IGIDR-IFPRI - Indian Agriculture Issues and Challenges, Prof Mahendra Dev

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Indira Gandhi Institute for Development Studies(IGIDR), and the International Food Policy Research Institute (IFPRI) on …

Indira Gandhi Institute for Development Studies(IGIDR), and the International Food Policy Research Institute (IFPRI) on
‘Harnessing Opportunities to Improve Agri-Food Systems’ on July 24-25 , 2014 in New Delhi.
The two day conference aims to discuss the agricultural priority of the government and develop a road map to realise these priorities for improved agri food systems.

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  • 1. Indian Agriculture: Issues and Policies Prof. S.Mahendra Dev Director and Vice Chancellor IGIDR, Mumbai
  • 2. Some good things on agriculture Good things and concerns. Good things first Economic survey says 4.1% during 11th plan period. Last year 4.7% Total foodgrain production 264.4 mil.ton in 2013-14. Pulses 19.6 mil tons. Exports rose. Terms of trade. Both public and private investment in agri increased. Total investment 21% of agri GDP Large expenditures on programs like RKVY, NHM, NFSM and ATMA On technology, well known cotton, hybrid maize Diversification to high value: Horticulture 30%, l Recognition of climate change issues High growth in rainfed. e.g. Gujarat etc.
  • 3. States 1994/95 to 1999/00 SDP gr 2000/01 to 2004/05 SDP gr 2005/06 to 2011/12 SDP gr All India agri GDP 3.3 1.7 3.7 High irriga. States 3.2 1.7 2.7 Medium irrig state 1.8 3.1 4.2 Low irrig States 2.8 1.5 4.5 High prod. States 2.9 2.5 2.1 Medium prod state 2.4 2.1 3.7 Low prod States 2.6 2.5 5.1 Source: 12th Five year plan document Low prod. and low irrigation states recorded high growth.
  • 4. Challenges in Agriculture Concerns and challenges in Agriculture -- Long term growth is still 2.5 per cent per annum. -- India Productivity levels are still low compared to other countries -- 21% agri. investment led to only 3 to 3.5% growth now. High capital output ratio of 7:1 low efficiency -- cost of cultivation increased. Profitability declined --Green Revolution technology have less impact on dry land and rainfed areas. Also, yield growth plateaued in the irrigated areas. -- Yield gap in known technologies. Technology fatigue -- Food inflation still 8 to 9%. Changing consumption patterns. Shortage of non-cereals: pulses, oilseeds etc. Demand for livestock, fish, meat increasing.
  • 5. Challenges in Indian agriculture  land degradation, water logging, soil quality problems.  Long term factors: Steeper decline in per capita land availability. Shrinking of farm size In 2010-11, share in total holdings -Marginal farmers 67.04%, Small farmers 17.93% -- Small and marginal farmers together 85% -- Medium 4.25%; Large 0.73%  Raising productivity of small farmers is a challenge Slow reduction in share of employment (still 48%) Marketing is the main problem for farmers particularly for small farmers. How to improve agriculture marketing is a challenge. Climate change problems are emerging issues
  • 6. Three Goals of Agricultural Development 1.Achieve 4% growth in agriculture and raise incomes. Increasing productivity (land, labor, total factor productivity), diversification to high value agri. and rural non-farm by maintaining food security. Higher growth has to come from non- cereals crops like fruits, vegetables and allied activities like dairy, meat and fish. 2.Second goal is inclusive growth and equity: focus on small and marginal farmers, lagging regions, women etc. Share of women is increasing in agri. On lagging regions, focus on Eastern India and other rainfed areas. 3. Third is to maintain sustainability of agri. by focusing on environmental concerns including climate change issues.
  • 7. 1. Macro level agricultural policies Now I shift to the topics of the conference Macro level agricultural policies are crucial for agricultural development (e.g. investment policy) It would also be interesting to look at different policy choices and impact on agri. In analysing agri development, we examine only agri policies. Macro policies ,monetary, fiscal, trade, industrial etc. are equally important for agriculture. For example, fiscal policy may decide how much agricultural investments have to be made.
  • 8. 2. Transforming agriculture First one is how to transform low income agri to high income agriculture Second, how to link transforming agri. to industry and services. Although For example, take agro processing :India ranks first or second in world production of fruits and vegetables. Only 10% of this is processed as against 30% in China, 78% in Phillippines Parikh et al study looked at the changes in structure of food consumption over 2007 to 2039 with CGE . Their study shows that high value products constitute almost two-thirds of the total food consumption exp. by 2039 with right policies Milk products alone will have 31% share.
  • 9. Transforming agriculture (contd.) Need for growth in non-agriculture also for transformation of agriculture. Some say (like T.N. Srinivasan) solution for agriculture lies in growth of non-agriculture in order to absorb labour Poverty can not be removed with 48% of workers in agri. promote labour intensive manufacture and rural non-farm Even in 2011-12, around 78 per cent of rural female, 56 per cent of rural males, 47 per cent of urban females and 30 per cent of urban males are either illiterate or have been educated upto primary level. Need for higher education and skills
  • 10. Changing Face of Rural India Significant changes in rural areas. Increased connectivity, rise in public employment, increase in expenditure on social protection like MGNREGA, panchayat raj as power centres (Vyas, 2013), education, migration and remittances. Significant rise in rural occupational diversification Male Female 93/94 2011/12 93/94 2012/12 Agri 74.0 59.4 86.2 74.9 Manufa 7.0 8.2 7.1 9.8 Constru 3.2 13.0 0.8 6.6 Services 14.8 18.3 5.6 8.3
  • 11. Importance Non-agri. income in rural areas: Bihar village study (%) (Alakh & Gerry) Caste Own agri. prod. Wage in agri All agri incom e Non- agri own prod Casua l wage in non- agri Regul ar emplo incom e Other incom e remitt ances Brahmi n/kaya 32.7 0.2 33.0 10.5 0.5 13.1 23.0 20.0 Bhumi har/ka 24.8 0.1 24.9 6.1 0.3 19.6 13.7 35.4 Kurmi 19.0 1.9 20.8 12.8 1.9 27.3 25.1 12.0 Yadav 45.4 2.2 47.6 8.4 2.4 10.0 14.0 17.6 Koeri 13.1 0.6 13.7 50.3 0.2 3.1 6.2 26.5 OBCII 14.2 1.3 15.5 32.0 9.9 14.4 10.9 17.4 OBCI 20.5 7.7 28.3 9.7 10.1 7.0 11.8 33.1 SC/ST 11.8 9.2 21.0 4.3 18.0 6.9 16.7 33.0 Muslim 18.8 3.9 22.7 4.4 15.8 7.6 16.9 32.5 Total 22.3 4.2 26.5 10.7 8.2 10.6 16.0 28.0
  • 12. 3. Ensuring Sustainable Food Production Sustainability issue is becoming important. Even at global level sustainability development goals. A crucial step is to provide farmers with a policy environment that will make agricultural growth more sustainable. It also includes review of water, energy and fertilizer subsidies that encourage unsustainable resource use. Particularly important encouraging agricultural producers to adopt specific technologies that increase agri productivity and enhance environment sustainability.
  • 13. Ensuring Sustainable Food Production In India also we have to look at issues such as energy, environment and natural resources. For example, recent high growth during 11 th Five Year Plan is due to high intensity of inputs. This is not sustainable. We have to improve food production with less intensive inputs and less natural resources including organic farming. Soil quality improvement is one of the major issues; Many state governments have recognized the need for improvement in soil health; similarly water management. We should have institutions, policies and innovations that can improve sustainability.
  • 14. 4. Markets and Trade Over regulation of domestic trade, agro processing, enterprise size, and land and credit market can discourage private investment. There is a need for consistent policies regarding domestic and international trade. There is need for long term policy on exports and futures markets. Frequent export bans. Reducing inflation: Some of the measures needed are : (a) reducing cereal stocks; (b) diversification (c) marketing reforms (d) post- harvest handling (e) fiscal and monetary policies (f) opening trade (g) better information system
  • 15. Markets and Trade Marketing: Look at farm-to-fork value chain. Higher prices for farmers and low prices for consumers The Economic Survey indicates the following reforms needed for a national common market --Examine the APMC Act, EC Act, Land Tenancy Act which are restrictive and barriers to free trade --Pursue direct marketing and contract farming -- Examine inclusion of agri related taxes under GST -- Establish stable trade policy based on tariff interventions instead of non-tariff trade barriers -- Develop and initiate competition in the agro processing sector. Incentivize the private sector to scale up investment
  • 16. 5. Building Resilience Resilience is becoming is an important area for research and policy. Recently, IFPRI organized 2020 conference on resilience at Addis Ababa Natural disasters, conflicts, financial crisis, volatile food prices have hit poor people hard in several countries in the last decade including India. We will have increasing shocks in future. Risk and vulnerability is rising in agriculture Resilience means recovery and improve well being and not just recovery. We have to identify policies and instruments for managing risk and building resilience for individuals, communities, states, regions and ecosystems.
  • 17. Building Resilience E.g. Agricultural insurance. It has not worked effectively in India. Better methods are required Climate smart agriculture: Emerging area of research and policy There is some improvement in resilience of countries. For example, Bangladesh, India, Ethiopia. The 1991 cyclone in Bangladesh killed 138,000 people. 2007 cyclone killed 2000 lives In Ethiopia severe droughts. 2011 had worst drought in 60 years. The drought effect is mitigated by Ethiopia Productive Safety net program Some improvement in India. Better in 2009 and 2012 droughts compared to 2003 But, long way to go for resilience many parts of India
  • 18. 6. Healthy Food Systems Food safety is becoming an important issue for countries like India. In other countries too: e.g. Food safety was headlines in China in 2013 with reports Of China’s rice supplies containing excessive levels of cadmium which could induce multiple organ damage. How to make food safer and nutritious along the value chain? More nutritious foods like animal sources, fruits and vegetables have more food safety problems. Others: Maize, groundnut, sorghum aflatoxin problems.
  • 19. Healthy Food systems Notwithstanding the focus on market-based solutions, it is likely that specific, well-targeted interventions will be required to support poor people on food safety The targeting should consider opportunities for groups of poor people to benefit (including comparative advantage for certain foods such as dairy or vegetables Livestock sector should also be focused to help the poor regarding food safety. Also look at water, sanitation and hygiene etc. Agriculture, nutrition, health linkages are becoming important for research and policy.
  • 20. 7. Institutions and Governance Political economy of agricultural policy making Subsidies vs. investments Food subsidies and grain management Fertilizer subsidies Collective action for managing natural resources and water management Institutions and governance for effective delivery systems in public services Governance is important for all policies of agricultural sector.
  • 21. Institutions for Small farmers One of the example is the need for institutions for viability and sustainability of small farmers. Small farmers have difficulties to access inputs, credit and extension or to market their output. Many institutional innovations are coming up to link small farmers to high value agriculture and help increasing their productivity and marketing. ICT revolution in India is also helping small farmers with information, input supplies and marketing 12th plan focuses on Farmer producer organizations Unless we increase their incomes, agri will not be sustainable for them.
  • 22. Conclusion Among the three goals of agriculture (growth, sharing growth and sustainability), Sustainability and climate change issues are going to be important in future. Role of women crucial in all the three goals. High productivity can be achieved but not with high input intensity in agriculture. Similarly viability of small holdings particularly marginal holdings forming nearly 70% (with size of 0.39 ha) have to be improved. To face the challenges of achieving three goals of agri- development, and covering the seven topics of the conference, sensible policies are needed. Agriculture is a state subject. State policies crucial. The Indian farmer and Indian agriculture has never let down a sensible policy regime
  • 23. THANK YOU