While announcing the third tranche of the ₹20 lakh crore stimulus package under the Atmanirbhar Bharat Abhiyan on May 15, Finance Minister Nirmala Sitharaman said the government will introduce three important agricultural reforms soon.
The reforms are aimed at amending the Agricultural Produce Marketing Committee (APMC) Act and the Essential Commodities Act, besides facilitating contract farming through price and quality assurance. The announcement has drawn a positive response with former Commission for Agricultural Costs and Prices chairman Ashok Gulati, terming it “A 1991 moment for Indian agriculture”.
Be that as it may. The issue does not end with announcing the reforms. Indian agriculture needs a paradigm shift in its outlook from its current methods and these reforms should be used to usher in that. Currently, Indian agriculture methods are towards meeting domestic needs as part of achieving self-sufficiency in production. This has continued for at least two decades now, with not much thought going into scaling up from here.
This has left India with mountains of food stocks. Data from the Food Corporation of India (FCI) show that current foodgrain stocks in the country are nearly three times the mandated operational and reserve storage norms. Huge foodgrain stocks are likely to result in wastage due to weather, insects, pests and rodents. Studies on post-harvest losses of foodgrains put them between 10 and 20 per cent in view of a dated storage system.
This should force us to review our policy of producing just to cater to the domestic market. Shouldn’t Indian agriculture look at consumers’ interests, export markets and making optimum use of its human resources?
For example, there is an increasing demand for healthy foods such as rice or wheat rich in amylose content. These varieties are diabetic-friendly and in great demand.
On the other hand, Indian wheat is considered as feed grade in the global market. Shouldn’t Indian farmers look at growing premium wheat varieties that can be used for making pizza and pasta? Given the current demand for healthy foods, there are ample opportunities to promote the cultivation of coarse grains. Rightly, the Centre has been backing its cultivation with a higher minimum support price (MSP) for them.
Encouraging the production of coarse grains such as ragi, maize, bajra and sorghum will help farmers diversify and getter higher returns.
Focus on inputs
There is one major drawback in Indian agriculture. Till now, the focus has been on the input side of agriculture such as seeds, pesticides and insecticides only. This has resulted in all subsidies being directed at these inputs.
Efforts to focus on the output side of agriculture such as marketing and meeting consumer needs have been minimal, if any. Promotion of cold storages or warehouses through various government schemes has not delivered expected results because of this.
As the output and marketing side of agriculture had been ignored until now, growers’ focus has been on selling their produce only to meet their next crop’s input costs. They retain a major portion for their family’s consumption, though. The second generation of farmers’ family has been forced to pursue other professions due to this. While production costs are rising, returns have not kept pace.
Thanks to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), wages for farm labour have increased sharply. A banana farmer in Tamil Nadu’s Tirunelveli district today has to pay ₹400 for three hours’ work to a male worker. These developments require farmers to look for higher returns that can be possible only by shifting their methods and priorities.
A million-dollar question is: How long can the government continue to increase the MSP for a crop? Indian MSP policy is under the scrutiny of the World Trade Organisation for distorting markets. At some point in time, the consumer interest will rear its head to force the government’s hands. The MSP system, in itself, is flawed as it does not reward productivity. Currently, the MSP is the same for a farmer who harvests four tonnes of foodgrain from a hectare as also for the one who harvests one tonne.
One of the best ways to look at providing MSP would be the system similar to the one used in determining the price that sugar mills pay for sugarcane. The payment is based on the amount of sugar than can be recovered from the cane.
The Centre should look at incentivising foodgrain production by rewarding farmers producing more per hectare. The incentive is necessary particularly when the outlook shifts towards meeting the consumer or export market demand. This is because we will still need growers to help us in continuing to be self-sufficient.
The task of shifting the focus of India agriculture will not be a tough one. Indian farmers are already catering to the export market, meeting the exacting quality standards. Corporate outreach programmes, too, have helped.
When farmers begin to focus on marketing their produce, buyers will automatically knock at their doors. This will have a multi-chain effect that will boost the rural economy and lead to all-round development. That way, a paradigm shift in Indian agriculture is paramount.
The writer is Executive Editor, SwarajyaMag. Views are personal