At the 74th Annual Conference of Indian Society of Agricultural Economics, Dr P K Joshi, Director of the IFPRI South Asia Office, gave a keynote address titled ”Has Indian Agriculture Become Crowded and Risky? Status, Implications and the Way Forward”.

1. 74 Annual Conference
Indian Society of Agricultural Economics
Dr Babasaheb Ambedkar Marathwada University
Aurangabad
18-20 Dec 2014
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2. Has Indian Agriculture Become Crowded and Risky?
Status, Implications and the Way Forward
P K Joshi
International Food Policy Research Institute
IFPRI-South Asia Regional Office, NASC Complex, Pusa
New Delhi 110 012 India
E-mail: p.joshi@cgiar.org
Web: www.ifpri.org
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3. International Food Policy Research Institute
Context
 Steady transformation from subsistence to semi-
commercial and commercial mode
 Threat to Indian agriculture
 Indebtedness, climate change, and uncertain global environment
 Declining share of agriculture in GDP and high
dependency in agriculture
 Concern of growing number of landless laborers and smallholders
 Global efforts
 “Year of Family Farms”
 Provide livelihood to 2.5 billion people (84% smallholders)
 87% of world’s smallholders are in Asia and the Pacific
 2/3 are in Indian and China and contribute 50% of output
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4. International Food Policy Research Institute
Small is Beautiful (?) but has become poor
 Why “small is Beautiful”
 Efficiency, land ownership, family labor
 Is “small still beautiful”?
 Disadvantage of economies of scale, inadequate access
to information, services, markets
 Efficiency advantage is evaporating
 Rise in per capita income
 Migration of workers from agriculture
 Rise in rural wages
 Cheaper capital compared to land and labor
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5. International Food Policy Research Institute
Outline
Crowding of Indian agriculture
Risk in Indian agriculture
Tale of two most crowded and risky states
Opportunities and way forward
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6. I
Crowding of Indian agriculture
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7. International Food Policy Research Institute
Nature and status of land holdings
0
100
200
Laborers Holdings
53
88
144 138
Crowding of Agriculture, m
1980-81 20010-11
0
50
100
Holdings Area
85
45
14
44
1 11
Holdings & operated area, %
Small Medium large
 Doubled the number of landless
laborers and land owners
 141 m in 1980/81 to 282 m in 2010/11
 Landless: 53 m to 144
 Land owners: 88 m to 138 m
 Operated area fell by 4 m ha
 164 m ha in 1980/81 to 160 m ha in 2010/11
 Urbanization, real estate, land degradation
 Smallholders increased by 70%
 66 m in 1980/81 to 117 m in 2010/11
 85% share in 2010/11; 74% in 1980/81
 Control 45% area; 22% in 1980/81
 63% are marginal farmers; control 22% land
 Medium & large farmers
 26% in 1980/81 to 15% in 2010/11
 Control 55% operated area
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8. International Food Policy Research Institute
Size of land holdings
 Projections for 2020:
 155 million smallholdings who will control about 51% operated area
 90 million if 40% leave agriculture, especially from smallholding category
 Average size of holdings
 1.84 ha in 1980/81 to 1.15 ha
 Average size of holding of 85% holdings is 0.61 ha
 0.39 ha of 63% holdings (marginal, part of smallholding category)
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9. International Food Policy Research Institute
Smallholder agriculture
 Large variation in landholdings and operated
area by smallholders
 Smallholders are concentrated in areas with low
urbanization, high poverty and more risky areas
 Bihar, Daman & Diu, J&K, Tripura and WB have
95% smallholders
 Share in operated area ranged between 76 and 81%
 2% of medium & large farmers in Kerala and 3% in
Bihar each control 24% operated area
 Punjab, Arunachal Pradesh and Nagaland have
<35% smallholdings
 Size of smallholders is <0.7 ha in >50% states
 Size of smallholders is 0.17 ha in Kerala and 0.31 ha
in Bihar
 Punjab and Goa: share of smallholders declining 9

10. International Food Policy Research Institute
Smallholders: district-level mapping
 Smallholders’ are expanding and
their operated area declining
 77% districts have more than 70%
smallholders
 Only 24% districts have more than 70%
operated area
 Disparities are widening
 India: 0.21 in 1995 and 0.31 in 2010-11
 High disparities in smallholder
dominated areas
 Bihar: 0.53 in 1995 to 0.77 in 2010-11
 UP: 0.46 in 2095 to 0.55 in 2010-11
 WB: 0.51 in 1995 to 0.62 in 2010-11
 These will have socio-economic
and political
 Calls for differentiated policies
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2001
2001
2011
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11. International Food Policy Research Institute
Implications of crowded agriculture
 Soil and water health
 Markets and value chains
 Access to institutional
finance
 Extension services
 Food basket
 Rural poverty
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12. International Food Policy Research Institute
1. Soil and water health
 Excessive and misuse of soil and water resources adversely affect
agricultural production
 Absence of appropriate policies and institutional arrangements
 Problem of soil erosion, soil salinity, and waterlogging
 Imbalance use of organic and inorganic fertilizers
 180 kg/ha and 4.88 t/ha FYM (per fertilized area)
 26% fall in FYM during last 15 years
 Negligible of micro-nutrients use(deficiency of Zn, Fe, Mn, B)
 Partial factor productivity fell: 48 kg food grain/kg NPK in 1970/71 to 10
kg food grains/Kg NPK in 2007/08
 Smallholders subsidy: Rs 1260/holding; Rs 17,646/holding to
large farmers
 Fall in water table, nitrate, fluoride and arsenic contamination
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13. International Food Policy Research Institute
2. Markets and value chains
 Transforming marketing system
 Developing rural-urban value chains
 Product differentiated at food industry
 Organizational changes
 Emergence of organized retail
 Policy changes to attract private sector
 Problems in agri-marketing
 Relatively lower marketable surplus and
low bargaining power
 Higher transactions costs (no means of
transport)
 Inaccessibility of cold storage facilities
(distress sale)
 Greater price variability, especially
perishable commodities
 Underdeveloped markets in smallholder
dominated areas
Commodity 1999-00 2011-12
Rice 62 77
Wheat 57 70
Maize 67 83
Tur 64 82
Gram 72 85
Cotton 84 98
Onion 98 75
Potato 48 77
13
Marketed surplus, %

14. International Food Policy Research Institute
Agricultural markets and smallholders
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3. Institutional finance
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Per holding Per ha
3976
6572
16718
4776
41838
2450
Institutional Credit
Small Medium Large
 Institutional credit increased manifold
 Rs 53 b in 2000/01
 Rs 6074 b in 2012/13
 Yet, 40% rural households depend on
informal source
 Limited access to smallholders
 Smallholders received 55% of total credit in
2006/07; 70% short-term credit
 Meager credit: Rs 3976/holding
 Demand side constraints
 More labor-intensive activities; financial illiteracy.
 Supply side constraints
 High transaction cost of banks
 Procedural hassles.
 Role of KCC and RuPay Debit card 15

16. International Food Policy Research Institute
4. Extension services
 Effectiveness and efficiency of public sector extension was under
scrutiny
 Unable to rise the challenge of organizational goals and objectives
 Unequal and unsatisfactory performance in accessing the information
 Only very few(28%) used any kind of information; a large
number (72%) left, especially smallholders (Negi et al 2014)
 Public sector was the main source (48%)
 Better-offs and irrigated farms were most benefitted
 Timely and quality service was lacking (49-51%)
 High returns from those use got and used the information
 12% compared to those did not
 Rs 1140/ha additional returns compared to Rs 186/ha investment in R&E
 Role of ICT, using mobiles for information delivery
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17. International Food Policy Research Institute
5. Food basket
Item Unit Small Large
Calories Kcl/capita/
day 2194 2492
Protein g/capita/day
60 70
Fat g/capita/day
45 65
Calcium g/capita/day
625 961
Iron Mg/capita/
day 37 47
β carotene μg/capita/day
1700 2159
Zinc Mg/capita/
day 9.9 10.2
 Food basket is influenced by
production, purchasing power
and access to PDS
 Smallholders share 50%
expenditure in food
 40% large farmers
 Smallholders consume less
quantity than large farmers
 Consume more of rice, while large
farmers consume more of wheat;
lead to imbalance diet
 Health issues (anemia, stunting,
etc.)
 Agriculture-nutrition linkages
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18. International Food Policy Research Institute
Global Hunger Index (2014): Country performance by severity
India ranked 55th out of 76 countries w.r.t GHI
>17% undernourished
>1/3 underweight children
120/128 in underweight children
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19. International Food Policy Research Institute
Rural poverty
Poverty
Low (<30%) High (>30%)
Smallholders
Low(<85%
Gujarat, Haryana, Karnataka,
Meghalaya, Maharashtra, Nagaland,
Punjab, Rajasthan, Sikkim
(22% smallholders & 21% poverty)
Arunachal Pradesh, Jharkhand, Madhya
Pradesh, Manipur, Chhattisgarh
(10% smallholders and 17% poverty)
High(>85%)
Andhra Pradesh, Goa, Himachal
Pradesh, Jammu & Kashmir,
Mizoram, Tamil Nadu, Tripura and
Uttaranchal
(25% smallholders and 11% poverty)
Assam, Bihar, Odisha, Uttar Pradesh,
West Bengal
(43% smallholders and 51% poverty)
• Low income generating opportunities, high dependency in agriculture and low
agricultural productivity
• Poor infrastructure and weak institutional arrangements
• Poor Social development Indicators (Rural literacy, toilets, urbanization, HDI)
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20. II
Climate risk to Indian agriculture
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21. International Food Policy Research Institute
Risk in agriculture: climate risk?
 Four popular risks in agriculture
 Production risks
 Markets and price risks
 Government policies risks
 Climatic risks
 Climate risk is becoming a major challenge in agriculture and the
smallholders have least capacity to overcome consequences
 Frequent droughts, floods, shift in rainfall patterns, rise/fall in temperature, frosts
 Pose a serious threat to food & nutritional security
 Impact of climate change
 Vulnerability
 Agricultural production
 Water resources and health
 Food prices and poverty
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22. International Food Policy Research Institute
1. Impact on vulnerability
 Vulnerable to climate change
 Very high and high category of vulnerability
 Rajasthan, Uttar Pradesh, Madhya Pradesh, Bihar, Gujarat, Karnataka, Maharashtra
 Rise in temperature, decrease in July rainfall, increase in drought years
 Madhya Pradesh, Karnataka
 Decrease in July rainfall and rise in minimum temperature and drought year
 Bihar and Maharashtra
 Vulnerability compounded by poverty in Bihar
 Vulnerability increases and adaptation capacity decreases from
west to east
 Highest adaptive capacity in Punjab and Haryana
 High adaptation due to irrigation, ability to use inputs,
electrification and better road network 22

23. International Food Policy Research Institute
2. Impact on agricultural production
 10-40 percent loss in crop production due to rise in
temperature (Aggarwal et al 2009; Nelson et al 2010; Knox et al 2012)
 4-20 percent yield loss of rice under irrigated condition
 35-50 percent yield loss under rainfed condition by 2030
 30-40 percent loss in agricultural production in 2020 (Cline
2007)
 Global warming will affect milk production by 1.6 mt by
2020 and more than 15 mt by 2050 (Upaddhyaya et al 2009)
 Capture and inland fisheries may be adversely affected
(INCCA 2010 and Easterling et al 2007)
 Food security in smallholder dominated areas will be much
more that other areas.
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24. International Food Policy Research Institute
3. Impact on prices and poverty
0
5
10
15
20
25
Rice
Maize
Sorghum
Millet
Pigeonpea
Groundnut
Cotton
23
16
13 13
10
5 5
Rise in prices due to 10%
drought
Rise in prices
 Climate change affects food production and raise
their prices and make people more poor.
 Recent price spikes negatively affected about 77% in
the world
 Prices of major rainy season crops will increase due
to drought
 Demand will go down due to rise in prices
 Rice by 5.5%; and 2-4% for other commodities
 India might import 15 million tons of rice due to 20%
drought in 2020
 Affect global prices significantly
 Adverse effects on poverty
 Globally, 600 million smallholders would face acute
malnourishment by 2080 due to climate change
 Adversely affect government efforts to increase
agricultural production and ensure food security
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Source: Kumar, et al 2013

25. III
A tale of two most crowded and risky states
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26. International Food Policy Research Institute
Crowded and risky states: Bihar and Odisha
 Most backward states with high poverty (43% Bihar and 46% in Odisha)
 Low urbanization (11% in Bihar and 17% in Odisha)
 97% holdings in Bihar and 92% holdings in Odisha are smallholders
 Occupy 76% area in Bihar and 70% in Odisha
 Average size of smallholders is 0.3 ha in Bihar and 0.8 ha in Odisha
 Agriculture is subsistence, laggard and highly risky
 Concurrent floods, droughts and numerous pests and diseases
 Crop sector contributes 58% in Bihar and 70% in Odisha
 Yield gaps are very high (131 to 300% of rice in Bihar)
 Low cropping intensity with large rice-fallow lands
 1/3 of total 13 million ha rice-fallow lands
 Meager investment in agricultural research and extension
 < Rs 10 per thousand population
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27. International Food Policy Research Institute
Two crowded and risky states ……
 Weak financing and marketing institutions
 Markets are unregulated
 Low electrification
 52% villages electrified in Bihar and 60% in Odisha (81% national average)
 HVCs are important source of value of agricultural output
 60% in Bihar and 50% in Odisha
 Opportunities in developing value chains and agro-processing
 Sudha dairy in Bihar; and Udyan fresh fruits & vegetables in Odisha
 Kaushalandra Foundation in Bihar and e-Kuteer in Odisha
 Need for reform agriculture sector
 Invest in agriculture, bridge yield gaps, promote diversification, strengthen
agricultural markets,
 Improve infrastructure and
 Create huge employment opportunities outside agriculture sector
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28. IV
Opportunities for smallholders and
the way forward
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29. International Food Policy Research Institute
Opportunities (move-up or move-out concept)
Increase production and
reduce yield gaps
Promote high-value agriculture
Strengthen agro-processing
Pro-smallholder institutions
Huge job opportunities outside
agriculture
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30. International Food Policy Research Institute
The way forward
 Land and labor reform
 Change ceiling laws; land lease system; and simple labor laws
 Market reforms
 Develop markets and institutions; adopt cluster approach; minimize risks
 Reform agricultural extension system
 New cadre of agri-professionals
 Minimize agricultural risks
 Climate smart agriculture, agriculture insurance
 Pro-smallholder agricultural research agenda
 Farm mechanization, energy, and climate smart agriculture
 Convergent innovation
 Converse policies, programs, technologies, markets, social mobilization
 Non-farm employment opportunities
 Reduce dependency in agriculture by generating off-farm employment opportunities
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31. International Food Policy Research Institute
Thank you
Small is beautiful but has become poor and vulnerable
Tune technologies, policies, and institutions to reducing
crowding and risk in agriculture
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