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  1. 1. Research Scholars, Department of Economics Bharathiar University Coimbatore- 46
  2. 2.     Agricultural Problems in the Global Context A growing global population is driving demand for food upward at a rapid rate of more than 2 per cent per year (Webb, 2009). Enormous amounts of resources will be required to meet this demand, as agriculture requires more water, land and human labor than any other industry (Food and Agriculture Organization, 2007). Multiple trends have contributed to the current problems in agriculture. Agriculture has been widely neglected for decades: donor and government attention to developing countries agricultural sector has decreased since the 1970s, and the percentage of total overseas development assistances allocated to agriculture dropped from 15 per cent in 1980s to less than 3 per cent in 2007 (World Bank, 2007; Global Donor Platform for Development, 2008). These declines have been matched by the shrinking and disappearance of agricultural research systems and other supports. Meanwhile, global trends with energy resources and climate have created new challenges. As energy prices have risen, prices for fertilizers, irrigation, transportation, and food processing have increased.
  3. 3.  Climate change will likely lead to climatic shocks of greater intensity and shifts ecosystems geographically, increasing the frequency of crop failures, especially among farmers without technology to facilitate adaptation and will likely result in increased food prices (Brown & Funk, 2008 and Webb, 2009).  In this context of massive challenges to food security and of farmers’ continuing struggle against poverty, we focus our attention on India.  Not only is India crucial to global food security, but also India is home to hundreds of thousands of farmer families facing historical and newly emerging challenges in agriculture that are impressively diverse and complex.  The aim of this paper is to create a foundational understanding of these problems with their historical, national and local contexts and to investigate potential solutions so as to influence the development of programs and policies in Indian agriculture
  4. 4. The Green Revolution Low Agricultural Productivity Problems in Indian Agriculture Impediments to Domestic Sales and Exports The Minimum Support Price (MSP) and Exploitation by Market Intermediaries Unpredictable Weather, Lack of Access to Insurance and Finances, and Exploitation by Moneylenders
  5. 5. The Green Revolution  Farmer’s illiteracy, poverty, lack of access to finances, and lack of instruction in the new farming practices they were expected to implement magnified the negative effects of the Green Revolution.  Public radio trumpeted the benefits of the inputs and practices of the Green Revolution, but illiterate farmers could not understand the usage instructions and warnings on fertilizer and pesticide packages and the vast majority of farmers received no personal instruction in proper use of these inputs (Shiva, 1993).  Due to green revolution there had occurred a huge damage to environment, like water pollution by using pestcides and fertilizers which affects the health of rural people mainly agricultural farmers.
  6. 6. Low Agricultural Productivity  Low agricultural productivity is a problem at two levels in India—at the national level, and at the level of individual farmers and their families.  At the national level, India has a population that needs 210 million tons of grain, but India produces only 200 million tons (Agoramoorthy, 2008). Meanwhile, the lack of investment in agricultural research and technology development in India over the last two decades has slowed the rate at which new ways to increase yield are discovered (Kumar, Mittal, and Hossain, 2008).  At the individual level, the extremely small size of Indian landholdings restricts total output. The main reason for the division of India’s land into very small plots is historical: land reforms following India’s independence imposed a ceiling on landholdings. Research at that time showed small farms to be more productive than large farms (Ghatak and Roy, 2007).  Another problem is that farmers are often not well informed of which crops would accrue the most profits, which would grow best on their land, or which specific farming techniques should be applied to maximize the growth of these crops. Thus, a collection of diverse and complex issues contribute to suboptimal output of farms in rural India.
  7. 7.      Impediments to Domestic Sales and Exports Two major impediments to domestic sales and exports are food safety risks and lack of infrastructure for processing. India’s national market is giving increasing value to the quality and safety of foods, and despite India’s tremendous share of global food production, India contributes only 1.5 per cent of exports of processed food. Meanwhile the post-harvest losses are 25 to 30 per cent. Poor infrastructure, waste management and pest control at wholesale markets and limited access to warehouses also reduce food quality and safety and lead to food wastage. Second, the Small Scale Industry Reservation permits processing of certain commodities only in the small-scale sector, restraining enterprises’ capacity to make the needed investments to meet domestic and international food safety standards. Finally, the laws governing the processed food sector are extremely confusing, as they are enforced by eight different ministries that sometimes prescribe differing or even contradictory standards. Small farm size, lack of education, and credit constraints among farmers impede them from undertaking the needed investments in process improvements, storage, and certifications to meet quality and safety requirements (Umali-Deininger and Sur, 2006
  8. 8. The Minimum Support Price (MSP) and Exploitation by Market Intermediaries  The World Bank reported in 2005 that benefits accrued to large farmers as a result of the MSPs were 13 times larger than those to a marginal farmer in the same state and 95 per cent of procurement of wheat, for which there was a high MSP, occurred in only three states.  Worse than these inequities is that the government has sometimes been unwilling to support its announced MSP, failing to purchase at this price from farmers seeking to sell to them for lack of a better price elsewhere.  Part of the reason the government has sometimes failed to purchase crops as promised is that the government’s food stocks have grown significantly above the target level. Meanwhile, there is not an effective system for distributing these reserves, as the public distribution system reaches only a small percentage of the poor who could benefit from it, and the higher MSPs result in higher food prices even within the PDS (Ghosh, 2000).
  9. 9. Unpredictable Weather, Lack of Access to Insurance and Finances, and Exploitation by Moneylenders  Farmers face many stressful uncertainties by the nature of their work and their lack of access to insurance and to finances at reasonable interest rates.  The Indian monsoon is often unpredictable, and unexpected weather—such as long periods of drought—can cause crop failures, drastically reducing the farmers’ income. The security of insurance is also very rare among farmers. (Banerjee and Duflo 2007)  Without money savings, farmers struggle to invest in infrastructure improvements that could have significant long-term benefit.  Farmers also lack the money to irrigate their lands to optimize the period of their usability during the course of the year.  The large proportion of farmers who resort to loans from moneylenders are subject to absurdly high interest rates that often cause the farmers to fall into deep debt (Jain, Trehan, & Trehan, 2010).
  10. 10. A Sustainable Green Revolution in Organic Farming Agricultural Technology and Input Solutions, and Expansion of Agricultural Research Farmer Capacity Building and Investment in Rural Infrastructure An Assessment of Potential Solutions Development and Expansion of Food Processing Facilities Modification of MSP Policy and Improved Dissemination of Price Information Programs to Increase Access to Insurance Programs to Increase Financial Access, and Mobile Technology Solutions Strengthened Mental Health Services
  11. 11. A Sustainable Green Revolution in Organic Farming  The environmental damage resulting from the Green Revolution has led many to call for a second, sustainable revolution.  To some this simply means using new techniques in a way that strengthens ecological systems and preserves natural resources; for others, this is a call for a return to traditional, organic farming.  Agricultural experts are in disagreement about the potential for organic farming, but areas of agreement are summarized as follows: organic farming offers an alternative that is eco- friendly and protects human health, but principal challenges include financial viability, availability of organic inputs, and teaching of skills required for productive organic farming.  Organic farming is particularly promising in dry land regions, where climatic variability
  12. 12. Agricultural Technology and Input Solutions, and Expansion of Agricultural Research  There is currently a strong need for research to generate location-specific farming technologies and to assess their effectiveness.  Once these technologies are identified, their deployment should be accompanied by skill development training programs and efforts to ensure that all needed inputs are available to farmers (Huelgas et al., 2011).  Since the technologies will need to be adopted widely to have their full impact, research on adoption of these technologies is also crucial.  Investments in research, beside investments in rural infrastructure and education, have been shown to promote agricultural growth more effectively than subsidies to inputs such as fertilizer and irrigation (Fan, Gulati, and Thorat, 2008).  Investment in agricultural research and development has also been one of the most successful ways to alleviate hunger and poverty.
  13. 13. Farmer Capacity Building and Investment in Rural Infrastructure  Higher literacy levels among the rural poor with the improvement of primary education will be crucial to raising farmers’ living standards.  In the absence of widespread literacy, training programs should be instituted to make farmers less susceptible to exploitation and give them the information they need to make more advantageous choices in crop selection, use of agricultural inputs and technologies, and distribution and sale of their produce.  Investments in rural infrastructure will also be crucial to solving problems for farmers and for ensuring food security for India.  Agricultural markets need to be expanded, and storage conditions must be improved. Investments in infrastructure to facilitate transportation of agricultural products will help farmers get fair prices and will help preserve food safety and quality (Agoramoorthy, 2008).
  14. 14. Development and Expansion of Food Processing Facilities  With post-harvest losses, especially of fruits, vegetables, and other perishables, amounting to over Rs 1,00,000 crore annually (Goswami, 2010), there is great need for increased investment in food processing infrastructure.  In order to leverage export opportunities and meet the demands of a growing population increasingly concerned with food quality and safety, food processing facilities should be build in compliance with national and international food safety standards.  The much needed expansion of India’s food processing industry would help diversify and commercialize agriculture by extending product shelf-life, adding value to produce, and increasing farmers’ income, and would also generate employment and foreign exchange earnings for India (Singh, 2008).
  15. 15. Modification of MSP Policy and Improved Dissemination of Price Information  The methodology for arriving at the MSP should undergo periodic, transparent, and thorough review by both academicians and farm leaders to eliminate large differences across crops for the value of the MSP in comparison to the market price.  The MSP must also be announced earlier, before farmers have sowed their seeds, so that it can effectively influence supply and thus price.  Institution of state and local level monitoring of prices and markets would help ensure that farmers receive benefits from the MSP (Deshpande and Naika, 2002).  Policy must give added focus to dissemination of pricing information and markets for sale at the MSP.
  16. 16. Programs to Increase Access to Insurance  No other form of insurance has been widely adopted by farmers, although many systems are being developed and assessed. One particularly promising form of insurance for farmers is index insurance, insurance that is linked to an index such as crop yields, rainfall, or temperature, rather than actual loss (International Research Institute for Climate and Society, 2009).  Reliance upon an index rather than on assessment of losses at individuals’ farmers reduces moral hazard and adverse selection, enables rapid payouts, and reduces transaction costs, making the insurance financially viable as well as affordable for small farmers.  A consistent problem in implementing these sorts of insurance schemes, however, is low adoption by farmers.  Participation strongly tied to familiarity with the vendor and inversely correlated with risk aversion show that farmers are uncertain about the consequences of signing up for insurance
  17. 17. Programs to Increase Financial Access, and Mobile Technology Solutions  The rural banking network should be expanded to facilitate financial inclusion of rural poor farmers, who are often left without service as a result of poor bank accessibility, high transaction costs for formal banking operations, complexities in account opening and loan approval, and inflexibility of financial products (Bhattacharyay, 2010).  There is great potential for mobile phones to address these issues as well, as mobile phones are widely available to India’s rural poor.  If banks incorporate mobile phone technology into their interactions with customers, they will acquire a new way to monitor rural clients. Mobile banking will enable banks to reach many more customers, hugely reduces transaction costs, and can provide services to customers at any time and place through mobile messaging and other related interfaces (Infogile, 2007).
  18. 18. Strengthened Mental Health Services  Finally, mental health services need to be strengthened at the primary health care level to provide support for farmers.  Facing the many diverse, complex, and severe problems described in this paper, farmers often resort to suicide: over 1,50,000 farmer suicides occurred in India between 1996 and 2006 (Harper, 2011).  Solutions to the problems farmers face will require much time, effort, and resources to come to fruition on a wide scale, and vulnerable farmers need support immediately to prevent loss of life.
  19. 19. Conclusion  We saw a surplus of opportunities for individuals and organizations, for-profit and not-forprofit, public and private, to become involved in addressing problems Indian farmers face.  Change in MSP policy is a task of the government, and development of food processing infrastructure for exports will likely be the task of individual entrepreneurs.  The issues in between, however, will probably be addressed by social entrepreneurs, NGOs, and the government alike, sometimes separately and sometimes together.  Many innovative programs are currently being field-tested, and systematic evaluation of their effectiveness should guide further action to close, modify or expand the programs.  When programs initiated by private organizations are found to be effective, a collaboration with the government going forward will help the program to achieve large-scale positive change.
  20. 20.  Investments in farmer capacity building, rural infrastructure, and research have been crucial to past advances in agriculture, and the problems described in this paper underline continued investments in these three areas as priorities.  Capacity building and rural infrastructure will enable farmers to avoid exploitation by giving them new knowledge, skills, and opportunities so that they can optimize their crop yields and maximize their profits and will reduce wastage of agricultural products, which is currently enormous.  Research, perhaps an even broader target for investment, encompasses research to find technologies and agricultural strategies suited to maximize yield in India’s unique landscapes and to increase food quality and safety, research to assess the effectiveness of these technologies, and research to discern the best ways to promote adoption of the technologies and practices that would benefit farmers if properly used.