‘Fall in area under rice, sugar will not hurt us’

Vishwanath Kulkarni | Updated on September 20, 2019

Ramesh Chand, Member, NITI Aayog   -  THE HINDU

Citing resistance to biotechnology, NITI Aayog’s Ramesh Chand favours a productivity breakthrough in oilseeds, pulses


There appears to be no let-up in the agrarian crisis prevailing in the country, despite the government taking various measures. Agri growth has witnessed a decline in recent quarters and could pose a challenge to the government in doubling farmers’ income by 2022. BusinessLine caught up with NITI Aayog Member Ramesh Chand to get his views on the prevailing crisis. Excerpts:

Do you think the decline in agriculture growth will hamper the doubling of farmers’ income?

Decline of agri GDP in one or two quarters will not alter the overall trend. Indian agriculture consists of many segments and I am hopeful that in some segments we will still be able to achieve the target of doubling farmers’ incomes. Like in fisheries, for instance, which is already growing at a higher rate. The gross value added (GVA) in fisheries is growing at more than 7 per cent while the GVA in livestock is growing at 6.5 per cent.

Within the crop sector, of concern is field crops, where the growth rate is quite low. Horticulture segment within the crop sector is doing well, and in some of the other segments, growth is on track. But in the case of field crops, the growth rate is not as projected in the NITI Aayog model that envisages a doubling of farmers’ income. Still we have three years, we need to do something. We need to take some set of measures.

The Prime Minister has constituted a high-powered committee of chief ministers which is discussing how farmers’ income can be increased, how to promote exports, how to give a big push to agri-processing and invite private investments, etc. So we are tracking the situation and seeing in what areas we need to take action.

But are fresh investments happening in the agri sector?

Yes. But the concern is private investments should be coming to the production side of agriculture. Private investments are coming into the post-harvest sector. Private investment should come right from the seed to the harvesting stage. After detailed analysis we found that unless we bring in reforms in agriculture, unless we allow contract farming, and unless we bring about changes in the Essential Commodities Act and the APMC Act, it will be difficult to bring in private capital into agriculture. The Centre has notified the model APMC Act and the Contract Farming Act. We are working with States. The High Powered Committee of CMs had TORs on how to take States on board to undertake these reforms.

How many States have started adopting these laws?

The Model APMC Act has nine different provisions. The provisions are being adopted by States on a piecemeal basis and in a partial and diluted form. That’s why we are not seeing results. States should implement the Act comprehensively. Maybe, one or two provisions may not fit the situation of a particular State. But they should do it. By implementing one or two provisions for formality’s sake, you cannot claim that you have brought in reforms.

How are the BJP-ruled States implementing these reforms?

Gradually, the States are coming on board. Maharashtra, Gujarat and Haryana are far ahead in terms of implementing the reform measures. Uttar Pradesh is picking up. It has introduced the model land lease law, and amended the Revenue Act to create scope for land leasing. One by one the BJP-ruled States are coming on board. Punjab, which passed the model APMC Act two years back, is yet to notify it. Maharashtra has the Contract Farming Act, but farmers have not come in lakhs to adopt it. One reason is there are not many sponsors for contract farming. They are waiting for a more facilitating environment. Things are changing, but a bit slowly.

You said field crops are the weak links, but production is still going up?

Production is growing, but the growth rates are still slow. In the case of cereals, we are already surplus. We have to sell 10 million tonnes of rice in the overseas market. But as far as the oilseeds and pulses sectors are concerned we are still depending on imports to meet our requirement. The growth can be much higher here. In these two commodities groups, the main problem is we are not having a tech breakthrough. And there is resistance in the country to go for bio-tech crops, whereas the world has gone ahead in a big way for GM technology. We seriously need to think of some breakthrough for oilseeds and pulses.

So with GM crops facing stiff resistance, what are the options available to boost yields of oilseeds?

One option is crop area substitution. India will not suffer if the area under rice or sugar declines. We are finding it very difficult to dispose our sugar in the international market. The second option is that since these crops — pulses and oilseeds — are largely grown in rainfed conditions, it will make a big difference to their productivity if we are able to expand irrigation to those crops.

But do you see the need for a policy to discourage water-intensive crops such as sugarcane and rice?

There is such a thinking. There is a task force in the NITI Aayog, which I am heading, which is looking into this issue. We have prepared a report to figure out what is the optimal area that should be under sugarcane. In the last few years, both yields and profitability have increased. The increase in FRP (fair and remunerative price) has also been quite high. So sugarcane profitability has been increasing. So if there is domestic demand it is okay.

But we are not having adequate domestic demand and the international prices are very low. Also, the crop is a big water consumer. So, because of these issues, substitution needs to be considered. Earlier, Maharashtra was the largest producer of sugarcane. Now, UP is the largest, accounting for 60 per cent of the sugarcane produced in the country. The government is also trying to promote ethanol from B and C grade molasses. I think we should also be looking at technologies that allow direct conversion of sugarcane juice to ethanol. We can allow some percentage of sugarcane to be converted into ethanol. We are having a consultation with the industry and farmers on this report soon. The main idea is to bring in a balance between the demand and supply of sugar.

How do you see the crisis in the plantation sector?

From the macro statistics that I have seen, rubber is facing a serious crisis, while other crops are not having such serious problems. Since 25 per cent of all plantation crops are exported, what happens globally is very important. Look at coffee and what’s happening in Brazil and Vietnam. The output has gone higher and higher with improved productivity. We are stuck and our production is stagnant. I feel that over time, either of three or four things should happen.

There should be either a technological breakthrough or an organisational innovation — like in the dairy sector. The organisational innovation was a co-operative model, which has helped achieve scale and reduce costs. Or there should be some brand loyalty creation where people don’t mind paying premium on their products. I feel that they need to spend much more money on demand creation, like the Café Coffee Day did, which has helped create demand. After all, with the export market is getting more and more difficult, it will become more a niche kind of thing. Coffee producers should look at how we ways to promote coffee consumption within the country.

Plantation crop growers face disadvantage both in terms of high labour costs and lower yields. The germplasm varieties in the plantation crops are too old. In the case of apple, a change has started happening. If this change had not happened, our apple industry would have been wiped out. Now, the apple growers are going in for high density plantations. The kind of apple that is grown in many areas of Himachal Pradesh now is totally different. You don’t see those old big trees. This could be possible because we allowed import of root stock and plant-propagation material after due process of testing. I think we need to look at that for the entire plantation sector. We must upgrade entire plantations.

But research in plantation crops is largely controlled by the public sector...

I will say that research has been a tragedy in the case of commodities. Research was not taken up by the mainstream public sector system. That responsibility was given to commodity boards. At one point in time, the commodity boards had three or four scientists to carry out the research. Agriculture research has become both capital and knowledge intensive. I think it is time to have a relook at who will be doing R&D for plantations. The agriculture universities of the States where these crops are grown should take the lead in the research activities.

You think the proposed RCEP will have any impact on Indian producers?

It will depend on how we negotiate it. You can’t simply say by looking at things on the surface. The modern FTAs nowadays give special and differential treatment for many commodities. They keep many commodities in the exempt category. It will depend on how we negotiate. We are keeping commodities we are not very competitive in compared to ASEAN countries and others in the exempt list. If we get special and differential treatment for those commodities, then it will not matter. Otherwise, in a modern world, if you feel safe that you are not part of an FTA it is not true.

Then there is trade deflection. Assuming that Sri Lanka is part of RCEP and we are trading with Sri Lanka, a lot of commodities will start coming from Sri Lanka. I have observed this in the case of palm oil. Bangladesh was allowing imports at much lower duty than India. So palm oil started coming to India from Bangladesh. So this is the problem. You can’t say that you are fully insulated and protected if we don’t become part of any FTA. So it is better that you become part of that to get whatever benefit you can get, and then try to protect your sensitive commodities through the exempt list and by having provision for high tariff.

There’s a sense of concern among planters on the RCEP agreement...

We should not always look at very high tariff walls. Then other countries can also apply that logic to us. Trade is a two-way route. It can’t be that you would want to sell your product and not buy their products.

Published on September 20, 2019

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