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Tuesday, April 07, 2020

Agriculture reforms: a mantra for equitable growth

There are many things that the government can do to improve ease of doing business for kisan and industry.

Written by Ajay S Shriram | Updated: January 23, 2020 6:00:48 am
Agriculture reforms: a mantra for equitable growth Agriculture in India is extraordinarily heterogeneous on account of climatic conditions, landholding sizes, soil types, access to water, nature and variety of crops grown, etc. (Representational Image)

The budget season is upon us, with a flurry of submissions being made to the finance minister from all quarters. The budget itself could result in a fine-tuning of tax rates and allocation adjustments against various expenditure heads/ministries. There are implications from these for all sectors. And no less for one sector — agriculture — that supports the livelihoods of 495.13 million citizens and 100.70 million households directly dependent on farming, as per the NABARD’s All-India Rural Financial Inclusion Survey of 2016-17.

Agriculture in India is extraordinarily heterogeneous on account of climatic conditions, landholding sizes, soil types, access to water, nature and variety of crops grown, etc. On top of these, we have the farmer, who faces the twin challenges of climate change and crop price fluctuations.

Against this context, here are some suggestions perhaps worth considering in the upcoming budget and beyond:

* Dealing with fragmented land-holdings: The problem of small and fragmented holdings that make individual farms unviable, especially in densely populated states, is well recognised. The answer to this problem lies in consolidation based on leasing. Many small farmers now leave their lands fallow, as they are uncomfortable leasing these out for fear of losing control and ownership. The need of the hour is to have a watertight land leasing law, along with the use of remote sensing technology, to ensure proper safeguarding of ownership rights. The benefits from this are many. Consolidated holdings — creation of new farms comprising fewer parcels, in place of a multitude of patches — will encourage capital investments in long-term land productivity improvement and adoption of precision agriculture. For the original owner, it would provide guaranteed lease incomes or options for employment in the same land. Farmer producer organisations can play a very positive enabling role here.

* Encouraging food processing: The agro processing industry can play a pivotal role in bringing stability to farmers’ incomes as well as facilitating transfer of technology. We have several successful examples — sugar mills, dairy plants and seed companies, among others — where assured procurement of produce helps in elimination of intermediaries and better price realisations for the farmer. Most of these concerns also engage extension teams that work directly with farmers to raise crop yields and reduce cost of production. Proactive government support to set up food processing facilities, including interest subvention, could give this a further push.

* Taking lab to land: There is a vast network of around 102 Indian Council of Agricultural Research (ICAR) institutions, 71 State Agricultural Universities and 716 Krishi Vigyan Kendras across the country. However, the contribution of these institutions, in terms of introduction or transfer of new technologies, has not been commensurate with their numbers. With growing technology fatigue, plateauing yields, reduced land and water availability, and the challenges of climate change, it calls for a sustained and focused approach to boost India’s agriculture productivity. Public sector research has tended to operate in isolation from the market and the real requirements of farmers as well as industry. One way to address this is by establishing a formal interface mechanism between, say, each ICAR institute with the actual end users of technology. The objectives of research should be clearly defined, with a report card on achievements put in the public domain at the end of every year. Secondly, most crops have an agro-industry counterpart. Thus, sugarcane has sugar factories, wheat flour mills, cattle and buffaloes dairy plants, and so on. The governing body or research council of each ICAR institute, dealing with a particular crop, should mandatorily have a counterpart industry representative. This would allow better assessment of the results of research, apart from fine-tuning its direction taking into account changing ground realities.

* Improving centre-state coordination: Agriculture is far too important a subject, which, then, justifies its being moved from the State to the Concurrent List of the Constitution. The Goods and Services Tax (GST), after all, was an outcome of a similar restructuring. Like with the GST, the Centre can initiate a consultative process and get the states’ buy in through offering suitable incentives. As it is, many regulations relating to agriculture today — from the fixation of minimum support prices and trade policy matters, to the Seeds Act and the Plant Varieties Protection law — are decided by the Centre. The time has come now to create an ‘Agriculture Council’, a statuary framework similar to the GST Council having representatives (the ministers concerned) from the Union and state governments. This body will help in bringing about better coordination and uniformity in regulations concerning agriculture, apart from resolving differences.

* Restructuring fertiliser subsidy: The existing model, of under-pricing fertilisers and compensating companies for selling at below production/import cost, was relevant when there was an urgent need to promote nutrient consumption by farmers to produce more food. However, that model is today outdated, as it is resulting in over-consumption of urea and depriving the soil of other nutrients, apart from being fiscally and environmentally unsustainable. The farmer is quite aware of these imbalances and should be incentivised to apply nutrients judiciously, based on his soil- and crop-specific requirements. Why not transfer the subsidy directly to the farmer on a per-tonne or even per-acre basis? Recent experience with direct benefit transfers, including the Centre’s PM-KISAN or the Telangana government’s Rythu Bandhu schemes, illustrates their efficiency and also ease of implementation.

* Easing business: Finally, two mantras applied to the rest of the economy should be espoused for agriculture, too — ‘ease of doing agriculture’ and ‘access to advanced technology’. The farm sector is hostage to regulatory hurdles and uncertainties, whether they relate to pricing controls on fertilisers and sugarcane, export bans or stockholding restrictions under the Essential Commodities Act. The Indian farmer is, moreover, deprived of new technologies — genetically modified Bt brinjal, herbicide-tolerant cotton and hybrid mustard being prominent examples. This same technology enabled India to become the world’s largest producer and second largest exporter of cotton, but we have lost those positions, even as new genetically modified products are being denied approvals. If every car on the road can be tracked by satellite, why cannot every field be? If remote artificial intelligence can be used to run industrial plants, why cannot it be done for optimising fertiliser dosage? If drones can deliver pizzas, why cannot spray crop protection chemicals or identify plant diseases?

Our “ask” from the government is simple: Be a “farmer-centric positive facilitator”.

The writer is Chairman and Sr Managing Director of DCM Shriram Ltd and former President of the Confederation of Indian Industry

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