to agriculture, significant policy attention at this level is likely only when there is sufficient political interest, depending on whether the number of farmers affected by these local issues is large enough. The diversity of farming conditions limits the choices open to the policy makers in reaching all the producers.

The current phase of food inflation would certainly lead to, quite justifiably, new initiatives to augment supplies of food. The policies will seek to promote production of food crops and discourage allocation of output for non-food uses such as biofuels.

There will be policies that will promote technologies for production of pulses and vegetables, for livestock products. However, it is important to recognise that many of these policies will imply that there will be simply re-allocation of resources and the excess demand will show up in some other areas. Cases of supplementary output without taking away resources from elsewhere would be few.

Prices and productivity

In this sense, generic support to raising overall production potential of agriculture is as important as specific programmes that seek to raise food production. Raising minimum support prices for specific crops shifts incentives where production of these crops is feasible. But if MSPs are raised for all crops, the impact of higher MSPs would be more in the nature of increasing farm incomes to some extent rather than increasing production. On the other hand, new high-yielding variety seeds for specific crops would impact production of these crops significantly. Better fertilisers or better application of fertilisers will lead to higher production for several more producers and crops.

Rural infrastructure

In this sense, the policies that help improve land quality, market infrastructure, credit, power and roads for the rural economy will have wider impact across the diversity of farming conditions, allowing farmers to respond to changing demand conditions. It will also allow the suppliers of inputs to reach wider range of producers.

The strategy for raising agricultural growth rate should be based on widely-shared growth with focus on widely-shared assets. This will help in raising the overall agricultural production potential than just some crops. The investments in rural infrastructure meet these conditions. However, building infrastructure in less developed and remote areas, should get greater attention as such areas face greater disadvantages in market access.

The rising income and demand will draw resources away from agriculture more quickly than they are likely to be brought back. Policies that augment these resources are necessary to sustain production capacity. It is hard to argue in favour of one set of policies to the exclusion of the other. But it is necessary to recognise the diversity of production conditions and ensure that potential for increased production is created more widely.

(The author is Senior Research Counsellor, NCAER. The views are personal. >

Published on January 26, 2011

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