Revive of Agriculture in india

1. India: Roles and Challenges
of Small Holder Agriculture
S.Mahendra Dev
Director and Vice Chancellor,
IGIDR, Mumbai, India

2. Contents of the presentation
Introduction and background
Role of small holding agriculture for food
security and livelihoods
Small holders and livelihoods
Issues and challenges for small holders
Opportunities for small holding agriculture
--Technological innovations
--institutional innovations
Policies to support small holders
Lessons from Indian experience

3. Introduction and background on
Indian Agriculture
India ‘s population is 1.21 billion in 2011. 67% are
rural. Majority are in agriculture.
Importance of agriculture in Indian economy. Although
it contributes only 15% of GDP, the share of workers
is about 55%.
Marginal and small farmers dominate
Major crops are rice, wheat, maize, coarse cereals,
groundnut, cotton, sugarcane, fruits and vegetables
60% of cultivated area is rainfed as only 40% of area
is under irrigation.
Rural poverty is 41%in 2004-05.
Agriculture is a ‘State Subject’. In other words, the
policies of provinces are also important

4. Performance of Agriculture
Growth performance in agriculture%)
1950-1 to 1964-5: 2.51 (area gro. +yield gro)
1967-8 to 1980-1: 2.20 (yield gr. green revol)
1980-1 to 1990-1: 3.07 (spread of green rev)
1992-3 to 2004-5: 2.76 (reform period)
1997-8 to 2004-5: 1.60 (neglect of agri.)
2004-5 to 2010-1: 3.47 (revival of growth)
 The policy, institutional and investment focus during
green revolution time helped India achieve its food
self sufficiency goals.
 However, now different policies are needed to focus
on small holdings, rainfed areas, women, lagging
regions, rural non-farm for sustainable agricultural
transformation

5. -1.00
0.00
1.00
2.00
3.00
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5.00
6.00
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1965
1967
1969
1971
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1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
5-YearAverageGrowthRate
Agriculture GDP growth

6. Challenges in Agriculture including small farmers
Concerns and challenges in Agriculture
--Green Revolution technology mainly benefited the high
potential and irrigated areas. They have less impact
on dry land and rainfed areas. Also, yield growth
plateaued in the irrigated areas. Technology fatigue.
---With urbanization and income growth, consumption
patterns have shifted from cereals to non-cereal food
(pulses, edible oils, fruits, vegetables, dairy and other
livestock, fisheries)
-- Supply of these commodities are in short supply
compared to demand. As a result food inflation
increased in recent years
-- Deceleration in growth from 3.5% during 1981-97 to
2% during 1997-2005. Decline in yield growth.

7. Challenges in Indian agriculture
--This led to rising rural distress and also farmers’
suicides.
-- Land and water problems, vulnerability to world
commodity prices,
----Disparities in growth across regions and crops: growth
rate declined more in rainfed areas.
Long term factors: Steeper decline in per capita land
availability. Shrinking of farm size
Slow reduction in share of employment (still 55%)
Main problem is low land and labour productivity in
agriculture. Gap between agri. and non-agri. is
widening.
We should blame non-agriculture (industry and
services) for not absorbing workers from agriculture.

8. Sources of growth in agriculture
What are the reasons for slow growth in agri. during
mid-1990s to mid-2000s
Steering Group for 11th Plan has estimated sources of
growth
Sources of growth: Five factors: (a) Public invest.
(b) private invest. (c) Technology; (d)
diversification (e) fertilizer
There has been slowdown in all these factors
Terms of trade also declined
Higher growth in the post-reform period only in the
case of agricultural credit

9. Decline in growth (%)
1980-81 to
1990-91
1990-91 to
1996-97
1996-97 to
2005-06
Technology 3.3 2.8 0.0
Public Inve. 3.9 1.9 1.4
Private Inv. 0.6 2.2 1.2
Irriga.area 2.3 2.6 0.6
Area under
Fruits&veg
5.6 5.6 2.7
NPK use 8.2 2.5 2.3
Credit 3.7 7.5 14.4

10. Some Dynamism in Recent Years
4% growth in agri. During 2004-08. Record
foodgrain production during 2008-09 (241 m.t.).
Exports in cotton, rice and sugar till 2008.
Revolution in cotton. Cotton prod. doubled in six
years. Some positive signs on bio technology (BT
cotton). Success in hybrid maize.
Some increase in high value agriculture
Some rainfed regions showing high growth in
agri: Bihar. Gujarat showed 9% growth in
agri.2001-09
Comfortable buffer stocks; 60 million tonnes
Terms of trade in agri. improved

11. 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.
2.Second goal is sharing growth (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 agriculture

12. Role of Small Farmers
Indian agri. is the home of small farmers (80%).
Therefore, the future of sustainable agriculture growth,
food security and livelihoods in India depends on the
performance of small and marginal farmers
Marginal (0.01 to 1.00 ha); small (1.01 to 2.00), semi-
medium (2.0 to 4.00),medium (4 to 10), large (above 10)
Agricultural Census data shows that there were about
121 million agricultural holdings in India in 2000-01.
Around 99 million were small and marginal farmers.
Average size has declined from 2.3 ha. In 1970-71 to
1.37 ha. In 2000-01. Average size of marginal 0.24 ha
Small and marginal farmers account for more than 80%
of total farm hhs. But their share in area is around 44%.

13. % Distribution of small
holdings
% Distribution of operated
area
Land
Class
1960-61 1991-92 2002-03 1960-61 1991-92 2002-03
Margina 39.1 56.0 62.8 6.9 15.6 22.6
Small 22.6 19.3 17.8 12.3 18.7 20.9
Small
&margi
nal
61.7 75.3 80.6 19.2 34.3 43.5
Semi-
medium
19.8 14.2 12.0 20.7 24.1 22.5
Medium 1.4 8.6 6.1 31.2 26.4 22.2
Large 4.5 1.9 1.3 29.0 15.2 11.8
Total 100.0 100.0 100.0 100.0 100.0 100.0

14. 65.54
18.1
10.64
4.82
0.9
21.85
20.19
22.81 22.09
13.06
0
10
20
30
40
50
60
70
Marginal Small Semi-Medium Medium Large
Fig.2.1: Percentage Distribution of Farmer'sholdings and Area
Operated - All India
Percentage of Farmer Households Percentage of Area Operated

15. Role of Small Holders
Access to irrigation: irrigation for small holdings 51%
compared to 31% for large farmers
Access to fertilizers, area under HYV and cropping
intensity: It is inversely related to farm size.
Cropping patterns: Do small and marginal farmers
grow high value crops? They allocate large
proportion of land to high value crops like fruits and
vegetables and also to rice and wheat than other
farmers. Thus they contribute to food security and
diversification. But less on pulses and oilseeds
Farm size, output and productivity: Productivity is
inversely related to farm size. Small holdings
continue to produce more in value terms per hectare
than medium and large farmers

18. Small holders and livelihoods
Around 98 million out of 120 million farm holdings
are small and marginal farmers. Therefore, their
performance is crucial for livelihoods.
It is true that small holders have higher productivity
than large holders.
But it is sustainable because consumption
expenditure of small and marginal farmers exceeds
their estimated income from agri+ non-agri by a
substantial margins and the deficits (dis-savings)
have to be plugged by borrowings.
According to 2003 NSS data,
-Marginal farmers monthly consumption Rs.2482 and
monthly incomeRs.1659
-Large farmers: consumption Rs.6418 income Rs.9667

20. Issues and Challenges for Small farmers
The 11th Five Year Plan says “ The agricultural
strategy must focus on the 85% of farmers who
are small & marginal, increasingly female, and
who find it difficult to access inputs, credit and
extension or to market their output”.
“While some of these farmers may ultimately exit
from farming, the overwhelming majority will
continue to remain in the sector and the
objective of inclusiveness requires that their
needs are attended to”
Inherent disadvantages faced by the small
farmers would be larger with increasing market
integration and globalization.

21. Issues and Challenges for Small Holders
Some of the general issues that confront small
holders are: imperfect markets for inputs/products
leading to smaller value realizations,
absence of access to credit markets or imperfect
credit markets leading to sub-optimal investment
decisions or input applications; poor human resource
base; smaller access to extension services and
technology
Poor access to ‘public goods’ such as public
irrigation, command area development, electricity
grids.
Key issues and challenges are the following
Role of women

22. Challenges of Small Holders
Social groups: Scheduled Castes and Scheduled
Tribes
Land issues: land and tenancy security
Low level of formal education and skills
Credit and indebtedness
Globalization challenges: Volatility in international
prices; challenges of integration of value chains,
super markets.
Impact of climate change
Water problems
Diversification challenges
Risk and vulnerability

23. Opportunities for Small holding agriculture
Research and extension
Technological innovations
--zero tillage
--Public sector led improved technologies
--Nutrient management
--Bio-technology
--Information technology
 Institutional Innovations
--land and water management: institutions like
water user associations for water management
of canal irrigation

24. Institutional Innovations
Women’s collectives: Women’s cooperatives,
producer women’s groups and other forms of group
efforts (e.g. Deccan Development Society in Andhra
Pradesh).
Gujarat put in place institutional environment for
development of agriculture (e.g. Krishi Mohatsav).
This Mohatsava serves as an institutional platform at
the village level and proved to be an important support
for farmers.
Similarly Andhra Pradesh: The Community Managed
Sustainable Agriculture (CMSA) programme. It
addresses the major causes of agricultural distress
and help farmers in adopting sustainable agricultural
practices. It covers 2.7 million acres and benefit 1.05
million farmers

25. Institutional Innovations
Institutions for Marketing of Small holders
--There are several models: Contract farming, self
help group model, co-operative model and
producer co-operatives
--One of the most successful producer
organization is dairy cooperative with 12.3
million members.
--Contract farming is also successful in some
cases
--Some examples of group approach are: Apni
Mandi in Punjab and Rytu Bazar in Andhra
Pradesh

26. Small farmers, value chains and
Supermarkets
Wholesale, processing and retail segments are
growing in India.
In India, super market revolution is also catching
up. Average annual growth rate of top 10
retailers during 2000-06 in India was 50%.
Linking small farmers to super markets. Linking
farmers with input suppliers, logistic suppliers,
agro-processors and retailers
In those cases where small producers have
been able to integrate into the supplying chains,
supermarkets have offered enhanced security
and considerably higher margins than the
traditional clients, such as wholesales and
groceries

27. Challengeing the conventional view on value
chains: IFPRI study
1. Conventional view: Food supply chains are
dominated by long chain of many hands. Findings:
supply chains can be short
2. Earlier view: Staple’s value chains are
dominated by small traditional processors and
retails. Findings: Things are changing. Role of
large cold storages, modernizing rice mills, small
but rapidly increasing super markets in retail chain
3. Earlier view: Little change in technology since
green revolution. Findings: there are substantial
changes in technological and factor markets
4. earlier view: little role for quality. Now the role of
quality is important

28. Challenging the Conventional View
5. conventional view: traditional supply chainssay
high rates of wastage and transportation costs.
Findings: Both are only 10% of final consumer
price
6. Conventional view: Govts. Play a major direct
role in value chains. Findings: It is true in India in
the case of foodgrains but not in non-cereals
7. Conventional view: food security debatemainly
on farm sector. Findings: traders and retailers play
big role.
8. Earlier view: Retail margins are increasing over
time and cause for inflation. Findings: Retail
margins have not increased

29. Institutions
New institutional approaches are needed to help
the farmers e.g. formation of producer groups.
One of the important policy issue is how to link
small farmers to high value agriculture.
There has been diversification of Indian
agriculture away from foodgrains to pulses, edible
oils and to high value products like vegetables,
fruits, milk, eggs, fish and meat products.
Although foodgrains are important, future sources
of growth and incomes are going to come from
high value agriculture.
Being perishable, it needs fast moving
infrastructure and institutions.

30. Targeted Growth Rates for 11th Plan
GDP Share% Growth Rate%
Foodgrains 26 2.3
Oilseeds 7 4.0
Other crops 15 3.0
Crop Sector 48 2.7
Horticulture 19 5.0
Livestock 25 6.0
Fisheries 4 6.0
Forestry 4 0.0
Total Sector 100.0 4.1

31. Small Farmers and Information
Indian private companies and NGOs are global
leaders in providing information to farmers, as a
spinoff from India’s meteoric rise as a world leader in
ICTs.
E-Choupal (Internet Kiosks) has expanded access
to internet in rural areas. Up to 6,400 internet kiosks
were set up between 2000 and 2007 by ITC Limited,
one of the largest agricultural exporters.
It reaches about 4 million farmers growing a range of
crops - soybean, coffee, wheat, rice, pulses or
shrimp - in over 40,000 villages.
They get free information in their language about
local and global market prices, weather forecasts,
farming practices and crop insurance.
It serves as a purchase centre, cutting marketing costs
and allowing farmers to obtain a bigger farm price.

32. Small Farmers and Information
The M. S. Swaminathan Research Foundation
established Knowledge Centers in Pondicherry.
The women self-help groups use the centers’
computers to manage their business accounts and
coordinate their activities, using video links with the
other villages.
Mobile phone coverage in India is expanding at
breakneck speed.
By linking communication technologies to market
exchanges in commercial centers, even small farmers
can overcome the enormous informational
asymmetries that limit their bargaining power in
traditional supply chains.
The revolution in mobile phones is helping the small
farmers to get information about crop prices and input
prices and other related information on agriculture.

33. Special Programmes for Small and Farmers
National Commission for Enterprises in the
Unorganized sector (NCEUS) has advocated a special
programme for marginal and small farmers.
Objectives are: (1) to improve income prospects; (2) to
improve the skill base; (3) provide income earning
opportunities in the non-farm sector; (4) to ensure the
needs of small farmers and adequately reflected in
other agricultural and development programmes for
livelihood security
Principal activities proposed under the special
programme are
(a) Promotion of group approach to small farmers: It
proposes setting up of Marginal and Small farmers’
development society (MSFDS) for the promotion,
capacity building and coordination of development of

34. Special programme for small farmers
Marginal and small farmrers’ groupsI
(b) Enabling gender access to institutional credit
(c) Training and capacity building
(d) Support for strengthening and creation of non-farm
activities
(e) Gender focused activities
(f) Planning for development of marginal and small
farmers
It also advocates implementation mechanism and
financial resources, M&E
Basically, the commission advocates that there is a
need to special focus on small and marginal farmers
for growth and equity in Indian agriculture

35. Rural non-farm sector
Poverty can not be removed with 55% of workers
in agri. Need to promote rural non-farm sector.
India currently produces about 50 million tonnes of fruits
and 90 million tonnes of vegetables. Only 2% of these fruits
and vegetables are processed as against 23% in China,
78% in Phillippines, 83% in Malaysia.
Half of those engaged in agriculture are still illiterate and
just 5% have completed higher secondary educ.
Even in 2004-05, around 60% of rural male workers
and 85% of rural female workers are either
illiterate or have been educated upto primary level.
In other words, education and skills are constraints
India can learn from China on rural transformation.

36. India and China: Manufacturing
India leap frogged from agriculture to services
without focusing on manufacturing sector.
The share of employment in manufacturing in
Malaysia is 50%, in Korea 62%, in China 31%.
On the other hand, the share of employment in
manufacturing in India is only 12%
Diversification towards rural non-form sector in
China is one of the important factors
responsible for rural poverty reduction
(poverty 3%). This was partly due to
agricultural productivity.

37. Lessons from Indian Experience
Green Revolution and Small Farms
Food Grain Management
Dairy Cooperatives
Water management in Gujarat
Self Help groups and group approach
Rights based approach
Learning from others: India can also learn from
countries like China, Brazil. India can learn from
China on rural transformation and infrastructure.
It can also learn from Brazil on agricultual
research (like EMBRAPA) and zero hunger
program

38. Conclusions
This paper examines the role and challenges of small
holding agriculture.
India has done well in attainting food grains self sufficiency
since the days of green revolution.
Difference between green revolution period and the
expected ‘second green revolution’ is that (a) globalization
challenges, volatility in prices (b) shrinking farm size (c)
rain fed farming challenges (d) environmental stress and
climate change
Small farmers are certainly going to remain in India the
next decade or more.
Way ahead: Main goals are (a) raising agri. growth
productivity rise, move towards high value agri. and rural
non-farm and maintain food security (b) shared growth
(small farmers, lagging regions, women etc. (c)
sustainable growth

39. Conclusions
There are six deficits in agriculture. These are: (a)
investment, credit, infrastructure (b) research,
extension (technology) (c) Market (d)
diversification (e) institutions (f) education/skill
Food security has been an overriding priority in India’
since the 1960s. The focus paid off with attaining food
grain security and poverty reduction.
The strategy concentrated on rice and wheat in
irrigated areas.
The future growth will need to rely on a dual strategy
of diversification into non-cereal high value crops and
rainfed areas with focus on small farms.
Basically investment and institution strategies have to
focus on small and marginal farmers, women farmers,
rainfed areas, environmental stress, rural non-farm
sector for sustainable agri-transformation.

40. Conclusions
Small farmers have difficulties to access inputs, credit
and extension or to market their output.
Investment in infrastructure like roads, irrigation,
communications etc. can benefit small farmers
Many institutional innovations are coming up to link
small farmers to high value agriculture and help
increasing their productivity and marketing (contracting
farming, dairy sector, cooperative marketing).
ICT revolution in India is also helping small farmers with
information, input supplies and marketing
Risk mitigation strategies are needed for small farms.
There is a recognition now that small farmers need a
special focus in order to have growth and equity in
agriculture and food security.

41. Conclusion
Elephant (India) can learn from Dragon (China) on
rural transformation particularly rural industrialization.
Small farmers need agri. Diversification and income
from rural non-farm sector.
Need for massive increase in investments for
agriculture and rural infrastructure by simultaneously
improving the institutions for better delivery systems
Govt. is thinking of big push to health and education
in 12th Plan
Such a big push is needed for agriculture sector for
food security, livelihoods, sustainability and
transformation.

42. THANK YOU