Agriculture & Rural Development TISS

Agriculture & Rural
development: Towards
Next Phase
Prof R S Deshpande
National Fellow
Institute for Social and Economic Change
Bangalore 560072

E-mail: rs.kalbandi@gmail.com

RSD/TISS-Hyd/24-09-13

1

Overview of the Presentation









Process of Agri & Rural Development
Importance and What it Involves
Review of Research and Development
Process
Major Issues Confronting the Sector
Society and Agriculture
Future Focus

2

Phases in Agricultural Growth
Phase

Period

Specific Characteristics and Farmer’s Focus

First
Phase

Preindependence
up to 1947

Problems inherited from the Colonial Rule
Consolidating control on the economy through the
creation of non-cultivating farmer intermediaries

Second
Phase

1947 to 1966

Food Insecurity and Community Development
Changing the cropping pattern in favour of food
crops
Equity in the size of holding
Land reforms (i) favouring the peasant cultivator
through tenancy reforms and abolition of
intermediaries, and(ii) bringing equity in access to
land and other resources.

3

Phases in Agricultural Growth -contd
Third Phase

1967-79

Making the farmer technology adopter and
attending the constraints of technology from
farmers’ perspective. Ensuring farmer friendly
technology. Farmers’ participation in the overall
growth calculus.
Period heralding the technological change (Green
Revolution)

Fourth Phase

1980-90

Preparing the farmer for participation in the tradeoriented economy. Domestic market reforms to
reduce market margins. Initiating the farmer to
the WTO regime.
Two distinct phases marking the fall-outs of
technological change and environmental debate.

Fifth Phase

19902000

Sixth Phase

2001-13

WTO & Liberalisation process and its interaction
with the agricultural sector.
Down turn, Lack of Investment, RKVY and
Research and Development


4

Growth During British India
1891-1947
Crop
Groups
Food
Grains
Non Food
Grains
All Crops

Area Productivity Production
0.31

-0.18

0.11

0.42

0.86

1.31

1.40

0.01

0.37


5

Quotation from Paddock and Paddock (1968)
FAMINE 1975, (p.278)


“America will have to apply classical triage method- like doctors on the
battlefield trying to make the best out of minimum resources. She will

have to decide which countries to save and which countries to
sacrifice. Today India absorbs like a blotter 25% of the entire wheat
crop, no matter how one may adjust the present statistics and allows
for future increase in the American wheat crop ... It will be beyond US to
keep famine out of India during 1970. The reason ... of all the national
leadership, the Indian leadership comes close to being the most
childish and inefficient, perversely determined to cut the country’s

economic throat. THE MORAL: If other more deserving countries are to
be saved, India must be sacrificed.”

6

Growth Performance 1949 to 2002
Crops

1949-50 to 1964-65
Area
Prod
Yield

1967-68 to 2001-02
Area Prod Yield

Rice

1.21

3.50

2.25

0.62

2.78

2.20

Wheat

2.69

3.98

1.27

1.38

4.34

2.92

Coarse
Cereals
Cereals

0.90

2.25

1.23

-1.44

0.54

1.90

1.25

3.21

1.77

-0.02

2.77

2.32

Pulses

1.72

1.41

-0.18

0.30

0.81

0.74

Food Grains 1.35

2.82

1.36

0.01

2.51

2.12

Oilseeds
2.07
Non
2.44
FoodGrains
All Crops 1.58

3.20
3.74

0.30
0.89

1.31
1.36

3.32
3.20

1.60
1.68

3.15

1.21

0.34

2.78

1.90


7

Crops
Rice

1990-91 to 1999-2000
Area Prod
Yield
0.68
2.02
1.34

2000-01 to 2011-12
Area Prod Yield
Neg
1.78
1.78

Wheat

1.72

3.57

1.83

1.35

2.61

1.24

Coarse
Cereals
Cereals

-2.12

-0.02

1.82

-0.80

3.00

4.44

0.04

-0.02

1.59

0.14

2.33

3.33

Pulses

-0.60

0.59

0.93

1.60

3.45

2.00

Fd Grains

-0.07

2.02

1.52

0.41

2.43

3.03

Oilseeds
0.86
Nn FdGrains1.18
All Crops 0.27

1.63
2.69
2.29

1.15
1.09
1.33

2.13
2.26
0.97

3.75
3.83
2.76

2.65
2.39
3.27


8

-5

2001-02

1999-00

1997-98

1995-96

1993-94

1991-92

1989-90

1987-88

1985-86

1983-84

1981-82

1979-80

1977-78

1975-76

1973-74

1971-72

1969-70

1967-68

1965-66

1963-64

1961-62

1959-60

1957-58

1955-56

1953-54

1951-52

Per Cent

Growth Rates in GDP from Agri
Annual Growth Rate of GDP at Factor Cost in Agriculture

20

15

10

5

0

-10

-15

9

Whither Agricultural Reforms
1. How Liberalised Agricultural Sector Is?
2. Performance & Lacunae


10

First Phase of Reforms








Structural Adjustments
Trade Policy, Industrial Policy
Relaxation in licensing
Fertiliser Policy Removal of Control
on Non-Nitro Fertilisers
Targetting of PDS
Credit Policy – Financial Sector

11

-5

2001-02

1999-00

1997-98

1995-96

1993-94

1991-92

1989-90

1987-88

1985-86

1983-84

1981-82

1979-80

1977-78

1975-76

1973-74

1971-72

1969-70

1967-68

1965-66

1963-64

1961-62

1959-60

1957-58

1955-56

1953-54

1951-52

Per Cent

Growth Rates in GDP from Agri
Annual Growth Rate of GDP at Factor Cost in Agriculture

20

15

10

5

0

-10

-15

12

19
49
19 50
51
19 52
53
19 54
55
19 56
57
19 58
59
19 60
61
19 62
63
19 64
65
19 66
67
19 68
69
19 70
71
19 72
73
19 74
75
19 76
77
19 78
79
19 80
81
19 82
83
19 84
85
19 86
87
19 88
89
19 90
91
19 92
93
19 94
95
19 96
9
19 7-98
99
-2
0
20 0 0
01
-0
2

Growth in Index of Food Productivity

180

160

140

120

100

80

60

40

20

0

13


20
01
-0
2

19
95
-9
6

19
90
-9
1

19
85
-8
6

19
80
-8
1

19
75
-7
6

19
70
-7
1

19
65
-6
6

19
60
-6
1

19
55
-5
6

19
50
-5
1

Index of Yield of Non-Foodgrains

160

140

120

100

80

60

40

20

0

14

Growth in Index of Total Crop Productivity
160
140
120
100
80
60
40
20


20
01
-0
2

19
95
-9
6

19
90
-9
1

19
85
-8
6

19
80
-8
1

19
75
-7
6

19
70
-7
1

19
65
-6
6

19
60
-6
1

19
55
-5
6

19
50
-5
1

0

15

Importance and What it
Involves
Production, State Policy

Interventions,Factor Markets, Institutions;
Marketing,Extension, R & D,Price Policy
ISSUES

20

Issues Confronting the Production
Sector












Productivity is fast reaching the achievable
optima during the decade.
Changes in Crop Composition are quite visible
and the policy also favours diversification
New technological Breakthrough is needed
Relative price trends, distorting the quality of
growth
Terms of Trade
Trade Centered Growth
Value Addition to the Product

21

Issues Confronting the Factor Markets










Land Use Pattern: Declining Land
Productivity, and Dependence on
External Nutrients
Land Reforms and the Differential
Impact and New Phase
Contributions to Total Factor
Productivity
Sectoral Imbalances due to uneven
increases in Cost and Returns
Imperfections in the Input Markets

22

Contd…










Increasing Trends in Inefficient Use of
lands
Marginalisation of the Size of Holding
Trends in Capital Formation
Imbalances in Fertiliser Use
Inefficiency in Water Use
Increasing Cost of Cultivation
Labour Shortages and Wage Trends

23

Cross classification
Naturally Well
Endowed
Regions
Regions with
Significant
Impact

Regions that
remained
bypassed

Naturally
Constrained
Regions

Punjab; Har;
West UP; TN;
Kerala; W
Mah.; S WB;
MP
Assam; Bihar;
Orissa;
N WB; Chhat;

Gujarat; N Raj;


N Kar;
APRayal; MarVid Mah;

24

Trends in Capital Formation

Total

Private

Public


25

Causes of Farm Distress











Distress due to Climatic factors
Loss of Crop due to inferior quality of input
and timely non availability
Adoption of New technology with inadequate
knowledge and expertise
Sudden attack of pests and diseases and
associated economic cost for meeting this
exigency
Yield or productivity loss due to the above
reasons or any other reason
Market prices crash due to bulk arrivals in
the market or other extraneous factors

26

Contd...










Non-availability of proper marketing
infrastructure and imperfections in the existing
markets
Mounting credit burden, dept trap and
consequent financial non-viability
Exploitative interlocking of input-creditproduct markets
Failure of extension services to advise at
proper time about farm technologies and
immediate steps to be taken
Counseling failure by the institutions and
breaking off traditional village institutions

27

Agriculture and
Globallisation

28

Trade Sector : Issues and
Challenges






Agricultural Sector with Positive and
Increasing Trade Balance
+ ive Growing Exports of Commodities
have changed from 47 % to 72 % ; (-)
ive changed 52% – 28%
Trade Sensitive Commodities and the
State wise list

29

Export Performance:1995-2013
Positively Growing












Marine products; Cashew; Tea
Basmati Rice; Spices; Castor oil
Guar gum meal; Tobacco ;
Pulses
Processed fruits and juices
Sesame and Dairy products
Tobacco manufactured
Poultry and Dairy products
Floriculture products
Fruits/Vegetables seeds
Cashew nut shell liquid

Negatively Growing












Oil Meals; Non-Basmati Rice
Coffee; Groundnuts
Meat and preparations
Fresh vegetables
Fresh fruits
Misc.processed items
Processed vegetables
Cotton raw including wastes
Spirit and beverages
Sugar and Molasses
Wheat


30



Imports with Percent Share: 0.50 to 2.00 per cent (Average of 1990s)
Wheat, Jute and Blast Fibres, Wheat and Meslin, Sugar total raw;



Imports with Percent Share: Above 2.00 per cent:
Pulses, Soya bean Oil, Silk, Rice, Natural Rubber and Gum, Rapeseed
Mustard Oil, Cotton lint, Milk and Cream dry, Cereals;



Exports with Percent Share: 0.50 to 2.00 per cent:
Soya bean Cake and Meal, Sesame Seed, Coffee Green, Pulses, Sunflower
Seed Cake



Exports with Percent Share: Above 2.00 per cent :
Tea, Rice, Cotton lint, Tobacco, Unmanufactured, Castor Oil, Pepper,
Rapeseed and Cake, Onions, Cereals, Oilseed Cake and Meal, Groundnuts.


31

Trade Reforms
Stepping up of trade in selected
agricultural commodities
 Encouraging trade in commodities with
comparative advantages for the country
 New trade avenues for non-traditional
agricultural exports/regions
 Info on Quality and SPS requirements
for different commodities
 International market information and
market margins



32

Trends in Agricultural Trade:1990-2003


33

Is Agri Suffering


34

Like or Dislike of farming
40 % farmers reported that they did not like
farming. 27 % reported that their dislike was
because farming was not profitable.

27 % Not
Profitable
60 % Liking
Farming
5 % Risky
8 % Oth.
Reasons


35

Awareness of Farmers
percentage of farmer
households

percentage of farmer households

aware of

aware of

State

biofertilisers

MSP

WTO

State

biofertilisers

MSP

WTO

Andhra Pr.

11

29

6

Kerala

55

61

44

Assam

26

22

11

Madhya Pr.

10

29

3

19

8

Maharashtr
a

24

28

6

Bihar
Chhattisgar

11

35

1

Orissa

15

12

2

Gujarat

11

25

6

Punjab

7

63

23

Haryana

9

62

12

Rajasthan

10

11

2

J&K

28

27

7

Tamil Nadu

48

48

12

Jharkhand

23

12

11

Uttar
Pradesh

15

33

5

Karnataka

22

29

7

West Bengal

22

30

12

All-India

18

29

8


36

Knowledge of Minimum Support Price
% of farmer Households

19 %

knowing procurement
Agency
10 %

aware of MSP but not
knowing agency
unaware of MSP

71%


37

Membership of farmers’ organisations
State

% of farmer households
with at least one person
belonging to

State

% of farmer households
with at least one person
belonging to

A Regd
Farmer’s Org

A Self Help
Group

A Regd
A Self Help
Farmer’s Org Group

AP

2.4

17.7

Kerala

10.5

19.9

Assam

7.0

8.2

MP

0.8

2.7

Bihar

0.3

0.8

Maharash 2.2

4.9

Chhattis

2.4

6.5

Orissa

0.2

2.8

Gujarat

5.9

3.2

Punjab

0.3

1.5

Haryana

0.0

1.0

Rajasthan 0.4

0.6

J&K

0.6

0.2

TN

3.4

12.9

Jharkha

0.2

2.8

UP

1.0

1.5

Karnata

5.2

8.1

WB

4.0

1.9

All-India

2.2

4.8


38

Services of co-operatives
not
member
s of coops

members
but did
not avail
of
services

kind of
service most
commonly
availed*
(% of
households)

not
member
s of coops

kind of
member services
s but did most
not avail commonly
availed* (%
of
services of
households)

AP

69

12

CR (17%)

Ker

40

21

CR (27%)

Ass

83

5

CON (10%)

M P.

57

14

SF (23%)

Biha

93

5

CR (2%)

Mah

46

18

CR (27%)

Chh

50

9

SF (28%)

Oris

78

7

CR (12%)

Gujt

51

11

SF (22%)

Punj

58

9

CR (20%)

Hary

62

9

CR (17%)

Raja

79

7

SF (7%)

J& K

75

2

SF(16%)

T N

57

15

CR (18%)

Jhar

98

2

-

UP

80

7

SF (12%)

Karn

64

14

CR (13%)

WB

79

10

CR (9%)

India

71

10

CR & S F
(9%)

State

% of households

State

% of households


39

Services By Co-operatives
1 % Con
Goods

10 %
Mem No Serv

9 % Seeds Fer

9 % Credit

71 % Not
Members


40

Percent of farmer households using specific resources
for farming

80
60
40
20
Fe
rti
li s
er
O
s
rg
M
an
ur
Im
e
p
Se
ed
Pe
s
st
ic i
de
s
Ve
tS
er
v

0


41

Distribution of farmer households by distance from some
farming resources used for cultivation

Fertilis Org
er
Manure

Imp
Seeds

Pestid Vet
es
Ser

Within
Village

27

68

18

20

24

< 2 Km

11

4

9

10

11

2-5 Km

26

8

24

26

29

5-10 Km

20

8

24

24

22

1020Km
> 20 Km

12

6

17

16

11

4

7

7

5

3

Not Rep

.01

.04

.03

.03

.01


42

Reasons for Non-Insurance

3 %can’t
pay premium

24 %facility
absent

57 %
Unaw are

16 %not
interested


43

Future Focus

44

Major Problems
• Rainfed Regions and Bypassed Groups and
Crops
• Product Factor Market Imperfections
• Value Additions and Market Margin
Reduction
• Safety Net Programmes and Specially
Devised Programmes for Rainfed
Agriculture
• Proactive Entry into the new phase of
growth
• Issue of Subsidies in Agriculture

45

Reform Platform






Withdrawal of the State (intervention not
protection) from the factor as well as
Product market intervention and allowing
agricultural sector to perform.
Identifying the commodities with competitive
advantage in international trade and creating
institutional incentive structures for such
commodities for boosting up the growth in
trade.
Creating an institutional setup to help
agricultural sector in order to negotiate with
the new policy regimes.

46

Contd….








Disseminating information about the
forthcoming changes in the sector to the
farmers in the language understandable to
them.
To identify and enlist the natural resource
degradation process and create forces with
proper incentives to internalize the negative
externalities.
Address Land Market,Labour – Factor
Market imperfections With First Priority
A proactive price policy, Procurement as a
Commercial Operation

47

Domestic Market Reforms










State Interventions
Low Density of Markets
Movement of Commodities across regions
Within Market Infrastructure
Market Information
Process of Marketing and existing
Imperfections
Market intervention schemes

48

Policy









Proactive and not Responsive role. Play
with partners. Sensitive commodities &
Regions
Food Security, Vulnerable Section and
Regions; Sustainable living standards as
main arguments
Bring out Hidden subsidies and file
disputes
Involvement of Stakeholders
Technical R & D back up institutions.

49

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