Prometheus Unbound: India Must Look to the Farmer for Way Forward

The low-intensive and high-potential agriculture sector should be the country’s best bet to recover from the economic losses caused by the coronavirus and subsequent lockdowns.

In his recent nationally televised speech, Prime Minister Narendra Modi openly thanked the Indian farmer and the taxpayer in the same breath. The farmers though wear both hats as they pay taxes on most of their inputs. With no set off opportunity as agri-produce sales are zero rated, there is no input credit, so perhaps the farmer was appreciated twice, as a provider of food and taxes.

The PM announced that he would extend the PM Garib Kalyan Aan Yojana, the free food grain and pulses support scheme for another 5 months to 800 million Indians. It is not clear if he included the farmers who grow these crops because they keep their own grains and only sell a marketing surplus. If he hasn’t, then the math doesn’t add up. But that is not the point. This gesture could be made because the country’s granaries are full. So the farmer was thanked for growing the crops, and the taxpayers for paying for the subsidy, which again, because of GST, ironically, includes the beneficiaries too. But, all in all, it is a creditable situation, especially because of the collapse of urban India in the same period, that rural India harvested a bumper Rabi or winter crop, 150 million tons in 2020 compared to the 139 million tons in 2019.

During the nationwide lockdown, urban and industrial India were almost frozen. Though the unlock procedure has begun, this economy is only sputtering back to life. Different states have also imposed differing restrictions. However, in a rare case of unanimity, the one sector that was set free early on in the lockdown was agriculture, across the country. Not out of any sense of altruism or concern, but simply because it was time for the Rabi harvest. Farmers were not going to let their standing crops be subject to lockdown rules and bear the loss. Better sense prevailed and very early in the lockdown, agriculture operations were allowed.

The result was that the country recorded a bumper harvest of a range of different agri-produce. Reports of rakes of wheat being despatched from Punjab to far away Assam were received. Fortunately for the railways, the movement of the rabi harvest and food grains enabled income, given that passenger and industrial goods services were closed for most of the lockdown period. The railways recorded over a 50% increase in income and almost a 100% increase in volumes of grains moved, in April and May this year. No small achievement during a period of total shut down. Again, it was thanks to the Indian farmer that this could happen.

The bountiful harvest has converted into an uptick of demand by rural India. These include tractors, two-wheelers, agricultural inputs and of course demand for consumer goods to the extent that lockdown rules permit supply and sales. Now, with a normal monsoon predicted and which has covered India two weeks ahead of schedule, the Kharif crop operations are on in full swing. It is likely that the country will also have a bountiful monsoon harvest, following a record Rabi, so an additional source of income for the farmers, as many do both seasons. Two bumper harvests in one financial year when all else has stuttered to a stop or is sputtering to restart is a big boost to the country and the economy. It also needs to be appreciated that the millions of migrants have been absorbed back by the rural areas after they were unfortunately abandoned in urban India. So not only did the farmer feed urban India, and herself, she also fed and sheltered the returning migrant family member.

The agriculture ordinances

In this period, with little coverage or discussions, the government has promulgated three ordinances on agriculture. This is being touted as the ‘1991’ moment for Indian agriculture. In a nutshell, these are, the Essential Goods Act being given the go by, allowing unfettered sales and national movement of all agri-produce, direct sales being allowed by a farmer outside the APMC, or trader controlled mandis and, contract farming. These initiatives seek to unshackle the Indian farmer.

Additional support has been given by the extension of the ‘TOP to TOTAL’ scheme where transport and storage subsidy of 50% has been given for a wide range of crops, for a period of six months. All for the good, if only, the mandarins, a politically inappropriate term in these times, in the policy and rule-making roles, would let the Prometheus that is Indian farming be unbound. Unfortunately, as the leopard doesn’t change its spots and become a tiger, the mandarin too will stay one. So impractical rules like procuring a minimum of 100 MT and the minimum distance between the centre of production and consumption should be 100 km for availing the benefits of the scheme immediately removes the hundreds of millions of small farmers who sell in their immediate vicinity and produce in low double digits measured in tons.

Similarly, our inability to think big, and the hangover of a Gandhian socialist outlook, thinks of food processing as tiny industries making papad and pickles run by women self help groups in village clusters. There is no thought as to how supply chains for packaging, processing and selling would work or global quality be produced. Loans have been announced for such ventures, which have a small chance of success.

Equally limiting is the thinking of district wise export crops. Classical Soviet-era thinking which is buried in the hubris of market economics and India’s farming diversity at the individual farmer level.

Last year, the agriculture industry produced a billion tons of agri-produce, which includes 292 million tons of food grains, 340 million tons of fruits and vegetables. The sector spans 127 agro-climatic zones and the country has 200 million hectares of arable land, apart from a 7500 km-long coast line. The sector is a potential global leader.

A very timid goal

India has set a very timid goal for agri-exports, from around $35 billion to $60 billion in the next three years. A mango tree or a cow matures in around ten years for optimum yield. So these kinds of targets are self-limiting. The global trade in fruits and vegetables alone is over $200 billion today, set to double in the next five years. Global trade of all agri-produce including marine and forestry products, is in the region of $2 trillion the size of the Indian economy today. India should set a target of 1 trillion dollars of agri-exports, including marine and forestry in the next ten years, including using it as soft power to feed countries which have a food security challenges.

Together, the EU and the US export around $350 billion today (Europe around $210 billion and the US, $140 billion) compared to our $35 billion. Our potential is a lot more than both. We need to negotiate an equitable trade regime and a reduction of duties for Indian value-added exports to become a significant player in the global value chains.

The focus on agriculture will also enable a better distribution of income. Given the hundreds of millions involved in agriculture and allied industries and its multiplier effects, the impact will be well distributed, both at the level of the small farmer and spatially across the country. This will prevent concentration of wealth, as has happened by the urban and industrial focus of the last 20 years. With the top 1% of Indians currently owning four times the wealth of the 70% of the poorest, the next phase can’t be a repeat, without having some significant and unpleasant social consequences.

Unleashing Indian agriculture can create a storm of opportunities. From drones to AI, digital devices, consumption of broadband, light engineering, storage infrastructure, logistics, agri-equipment to name a few, the sector can utilise many recent technological developments. The small Indian farmer, on the back of a high tech-enabled, globally-connected environment can show the way forward.

The upstream and downstream multiplier effects are also significant. Upstream will lead to a demand of farming machinery, fertilisers, agro-chemicals, inputs like seeds, micro-irrigation systems and protected cultivation equipment. These in turn upstream into metals, petroleum-based chemicals, engineering components like motors, pumps, pipes and more. Solar pumps and drip irrigation systems can become items of large volume business.

Downstream, there can be a significant jump in infrastructure, static and mobile cold chain equipment, food processing and allied industries, a significant demand for food processing equipment, all of which are also employment-intensive and MSME driven, and of course in retail services including e-commerce as seen during the lockdown period.

A relevant factor of this sector is its low capital intensity. In comparison, to produce approximately 110 million tons of steel, the industry has borrowed over Rs 300,000 crore, of which nearly half is classified as stressed assets. To produce over a billion tons of agri-produce, the borrowings of the agriculture and allied industries are around Rs 9 lakh crore, which rolls annually, with the crop cycles. The employment intensity per rupee of borrowing, measured by thousands employed per Rs 1000 crores borrowed, tells a story: seven in steel vs 700 in agriculture and allied industries. The steel industry estimates of direct and indirect employment is 2 million. For agriculture and allied industries, it is 700 million. For a country that needs to employ hundreds of millions with a limited ability to provide capital, it is clear where our focus should be.


The good news With India headed for a bumper kharif harvest, agriculture continues to hold out hope amid crisis

Farmers have completed sowing of kharif crops in nearly 55 per cent of the season’s normal area by the first week of July. Last year at this time, they had achieved hardly 38 per cent coverage, while undertaking the bulk of plantings after mid-July and all through August. The primary reason has been the southwest monsoon’s timely onset and the country receiving 14 per cent above-normal rains so far. With water levels in major reservoirs at 146 per cent of the last 10-years’ average for this time and groundwater tables recharged from the good pre-monsoon showers as well, farmers have sought to capitalise on the excellent soil moisture conditions. Not surprisingly, every crop — from paddy and pulses to maize, bajra, jowar, small millets, soyabean, sesamum, groundnut and cotton — has posted a significant acreage jump over last kharif. Fertiliser sales registering high double-digit growth every month from November is further proof of farmers’ inclination to plant and also invest in their crop.

Simply put, India is headed for a bumper kharif harvest on top of the recent rabi or winter-spring crop. This is, of course, subject to the monsoon not playing truant in the second half (August-September) and also no locust attacks. Last year, there was very little rainfall till the last week of July, after which it poured so much that 2019 ended up as the wettest year in a quarter of a century. The opposite happening — good rains now giving way to extended dry spells — cannot be ruled out this year. One needs to equally watch out for locust swarms: The Food and Agricultural Organisation has warned about breeding already occurring along the Indo-Pakistan border. These could lead to “substantial hatching and band formation” this month and cause the first-generation of inbred swarms to form by mid-August. That is when the kharif crop, too, would be in the vegetative growth stage. Government agencies need to be on high alert during the next 4-5 weeks and take preemptive control measures, including aerial spraying operations in the main scheduled desert breeding areas.

As things stand, agriculture is one sector that seems to hold out hope, even as manufacturing, retail and other services continue to grapple with uncertainty from rising COVID cases and localised lockdowns. The Narendra Modi government did well to ensure smooth harvesting of the rabi crop and also minimum support price-based procurement in respect of wheat, paddy, chana, rapeseed-mustard and tur. No major reports have come of shortage of fertiliser, seed and other inputs for the current kharif season either. The recent reforms involving removal of stockholding limits on foodstuffs and allowing farm produce to be traded outside regulated mandis may not have any substantial immediate impact. But they send out the right signals about a sector whose growth, employment and value creation potential, both on- and off-farm, hasn’t really been realised.


WhatsApp groups to keep farmers alert over locust threat

The district Agriculture Department has been organising mock drills and keeping farmers updated on the current location and chances of locust attack in various areas.

The department is on alert and has formed various WhatsApp groups. Around 250 progressive farmers from the district are a part of these groups. These groups keep farmers updated about the latest agriculture techniques and locust attacks.

Chief Agriculture Officer Dr Surinder Singh said another group would also be formed. “Several progressive farmers have been added in the group, who will further provide the information to other farmers to make them aware of the situation. Otherwise also, we are constantly tracking the speed and direction of wind and location of locusts to know where they can go,” the officer said.

He said all arrangements were in place to tackle any kind of untoward incident. As per the information, the highly prone areas in Jalandhar were Shahkot, Mehatpur and Lohian, but farmers in the entire district should remain cautious.

“At present, the locusts have attacked Sirsa in Haryana, Moga and Faridkot in Punjab, which are close to the Lohian area of Jalandhar. So, the threat of locust attack here also looms large,” the Chief Agriculture Officer said.

Recently, mock drills were also organised for which the department formed various teams of experts who made the farmers aware of harmful insects and their impact on the crop. The teams asked the farmers to be aware and inform the district administration in case they saw the swarms.

As per the experts, this insect often flies in swarms and given the favourable circumstances, it can even travel up to 80 to 200 km.

Dr Sanjiv Kataria, entomology expert, PAU, had earlier told the farmers that the insect tends to sit on higher side, ie, trees etc during evening time and this period spray of pesticides should be carried out.

Dr Kataria said the female insect lays eggs in abundance beneath the soil and after the eggs hatch, the nymph eats the whole vegetation within hours.

As per department officials, locusts attack can happen on any crop.

“A locust has a lifespan of 50-60 days. And the insect has three stages — egg, nymph and adult. They also fly in a gregarious way and thus destroy the vegetation,” an official said.


Farmers using cash scheme well: Study

The study found that beneficiaries were diverse and there was no “statistical evidence” of any bias in selection of farmers on the basis of caste, community or faith.

A study of the impact of PM-KISAN, the Modi government’s income transfer scheme for farmers, has found that poor cultivators don’t squander the free money they receive, but invest it “efficiently” in modern farm technologies, apart from education and health.

However, the extent to which farmers were likely to invest the free cash in agriculture was influenced by the availability of farm knowledge sessions imparted by the country’s network of institutions called Krishi Vigyan Kendras (KVK), technically called agricultural extension services, the study found.

How farmers utilised the money also depended on the very timing of cash release, according to the study, which is part of a larger project of the Indian Council of Agricultural Research (ICAR) and the International Food Policy Research Institute (IFPRI).

The study found that beneficiaries were diverse and there was no “statistical evidence” of any bias in selection of farmers on the basis of caste, community or faith.

Under PM-KISAN, the government provides income support of Rs 6,000 a year to farmers with a valid enrolment, paid in three equal cash transfers of Rs 2,000 — one every four months. It was launched on February 24 last year, when the first instalment was paid.

The cash is unconditional, i.e. nearly 80 million recipients are free to spend the money as they want, but it is expected that they utilise some part of the cash on farming.

Farmers tend to invest substantially in agricultural technologies, such more productive seed varieties, when the cash release happens close to sowing seasons and KVK field officials are available to tutor farmers on latest methods of farming and use of better seeds, the study found.

“So, what are the lessons? The lessons are that it is important to synchronise the release of the cash with that of farmer-training activities of Krishi Vigyan Kendras,” said Pramod Kumar Joshi, one of the authors of the study.

The researchers studied two instalments for spending patterns. In one instalment, the results showed that 52% of those who received the first instalment spent it on agriculture and 26% on consumption, 7% on education and health and the remaining 15% on other incidental expenses such as festivals and marriages.

The study showed that PM-KISAN has increased adoption of modern cultivars (crop varieties) for farmers with access to KVKs by 36 percentage points as compared to those who were not covered by KVK’s field scientists.

More than 60% of farmers who received the money in the off-season spent it on consumption, education and medical purposes, suggesting that farmers are most likely to invest larger sums in agriculture when the money is released just before the sowing season.

Joshi collaborated with colleagues Deepak Varshney, Devesh Roy, Anjani Kumar at the IFPRI to sample 1,406 farmer households who got money under PM-KISAN and segregated them as those having access to government training in farm technologies and those who did not. Their findings were published in the IFPRI journal as well as in the EPW journal.

In the last instalment of PM KISAN, the government paid nearly Rs 17,000 crore to about 80 million enrolled farmer households in April 2020.

“PM-KISAN shows a potential to break the cycle of intergenerational poverty and low income of farmers through investment in modern technology,” the authors said in the study.

KR Mani, an economist with the Tamil Nadu Agricultural Technology, said: “This study essentially demonstrates that it is not enough to give farmers cash, but the government must ramp up the numbers of farmers covered by KVKs, which are present in every district of the country.”


Farmers ditch short-duration crops for soyabean and cotton, bumper produce expected

Timely arrival of monsoon had seen farmers accelerating their sowing activities. As of July 10, India has reported 580.21 lakh hectares (lh) of sowing as against the 402.57 lh of last year.

Farmers across the country have increased soyabean cultivation this kharif, with oilseeds reporting the largest year-on-year increase in the country. Oil processors and solvent extractors have diverted their bajra, maize and cotton area towards soyabean, given the better realisation of last season, according to farmers.

Timely arrival of monsoon had seen farmers accelerating their sowing activities. As of July 10, India has reported 580.21 lakh hectares (lh) of sowing as against the 402.57 lh of last year. Barring a few areas in Rajasthan, Jammu & Kashmir and West Bengal, the country has reported normal or above normal rainfall till date.

By far, the largest increase has been reported in oilseeds, with the country reporting 139.67 lh of sowing as against 75.27 lh of last year. Similarly, cotton, another major kharif crop, has been sown over 104.82 lh, compared to 77.81 lh last year.

The greatest increase in acreage has been reported in soyabean, with farmers sowing the oilseed over 101.16 lh, which last year was 51.66 lh. Groundnut, sunflower, safflower and other oilseeds have also seen an increase in cultivation, but relatively lower compraed to soyabean.

Naresh Goenka, vice-president of Soyabean Processors Association (SOPA), the Indore-based apex body of soyabean processors, attributed the growth to the better realisation received by farmers last season. “Throughout last season, farmers received more than the Minimum Support Price for their produce, which is a reason for farmers going for the oilseed in a big way,” he said.

This year, the crop condition has been satisfactory and if the monsoon continues in its present form, the country may see a bumper crop of soyabean, said Goenka. “All indications are of the crop being grown over 110 lh this year,” he said.

Goenka said this season, prices would be good as the demand for soyameal, the protein-rich solid mass left after the oil is expelled from the oilseed, in the domestic market is expected to be high.

He said the germination failure of seeds had affected just about 2-3 per cent of the sown area. “Everything, however, depends on the rain,” he said. “Overall, we are headed for a bumper crop”.


With 34% rise in direct sowing of rice this year, Punjab farmers save Rs 600 cr, 30% ground water

The pandemic has pushed Punjab’s paddy producing farmers to embrace ‘Direct Seeding of Rice’ (DSR) technique like never before.

While bringing record 20 per cent of the total targeted rice area (27 lakh hectares) in the state under DSR, Punjab has increased its DSR area by 34 per cent compared to the cumulative area under the technique over the last decade — 2010 to 2019.

The increase in DSR sowing area this year translates into 30 per cent saving of the state’s ground water, and a saving about Rs 500 to 600 crore in input costs to Punjab’s farmers collectively.

Data sourced from the Punjab Agriculture department revealed that till July 6, 5,19,300 hectares (12.82 lakh acres) area has been sown through DSR technique in Punjab in this Kharif season, while from 2010 to 2019 only around 3,87,000 hectares (9.55 lakh acres) could be brought under DSR. This year’s area is more than 34 per cent higher as compared to the cumulative area of a decade.

2020 vs last 10 years

DSR was recommended in the state in 2010 and in the first two years — 2010 and 2011 — only a couple of 100 hectares in each year could be sown through this by progressive farmers and by the Department of Agriculture. Farmers started taking up this technique seriously in 2012 when for the first time 8,922 hectares area was brought under it. Then next three years were very good for the technique when 38,900 hectares, 1.15 lakh hectares, and 1.65 lakh hectares were brought under it in 2013, 2014, and 2015, respectively.

But then the popularity of DSR started decreasing among the farmers because proper technical know-how was not available to them. In the years 2016, 2017, 2018 and 2019 the area under DSR reduced to 19,660 hectares, 9,440 hectares, 6,200, and 23,300 hectares, respectively.

With this in the past one decade, only 3.87 lakh hectares could be brought under it while this year alone over 5.19 lakh hectares have been dedicated under DSR till July 6, which is 1.32 lakh hectares more than the cumulative data of all these years.

The shortage of migrant labourers across the state led farmers to go for this technique. Even Secretary, Agriculture Punjab, K S Pannu got 4,000 DSR machines sanctioned this year to help farmers.

Major savings for farmeres

Experts said that if the farmers of Punjab had opted for transplanting paddy seedlings on area now under DSR this year, then at least 1.25 lakh labourers would have been required to cover this area in over a month’s time. This year the labour charges had also increased from Rs 3000-Rs 3,600 last year to Rs 5,000-6,000 per acre. Apart from this around Rs 1,000 to 1,500 per acre are required for preparing paddy nursery, puddling of the field. However, the cost of sowing with DSR machine does not exceed Rs 2,000 to 2,500 per acre which includes DSR machine rent, seed, and herbicides spray and preparation of the field.

By these calculations with DSR sowing farmers managed to save around Rs 4000 to 5000 per acre, which adds up to roughly a saving between Rs 500 to 600 crores.

Also, there is around 30 per cent water saving on 5.19 lakh hectares paddy area.

Along with 4,000 new DSR machines, total 6,000 DSR machines were available in Punjab this year. One such machine covers 7-8 acres area in a day. So in 30 days, such machines could cover around 6 lakh hectares.

DSR is recommended in medium to heavy textured soil, like sandy loam, clay loam, silt loam, and loam, and Punjab has 87 per cent such soil type.

Bathinda tops DSR area list

In DSR sowing till date, Bathinda tops the list with 55,000 hectares followed by Mukatsar Sahib where 41,200 hectares area has been dedicated under DSR. Amritsar is at third place with 33,000 hectares, Faridkot has sown 30,000 hectares using DSR, while Kapurthala, Barnala, Ferozepur have sown 27,000 hectares each with DSR technique. Fazilka (26,600 hectares), Tarn Taran (24,000 hectares), Mansa (23,000 hectares), and Sangrur (21,000 hectares) too have high area under DSR. Ludhiana and Fatehgarh Sahib have 16,000 hectares and 14000 hectares, respectively. There are only four districts in Punjab where less than 10,000 hectares were sown through DSR this year. But still they have increased from negligible area under DSR last year to a considerable area this year.

Ropar, Pathankot, Mohali, and Nawanshahr districts recorded 4,100 hectares, 4,400 hectares, 8,000 hectares, and 9,000 hectares under DSR, respectively.

Meanwhile, normal transplanting has taken place on 17.53 lakh acres till July 6. And total, paddy sowing has come to 22.73 lakh hectares, including 5.19 lakh hectares with DSR which is 11 per cent less than the last year’s sowing area, which was 25.55 lakh hectares on the same corresponding date.

Every year in Punjab, 27 to 30 lakh hectares area is dedicated under paddy crop including Basmati for which around 6 to 6.5 lakh migrant labourers are required to transplant paddy nursery. But this year only around 10 per cent of the total migrant labour required was available to the farmers and around 15,000 to 20,000 more came to Punjab through special buses/vehicles arranged by the farmers and through special trains, which were started from June 1, in past one month. So, the DSR technique and local farm labourers of Punjab worked tirelessly this year.

Dr Sutrantra Airi, Director, Punjab Agriculture Department, said that only Basmati sowing is left as paddy sowing is almost complete thanks to the huge area under DSR. The sowing of Basmati always starts at least three weeks later than the paddy.

In normal transplanting farmers prepare nurseries where the paddy seeds are first sown and raised into young plants. These seedlings are then uprooted and replanted 25-35 days later in the main “puddled” field by 3-4 labourers. In the first 3-4 weeks after transplanting, the plants have to be irrigated almost daily (if there are no rains) to ensure water depth of 4-5 cm. Even for the next 4-5 weeks, when the crop is in the tillering (stem development) stage, farmers continue to irrigate every 2-3 days. Water prevents the growth of weeds by denying them oxygen in the submerged stage. Water, in other words, acts as an herbicide for paddy.

In DSR, there is no nursery preparation or transplantation. Paddy seeds are, instead, directly drilled into the field by a tractor-powered machine. In DSR, water is replaced by real chemical herbicides and it does not need flood irrigation, and the first irrigation is done 21 days after sowing, leading to huge water saving.


“Kisan Pakhwada” Director Agriculture inaugurates Kisan Mela at Akhnoor

Jammu: Director Agriculture Jammu, Inder Jeet today inaugurated a day long Kisan Mela cum Awareness Camp as a part of “Kisan Pakhwada” at Higher Secondary School, Akhnoor.
SDM Akhnoor, Gopal Singh, BDC Chairman, Baldev Raj, local farmers and others attended the camp amid observance of all necessary preventive protocols regarding COVID-19.
Director Agriculture impressed upon the officers of Agriculture and allied departments to put all out efforts to make this programme a grand success by achieving 100 per cent target of covering all the farmers including those engaged in Dairy Farming, Fisheries, Poultry and Horticulture. He called for mass awareness of farmer welfare schemes with the aim of doubling the Farmers income. He also urged the farmers to take full advantage of the kisan Mela to get registered under Kisan Credit scheme (KCC) on the spot. “Farmers should also use the occasion to acquire full knowledge about latest technological interventions in the field of Agriculture and allied sector and also clear their doubts regarding government schemes”, he added.
Later, Director inspected various stalls put up by agriculture, horticulture, animal/sheep husbandry departments and banks as well. These stalls exhibited latest farm machinery, high quality seeds and seedlings, Mushroom, Apiculture and Pamphlets/printed material relating departmental schemes and on the spot processing of KCC.
Director also handed over the 133 new Kisan Credit Cards to the concerned farmers.
Joint Director Agriculture SLUB, Chief Agriculture Officer Jammu, Deputy Director Trainings, DAO (Extension) Jammu, ADO (Vegetable) Jammu, SDAO Akhnoor and field functionaries besides bankers including LDM SBI Jammu, Head JK Bank, Regional Manager JK Grameen Bank, District Coordinator PNB were also present in the camp.


Sowing growth: Incentivising agri-reforms in the states

Incentivising states for better performance in the agriculture sector with a transparent implementation and monitoring system is important.

The Fifteenth Finance Commission (FC-XV) has, in its interim report for the year 2020-21, recommended implementation of a specific set of agricultural reforms by the states for liberalising agricultural markets, provide for seamless trading and catalyse private investment in the farm sector that would boost growth (para 4.32 & 4.33 of the Report). The Commission had specifically advised the state governments to “take preparatory action” by securing passage of three legislations—Model Agricultural Produce & Livestock Marketing Act, Model Agricultural Produce & Livestock Contract Farming & Services Act issued by the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW) in 2017-18 and Model Agricultural Land Leasing Act prepared by the NITI Aayog in 2016″ in their respective legislatures in 2020-21. This was made an essential precondition to be eligible to avail the grants” awarded by the Finance Commission from 2021-22 onwards.

In fact, the aforementioned recommendation has a nexus with one of the terms of reference (ToR) of the commission to propose “measurable performance-based incentives for states” in specific areas set out in Para-4 of the ToR such as sustainable development goals (SDGs); direct benefit transfers (DBT); ease of doing business among others. In fact, the ToR alludes to developing frameworks for giving grants/performance incentives to states in various sectors.

Even before the DAC&FW and the ministry of finance could operationalise the above recommendation of the FC-XV, the central government, as a part of the Atmanirbhar Bharat initiative, has brought Ordinances (ordinance No.10 and 11 of 2020) to push through reforms in agricultural marketing and contract farming. With the promulgation of these Ordinances, states are no longer required to enact two of the three legislations suggested by the FC-XV. As per newspaper reports, with this development, the FC-XV has set up a panel to rework and “devise a mechanism for incentivisation of states in the area of agricultural reforms agenda for inclusion in the final report of the Commission”. In this context, we offer some specific suggestions for the aforesaid panel to draw up a framework that would meet the commission’s mandate.

To begin with, we must reckon that the agreed agenda that would be advocated by the commission should be measurable in terms of reliable and comparable time-series data available in the public domain. Second, the formula for incentive grant reliant on multiple performance indicators must also be transparent and straightforward. We make this point recollecting that in the past a member of the Finance Commission was constrained to record a note of dissent, inter alia, on the ground that the Commission had used a fairly complex econometric model in its exercise. Third, now that a fresh opportunity is available, we would urge the panel to suggest a couple of other core areas, over and above the legislative measures for liberalising agricultural markets, in which state action ought to be incentivised.

Legislative action for liberalising markets for land farmers’ produce

Let us first analyse whether state governments are required to take any action to operationalise the two ordinances promulgated by the Centre. We find that in respect of the Farmers’ Produce Trade and Commerce Ordinance 2020 (Ordinance 10 of 2020), states would have to make their APMC Act compliant with Section 6 of the ordinance to ensure that no market fee or cess or any other levy is collected on transactions carried out outside the physical boundaries of the notified principal market yards. Besides, states have to ensure that Conciliation Boards envisaged under section 8 are set up at the sub-divisional level for dispute resolution.

Similarly, in case of the Farmers Agreement on Price Assurance and Farm Services Ordinance, 2020 (Ordinance no.11 of 2020), state governments have to prescribe the mode and manner of payment to be made to the farmers by the sponsors under an agreement for seed production, as per section 6(4).

They have to establish and notify a Registration Authority to provide for electronic registry of the farming agreements. Also, they have to ensure that the dispute resolution mechanism prescribed in Section 14 at the level of the sub-divisional magistrate and the collector is operationalised. As per Section 23, state governments have to notify rules for carrying out these provisions of the ordinance. We suggest that the panel may indicate definite timelines for the states to complete these action points.

The Model Land Leasing Act,2016 prepared by NITI Aayog and circulated to states for implementation has not seen many takers across the country, except for partial implementation by few state governments (Madhya Pradesh, Uttarakhand, Maharashtra and Uttar Pradesh). The all India average of leased-in areas in tenant holdings, as per NSSO Report (2013), is 10.2%. Admittedly, the incidence of tenancy is under-reported in all these surveys as tenancy in most states is not permissible legally. To enhance the equity and inclusivity of the agricultural growth process, land leasing reforms have been advocated to be the ‘last-mile’ intervention to synergise positive outcomes from the ordinances on agricultural marketing and contract farming. We suggest that the panel should make it obligatory for all states, except the North Eastern states where the community owns the land, to enact this statute by 2021-22 and ensure notification of necessary rules on operational matters, including standard form of the tenancy agreements besides putting in place electronic registration of all tenancy contracts by 2022-23.

New areas for performance incentives

With the triple whammy of climate change, malnutrition and the ongoing Covid-19 Pandemic, India’s food system needs to be sustainable and resilient. The agricultural research and development eco-system has also emphasised on crop diversification; bio-fortification; development of climate-resilient and nutritious cereals (like sorghum and millets) and productivity and production enhancement of pulses and oil-seed crops with suitable technologies to make India self-reliant on these commodities. We suggest that the panel may consider including the following three areas in the monitorable framework for incentivisation by FC-XV to states.

  • Climate-resilient agriculture: Keeping in view the national priorities embedded in the National Mission for Sustainable Agriculture as also the SDG-2 and SDG-12, we suggest that the relevant monitorable indicators developed by the NITI Aayog for the SDG India Index may be adopted.

Accordingly, the performance of the states in respect of two indicators under SDG 2.3–(a)production of rice, wheat and coarse cereals per ha, (b) gross value added in agriculture per worker and one indicator under SDG 12.4—balanced use of chemical fertilisers-may be tracked.

  • Agri-input subsidies through DBT: DBT in the agriculture sector could be incentivised for those states which systematically implement to benefit from the efficiency gains. Agri-input subsidies provided by the states through DBT on a robust IT platform (preferably synced with Aadhaar seeding of land records; soil health card recommendations) would not only be transparent; it would promote efficiency in resource use as well.
  • Ease of doing Agri-business: As promotion of agri-entrepreneurship, FPOs, post-harvest technologies (by availing agri-infra funds under Atma-Nirbhar Bharat) are priorities for the government and taking the idea of encouraging ease-of-doing business (Para 7 of ToR of FC-XV), an ease-of-doing agri-business index could also be developed for states by the NITI Aayog with specific indicators and sub-indicators. The panel may suggest incentives to the states based on an objective scoring pattern in this area.

The government, through various initiatives, has been promoting the spirit of cooperative and competitive federalism. Incentivising states for better performance in the agriculture sector with a transparent implementation and monitoring system is expected to bring positive results for sustainable growth of Indian agriculture.


Water in agriculture: Revisiting priorities in times of COVID-19

Currently, 600 million Indians face high to extreme water stress and about 2,00,000 people die every year due to inadequate access to safe water.

In the current environment, it is near impossible to look at any sector or scenario without applying the COVID lens. The scale of the problem as well as lessons from nations already ravaged by the disease is making sure that nearly all available public and private resources (financial, technical, human) are being ploughed into devising ways for mitigating the spread and minimizing its economic and human impact. While this is much needed, it has reasonably yet unfortunately diverted attention from equally critical emergencies that are looming large. Water stress amongst them is a foremost such catastrophe.

While the imminence, intensity and rapid spread of COVID-19 justifiably makes it a priority, water stress and its consequences albeit not as conspicuous, are equally disastrous. Currently, 600 million Indians face high to extreme water stress and about 2,00,000 people die every year due to inadequate access to safe water. And this is anticipated to worsen with demand projected to be twice the supply by year 2030 (NITI Aayog).

Looking at the usage data it’s fairly evident that the lion’s share of water is being drawn by agriculture. While the usage of water for domestic and industrial use stands at 5 and 6 percent respectively, its agriculture that demands a whopping 90 percent of the overall water share. India in fact is the largest user of groundwater for irrigation in the world. Inherent inefficiencies in the agriculture sector with respect to long period of policy draught on water, energy subsidies to farms, crop procurement patterns and water usage behaviour at farmer level cumulatively contribute towards the high demand for water and also present a complex problem landscape.

But in the last few years, there have been right noises emerging from the policy sphere acknowledging the urgency of the problem. Establishment of Jal Shakti Ministry, Jal Shakti Abhiyan (Water conservation), focus on micro irrigation (Pradhan Mantri Krishi Sichayi Yojna) among others point towards subject of water usage especially from the lens of agriculture taking a centrestage within the policy discourse.

Despite the right buzz, there seems to be an absence of a unified approach (inter-state, centre-state, inter-ministerial) in addressing the issue. For instance, studies suggest that canal irrigation is a highly wasteful method. It draws four times more water from the rivers than what is actually delivered at the farms and in best cases utilization efficiency is less than 30 percent. Despite the inefficiency, governments have traditionally allocated high funding to canal irrigation projects even in water stressed regions (as latest as 2016 budget).

Having said that, schemes such as PMKSY and setting up of Micro Irrigation Fund under NABARD are promoting shifting of irrigation to more precise and efficient piped and drip irrigation supply. States such as Maharashtra in fact made use of drip irrigation mandatory for cultivation of sugar cane and are providing subsidies as high as 80 percent to the farmers of Vidharba and Marathwada to install the system. But Maharashtra is amongst the better performing states with respect to micro irrigation penetration which is not saying much as India stands at a mere 5.5 percent of micro irrigation penetration.

Compared to Israel, where micro irrigation penetration is at an overwhelming 90 percent, India has a considerable distance to cover (2016 data). What is more concerning is that a mere 1 percent net sown area in severely water stressed states such as Punjab is covered under the system. Some blame for the low coverage maybe placed at the door of scheme modalities itself. The area limit for subsidy eligibility is 5 hectares. Large and medium farmers (owning farm land more than 4 hectares) though only about 15 percent of total farmers, own about 55 percent of the land. Therefore the upper area limit for subsidy eligibility does not incentivise the majority landholders in terms of land size to adopt the technology.

Even in the case of small and marginal farmers, high cost of the technology and maintenance despite subsidy support, need for power and assured water source are key inhibitors. Top up subsidies by states after establishment of Micro Irrigation Fund are expected to help resolve some of the issues to an extent. Overall, there is a need to perhaps reorient and target bigger land owners for technology adoption to ensure a noteworthy decline in water drawn from the ground.

The energy –water nexus in agriculture also adds to the complexity of the issue. Free/inexpensive power inevitably leads to non-judicious use of groundwater. Promotion of solar pumps on farmlands (PM KUSUM) while on one hand may save energy and lower electricity bills, may in fact further exacerbate the state of groundwater.

In terms of procurement trends as well, assured procurement encourage farmers to grow water guzzling crops such a paddy, sugarcane. And the procurement is also skewed towards water stressed states. For instance, for Kharif Market Season 2018-19, of the total 443.99 Lakh Metric Tonne rice procured nationally, 25 percent of it was from Punjab. Haryana Government in this regard has started ‘Jal Hi Jeevan Mission’ where in farmers are incentivized to convert from paddy to maize combined with assured procurement; a practice which could perhaps be adopted at an all India level.

Water a public good or a service?

The policy planning and implementation level contradictions need be ironed out for India to effectively address its water crisis. This is also essential to ensure that water is no longer viewed as a public good by the user wherein ownership of land title is perceived as the right to draw groundwater at will.

The COVID scenario presents an unprecedented opportunity in this regard. In the recent days, it is clear that governments, center and states are using the present circumstances as an opening to ‘clean house’ by getting rid of legacy bottlenecks in farm value chains such as the APMC chokehold. It is perhaps now also time to look at water in agriculture as a unified problem with complex interlinkages in need for sweeping reforms such as we have witnessed in other key sectors.


Agriculture Machine to Machine (M2M) Market Extensive Growth Opportunities to Be Witnessed by 2019-2025

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segment by Type, the product can be split into
Platforms Development
Application Development
Market segment by Application, split into
Crop Management
Environmental Monitoring
Livestock Farming and Fishery Management

Market segment by Regions/Countries, this report covers
North America
Southeast Asia
Central & South America

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History Year: 2015-2019
Base Year: 2019
Estimated Year: 2020
Forecast Year 2020 to 2026
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