When farmers benefit from businesses of pvt & public sectors

Not only is it a major segment of our economy, contributing almost a quarter of our GDP, but more significantly it is also the provider of gainful employment and incomes to the maximum number of people. Overall, an enormous potential exists for the rapid growth of rural economy on the basis of this country being endowed with abundant arable land, favourable seasonal conditions and shifting consumption pattern—driven by increasing income levels.

The impact of agricultural growth on farmer employment is apparent. It has been estimated that one incremental percentage growth in agriculture leads to an additional income generation of Rs 10,000 crore in the hands of the farmers thereby increasing their disposable income and ultimately, their purchasing power.

Owing to diverse and favourable agro-climatic conditions, India has a significant comparative advantage in agricultural production and the potential to be globally competitive by producing a wide-variety of high quality produce.

These advantages if leveraged optimally, can translate into India becoming a leading food supplier to the world. Further, with a population of more that one billion, growing at about 1.6 per cent per annum and with favourable demographics, India is a large consumption hub for food products.

In empowered India, which is overall an empowered rural sector, we will be able to obliterate poverty if farm produce are better connected to markets. The persistence of poverty is a moral indictment of our achievements.

Participation and inclusion are central to our approach to poverty reduction. Cooperatives are an ideal instrument in such a strategy, and the country has long drawn on the strength of the movement. Meeting the challenges of globalization requires strong local communities, strong local leadership and strong local solutions.

Cooperatives have proved to be a key organizational form in building new models to combat social exclusion and poverty, for example through local development initiatives. Cooperative members learn from each other, innovate together and by increasing control over livelihoods, build up the sense of dignity that the experience of poverty destroys.

To reduce rural poverty, we have to address the entire rural space—all of rural society and both the farm and non-farm aspects of the economy. While past approaches have identified most pieces of the puzzle, we have now to put them together in a way that attains this objective.

In addition to enhancing agricultural productivity, competitiveness, sustainability and fostering non-farm economic activity, the government’s development priorities are now geared to accelerate poverty reduction in rural areas by improving social well being and managing and mitigating risk and vulnerability of rural people.

Agriculture is facing fundamental change. Human population growth, improved incomes and shifting patterns are increasing the demand for food and other agricultural products. At the same time, however, the natural-resource base underpinning agricultural production is under threat, with growing threats to genetic diversity and the degradation of land and water resources.

Revolutionary advances in biological and information sciences offer great potential to address these resource constraints. However, making their benefits available to small scale farmers in a major challenge. Urban consumers, both domestic and international, are increasingly driving the transformation process by demanding diversified, high quality and safe foods.

International trade is increasing rapidly in response to these demands, bringing with it a set of global governance treaties and regulator frameworks whose implementation requires local capacity. How to lever these shifts so that small and impoverished farmers reap the benefits is a major challenge.

Government has put back agricultural growth on top of the development agenda. But ‘business as usual’ will not suffice. The dynamic changes now influencing agricultural production, diversification and competitiveness require a thorough re-analysis to develop better ways to support tomorrow’s agriculture.

Most high-potential agricultural areas of our country have now reached the limits of land and water resources that can be exploited. The closing of that land frontier—not to mention to acute water scarcity in many areas, diminishing returns and negative environmental effects from high levels of external inputs—means that future growth in these areas will largely depend on the substitution of inputs with knowledge.

This means that future agricultural growth in these areas will be increasingly knowledge based and the growth in total factor productivity will now need to be the major source of growth in the coming decades.

While the Tenth Plan assumed that agricultural production would grow at the rate of 4.0 per cent, in the first three years of the plan, the achievement is just 1.5 per cent of growth.

It is to reverse this situation that Government of India has laid its priority to give a ‘‘New Deal to Rural India.’’ This envisages reversing the declining trend in investment in agriculture, stepping up credit flow to farmers; increasing public investment in irrigation and wasteland development; increasing funds for agricultural research and extension; creating a ‘single market’ for agricultural produce; investing in rural electrification; investing in rural roads’ setting up commodities futures markets, and insuring against risks which are inevitable in an increasingly commercialized agrarian economy.

A comprehensive programme for rural infrastructure development has been initiated under the umbrella of ‘‘Bharat Nirman.’’ This is a programme for time bound investment in rural housing, rural roads, rural water supply, rural electrification and rural connectivity.

In the area of agricultural diversification, a National Horticulture Mission has been launched which will ensure an end to an end approach having backward and forward linkages covering research, production, post-harvest management processing and marketing, under one umbrella in an integrated manner.

In terms of post-harvest technology, programmes have been approved for strengthening marketing infrastructure like cold chains and godowns. A new Seeds Bill is under consideration of Parliament. Seed Production happens to be also a weak link in the chain of increasing production.

An ‘Integrated Food Law’ is being formulated to bring convergence in the laws dealing with food, to promote food processing industry in the country. Essential Commodities Act has been liberalized in order to remove all restrictions on the movement, storage and marketing of agricultural commodities.

Forward Contract (Regulation) Act has been amended to allow futures trading in important agricultural commodities. However, there are still several barriers in transport, taxation and retail trade sector which need to be removed to achieve a single common market for the country.

Expansion of warehousing services in rural areas and stepping up of marketing credit to farmers have been identified as other important areas of reform in agriculture sector. Legislation is now being formulated for the introduction of negotiable warehouse receipt system in the country which will result in large benefits from increased liquidity in rural areas, lower costs of financing, shorter and more efficient supply chains and enhanced rewards for grading and quality of commodities, development of other productivity—enhancing agricultural services and better price risk management.

It will also improve and standardize the existing warehousing facilities for the agriculture commodities in the country and will also enable the banks to improve the quality of their lending services to the agricultural sector. All these developments will in turn result in higher returns to the farmers and better services to the consumers.

With these developments, commodity exchanges could be effectively linked to rural godowns and markets as an alternative marketing structure for discovery of futures prices and to cover price risk.

E-linking of spot markets with commodity exchanges will go a long way towards bringing single-window solution for the farmers comprising warehousing, credit, insurance and marketing based on the dissemination of price signal to the farmers at the time of sowing itself. These initiatives would achieve a nation wide integration of agricultural markets and enhance the competitiveness of farmers in national and global market.

The Government is committed to reforms in agriculture, which will facilitate large-scale private investment in every step of value chain. The belief is that both the market and the State have an important role to play in the agriculture.

Bringing in the private sector—both as a competitor and as complementary to the public sector—adds greater strength and value for money. Both must work complementarily to benefit the farmers and their families—as well as make business sense.

We have a two-pronged agenda—pushing through the specific enabling reforms in agriculture, and working with State Governments to convince them to implement relevant reforms at the earliest. Several States stand convinced and are well on the path of doing so, while others too will have to follow suit.

Indian agriculture sector has the potential to transform India into the leading agro economy of the world. However, a holistic and integrated approach is required to achieve sustainable development of the sector. A paradigm shift is required in the outlook to agriculture production, to marketing orientation, and from a quantity to quality focus.

A scientific and innovative agricultural approach to agriculture will enable us to compete globally in cost and quality with respect to global benchmarking and our core competitive strengths in various agriculture produces.