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Indian Agriculture Sector: What Is Wrong And How It Can Be Made Better

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Editor’s Note: Farmer’s Lament is a three-part series on the agriculture sector of India.

Lal Bahadur Shastri once famously proclaimed, “Jai Jawan, Jai Kisan”. Today, even as we hold our jawan, the soldier, in high esteem, the condition of the farmer in India is deplorable. Agriculture may today contribute to only 15.5% of  GDP (as of 2017) compared to 41.8% it did in 1960, but it is the primary source of livelihood for about 58% of India’s population. India is among the top 15 exporters of agricultural products in the world and the total agricultural exports from India stand at a whopping $38.21 billion in the fiscal year 2018. The Indian food and grocery market is the world’s sixth largest, while the Indian food processing industry accounts for 32% of the country’s total food market. As per the Union Budget (2018-19), Rs 57,600 crore was allocated to the Agriculture Ministry. With such great figures, one would expect  agriculture would be given priority and would therefore be doing quite well in most places in India.

Not quite.

During the 2017-18 crop year, rice and wheat production in the country is estimated at 111.52 million tonnes and 98.61 million tonnes respectively, as per third advance estimates, while food grain production is estimated at 279.51 million tonnes in the same period. India is also the second largest fruit producer in the world, while the production of horticulture crops is estimated at a record 307.16 million tonnes in 2017-18 as per second advance estimates. India is the largest producer, consumer and exporter of spices and their products, with spice-exports from India reaching $3.1 billion in 2017-18. Tea exports from India have reached a 36-year high of 240.68 million kilograms while coffee exports reached a record 3,95,000 tonnes in 2017-18. However, major problems ranging from lack of support for farmers to lack of facilities, infrastructure and units for procurement and effective storage plague the agro-industry in India. So, how do we resolve these problems?

A Closer Look

Let us start by looking more closely at the problem. Since most of the cultivable land in India is farmed and  the demand for food grains is ever-increasing, , raising productivity per unit of land is much needed right now. Water resources are limited and this limited supply of water is  needed as much for industrial and urban needs as it is for irrigation. Hence, all measures to increase productivity need to be brought into place, including increasing yields, diversification to higher value crops, and developing value chains to reduce marketing costs.

In today’s age, promoting new technologies and reforming agricultural research is key.  Research into best agricultural practises has declined due to acute shortage in funds for  infrastructure and operations, or broad access to state-of-the-art technologies that are needed to succeed in this respect. There is also the problem of  negligible connection between research and extension/dissemination of the research inputs to the stakeholders (particularly the farmers), or between these services and the private sector, thereby creating a lack of dialogue between the major stakeholders.

Due to the aforementioned problem coupled with the problem of water supply and a high reliance of agriculture on water, India also needs to improve the management of irrigation and drainage system. Drip irrigation, piped conveyance, and better on-farm management of water are among the various ways  that this can be realised. Also, given the depleting water table, one must use water with discretion to ensure sustained supply for irrigation. Unfortunately, farmers still use excessive amounts, way beyond their need leading to wastage. Modernizing ways of getting water from underground sources and other water bodies, irrigation and drainage is needed along with including the farmers in a participatory model where their inputs are taken all along the way.

Maintenance of a high output-to-input ratio on  government schemes and prioritizing government expenditure to only those areas where returns are high, besides allocating money and resources for sustaining  primary investments (say in terms of managing and fixing the irrigation management systems) are all steps that need to be taken. One important way to achieve a more profitable agricultural model is to diversify crops to include higher-value commodities. This helps immensely with poverty alleviation, due to the limited land holdings of certain farmers.

Further, liberalization of elements such as transportation, processing, marketing and export can be helpful in making the market competitive and to inject capital into the system. The government can play a basic minimum regulatory role but most of the agro-processing must be endowed with a competitive market value chain. This will lessen the burden on the government to invest in power, fertilizers and irrigation systems, wherein it spends four times what it spends in investment expenditures! Also, one must improve access to rural finance for farmers since it is still difficult for farmers to get credit.

Rethinking Reforms and Policy

The elephant in the room still is procurement, which I will be discussing in the second article in this series. Besides this and the primary, aforementioned points, adoption of food safety and quality assurance mechanisms is important. This includes Total Quality Management (TQM) that in turn includes Good Manufacturing Practices (GMP) , Hazard Analysis and Critical Control Points (HACCP) and Good Hygienic Practices (GHP) in the food processing industry. This is going in the direction of not only helping the farmer but also safeguarding and promoting a sustainable agriculture sector in its entirety.

Unfortunately, and arguably for political reasons, India’s policy has not been able to evolve from the idea of  “farmer well-being” to “agricultural household sustainability”. There is a certain conspicuous lack of long-term policy planning, which along with welfare-oriented policy results in a periodic loan-waiver method that only perpetuates a poor credit culture in the primary sector and, hence, a fragile balance sheet for the state. This easy letting-be by convenient waivers is a quick solution for the short term but quite counterproductive in the long run. One, therefore, needs more comprehensive reforms.

This should start with a constitutional amendment that makes agriculture and water use a part of the concurrent list in the Constitution (currently agriculture, dairy, meat and fisheries are state subjects). This would provide a federal boost to states, with a primary emphasis laid on how to use water sources and resources effectively. This water project will not only focus on bringing more areas under irrigation in a sustainable manner but also focus on innovations and elements that will improve efficiency in agricultural practises and its use of resources such as sprinklers and drip irrigation. Also, though it may seem harsh, , misuse of groundwater can only be checked with a pricing of the elements that used to extract the water such as electricity, without giving state subsidies beyond a point. In addition, the water effectiveness emphasis should insist on agricultural power being priced to the farmer. And most importantly, there needs to be a strong political will to carry these measures out. As I will discuss later, it is due to the superficial MSP-based resolution of problems given by Indian governments that crops go waste and procurement becomes a huge issue.

Milk and Meat Production in India

In India, milk production and meat production were estimated at 165.4 million tonnes and 7.4 million tonnes respectively in the fiscal year 2017. Even though milk production has been booming due to the White Revolution and Operation Flood, milk processing has been lagging behind. Only 10% of all the milk produced is delivered to some 500 dairy plants that process 20 million litres per day. Even though today 80% milk production is done in unorganised and backyard farms, it is projected that in the next decade or so 40% milk production will come out of organised modes. One of the contributing factors behind this trend is the increased consumption of value added milk and milk products. This is facilitating the farmers and producers to fetch better realisation price of milk, which in turn makes the farmers more open to improve the nutritional optimisation of feed and fodder and this in turn improves milk production. This natural graduation of dairy farmers from unorganised to organised sector is happening in their minds due to the benefits therein.

However, there is a whole lot of farmers in the unorganised sector who still feed their cattle unbalanced diets and it is them that one needs to educate and inform about the importance of proper diet for the animals with an emphasis on their Dry Matter Intake (DMI) to protein to energy needs. For the semi-organized dairy-farmer, the issues of herd efficiency and maintaining a consistent milk production round the year can be addressed by proper transition management and management of reproduction efficiency. Even the organised sector has the problems of feed-to-income ratio and a proper supply of forage. This can be addressed by keeping good silos and facilities for storing and managing Total Mixed Rations (TMR) for cattle. There is also a problem of lack of fodder year long (with an estimation of a 65% deficit in fodder in 2025), which can only be resolved by cultivating high yield fodder crops. Not to forget, forward integration with the market in terms of properly marketing the milk and finished milk products needs to be done.

A very Indian phenomenon is the presence of a large unorganised sector of vendors and milkmen, who collect milk from local producers and sell the milk in both urban and non-urban areas, which handle around 65-70% of the national milk production. In the organised dairy industry, the cooperative milk processors have a 60% market share while the private dairies process and sell only 20% of the milk collected as liquid milk and 80% for other dairy products with a focus on value-added products.

Meat production and poultry is a booming industry in India. In 2017, chicken production increased by 7%, reaching a whopping 4.5 million tonnes. According to the Indian Department of Animal Husbandry, Dairying and Fisheries (DAHD), an estimated 2,38,00,00,000 chickens were slaughtered for their meat in 2016-17 in India. About 70% of this poultry production is controlled by large companies, which have slaughter facilities using huge amounts of water at every stage of production. This is, however, nothing compared to the meat industry of other countries. Today, a third of freshwater resources are used directly or indirectly by the meat industry globally. According to a very interesting fact, if every country in the world were to follow the high meat consumption patterns of America, the world would have already run out of water in the year 2000! Water is used for producing the grain feed for chickens, besides their drinking and maintenance of their surroundings. Water is also used for killing and cleaning the birds and then processing their meat. Not to forget, poultry creates a huge amount of water pollution at different stages of production, so much so that water cannot be recycled, drunk or even used for crops, due to being full of antibiotics and pesticides. These two factors combined — the amount of water used and the amount of water polluted — create the high water footprint of poultry.

It is estimated that 5,000-50,000 units of chicken are butchered every week in India, varying across different  states in the country. The living conditions of the poultry are despicable; they are allowed to lay eggs for six months after moving in and within a year they are sent off to butchers. . These chicken are often injected with chemicals that limit their growth or ensure that no further development of their eggs can take place! The high demand for meat and poultry in the country is the primary reason for non-adherence to standards and good practises, besides the exorbitant pricing and resultant spending on everything from electricity to grains and water. As we saw previously, a significant section of the Indian population is in agriculture for a relatively small pie in the economy, and this overcrowding often leads people to animal husbandry. The government has incentivized this further with subsidies and exemption on excise duty for meat processing units. With a certain growing acceptance of eggs as vegetarian food, the government has also launched schemes to make them available in midday meal programs in schools to get rid of malnutrition, which further increases the demand for the industry.

Improvement in infrastructure to keep pace with increasing demand, better regulation of food processing standards by the Food Safety and Standards Authority of India (FSSAI), and a mandatory supervision to ensure that rules are adhered to, besides prevention of unhygienic conditions for animals are important steps that must be taken. You may ask as to what is the point of keeping hygienic conditions for animals if they are anyway going to be slaughtered.  A good illustration of the need can be had in the instance where healthcare workers had to kill tens of thousands of chickens in the last few years due to the spread of bird flu, which was due to unchecked hygiene standards. Standards have to be ensured to keep the demand high.

In Conclusion

The current government has taken some good steps like the issuing of soil health cards to keep a tab on the `health’ of the soil. Designation of the agriculture ministry as the agriculture and farmers’ welfare ministry has brought to the fore the idea that keeping farmers’ welfare is important for agriculture progress. I would go a step further and include sustainable community/ family interests as well, albeit for that a sizeable amount of dialogue will need to be done with the rural development ministry.  

They say India’s soul resides in her villages and agriculture still sustains most of our rural populace. Given this reality and the aforementioned specific realities, the path seems clear. All we need now is a clear political will and action.

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  1. farmsurge

    Hello, Mrittunjoy Guha Majumdar great article depicting the great Indian Agriculture sector. We at Farmsurge offer both forward & backward market linkages to small farmers by addressing last mile connectivity issues.
    https://www.farmsurge.com/blog/2019/05/14/deciphering-the-last-mile-of-indian-agriculture/ explains the work we undertake to support Indian agriculture.

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