Editor’s Note: This is the third article in ‘The Farmer’s Lament’, a series of three articles on the agriculture sector in India.
“In the private sector, there is always innovation. There’s always change. There’s always improving productivity, and if you’re not leading that, you’ll be passed and ultimately go out of business. So there’s an urgency to constantly update and renew and to rethink your enterprise.”
-Mitt Romney
As much as the private sector can become an instrument of crony capitalism, it has its fair share of assets associated with it. Mitt Romney’s words above show the ruthless nature of the private sector that makes innovation the buzzword of the day. It also makes it a very oppressive system at times, but that shall be addressed in our context as the article progresses. Given the problems that beset the agricultural sector, I believe that innovation is the key and opening up the market is an act in the process of forging that key that can only be helpful to the sector. India’s liberalization in 1991 was out of the extreme economic crisis back then but its liberalization in agriculture further need not be such. Agripreneurship (agricultural entrepreneurship) needs to be promoted even in times of relative calm and growth to further augment it. The one area where this can help immensely is the one we tackled in the last article: procurement, besides elements in irrigation and storage. Has the government been doing absolutely nothing to address this in recent times?
Not quite.
The Food Corporation of India (FCI) was enacted by the Indian Parliament under the Food Corporations Act on December 10, 1964. Its primary purpose is the purchase, storage, transportation, distribution and sale of food grains and other food items. It also seeks to safeguard the interests of farmers, maintain buffer stocks and make grains accessible at reasonable prices to the weaker and vulnerable sections of society through the Public Distribution System (PDS). The FCI was useful when there were food shortages but with the aforementioned excess, its role is being questioned and potentially redefined. According to the National Sample Survey Office (NSSO), in the year 2012–13, only 13.5% of paddy farmers were willing to sell their output to procurement agencies. A high-level committee that was constituted for the purposes of restructuring the FCI recommended, that the institution should hand over all procurement operations of rice, wheat and paddy to the states. It also suggested revisiting the minimum support price policy.
Even though the Minimum Support Price (MSP) of wheat and rice has been increased since 2004-05 but the Central Issue Price (CIP), the price at which the government sells food-grains through the Public Distribution System in ration shops, has not been revised since 2002, leading to a widening gap between the subsidy expenditures and earnings in the system. The food bill is estimated to be Rs 13,81,23,00,00,000 in the 2018-19 fiscal year as against the actual expenditure of Rs 10,49,01,00,00,000 crore in 2017-18. To reduce food bill, the government has introduced a policy of switching all the expenses on procurement and distribution of food-grains over to the Public Financial Management Statement (PFMS) platform as mandated by the Finance Ministry in August 2018. the government has also introduced a policy of usage charges for packing of paddy to further the cause of reducing the food bill.
The committee also suggested the gradual containerisation of the movement of grains to reduce losses in transit and have a faster turnaround time. It has also recommended that farmers be given direct cash subsidy so that spurious diversions of implements like urea can be prevented. Most importantly, the committee believes that,
“The new FCI should be a market-friendly agency for food management, with a primary focus on creating competition in every segment of foodgrain supply chain, from procurement to stocking to movement and finally distribution in TPDS, so that overall costs of the system are substantially reduced, leakages plugged, and through it serving farmers and consumers.”
It also needs to prioritise the use of its grain management techniques in areas where farmers have often not been able to receive the minimum support prices. Above all—politically, economically and administratively — the FCI must look into getting rid of the occurrence of widespread hunger among the poor even with godowns brimming with grains. Recently, it has started to sell wheat in bulk to tackle the excess grain problem this year. Hopefully, the poorest of the poor will be benefited from this and from future formulations of distribution of grains not only in times of crisis but also in normal times.
I would go a step further in seeking to promote agripreneurship (agricultural entrepreneurship) to make it a competitive space and to make infrastructure and capital available at various points in the value chain. This, of course, has to be regulated and cannot be uncontrolled, since the exploitation of the weaker sections in the rural hinterlands may be possible. Emphasis should also be given on how local solutions, businesses and ventures can resolve problems of an area. After all, they may best know what the best resolution for a problem in their locality would be. The best case, for example, is that of Africa and how agripreneurship is making inroads and good change in many parts of the continent. Successful supply chain development projects have reduced not only the transaction costs but also the institutional barriers that break encumbering individual links in traditional distribution channels. They allow participants to achieve higher levels of service, products and solutions, and to capture substantial added value. This serves as a means to achieve economic growth as well as for poverty alleviation.
Where on one hand one has a dairy farmer in Eastern Cape who use uses the computer programme for herd management and feeding he helped innovate and develop and that has helped him increase milk output 30% at the same cost, on the other hand, one has Agriprotein, a firm that turns fly larvae from food waste into a high-value protein feed for chicken, pigs and fish.
However, one has to be cautious while considering agripreneurship as a solution: without proper capacity building, it may not be be sustainable. As the business grows, to keep the customers happy one needs to know the best possible ways to scale up for a particular product or solution in the sector. Thankfully, even there Africa is not behind. The recently started Young Innovators in Entrepreneurship and Leadership Development (YIELD) project seeks to build the capacity of agripreneurs. Africa was the cradle of humanity. I will not be surprised if they also give us the next stage in our evolution as a species and society, and it would be to India’s benefit to adopt the best solutions in this sector, including a sustainable agripreneurship model, albeit assessed and possibly customised for Indian realities and conditions. In India, in certain parts such as Rajasthan, the first such ventures have been coming up, including the agriventures under the ACABCS scheme.
A harmonious public-private partnership in agriculture and the primary sector is the only way the increasing pressures on this sector can be faced effectively without compromising on either the products nor the quality and effective timing of the distribution of these products. A sustainable model of agripreneurship that has ample training and support for capacity building and scalability can provide a robust model for sustainable agricultural practices as well as poverty alleviation.