Pingali - India Agricultural Renaissance

Agricultural Renaissance and the Pursuit of
Inclusive Development in 21st Century India

Ajit Kumar Sinha Memorial Lecture to the 94th Annual Conference of the
Indian Economics Association

Dr. Prabhu Pingali, Deputy Director
& Mumukshu Patel, Program Officer
Agricultural Development

December 28, 2011
*The views expressed here are personal and do not reflect the official position of the Bill and Melinda Gates Foundation.

Inclusive growth: emphasizes both the
pace and pattern of growth
 Inclusive growth and development Inclusive growth refers both to the
pace and pattern of growth

• Strong focus on economic growth
 The role of agriculture: key to as a necessary condition for
poverty reduction
ensure inclusive growth in India in • Long-term perspective, concerned
with sustenance of growth
the 21st Century • Broad based, across sectors
− Role in GDP • Include a large part of the
country’s labor force
• Emphasis on productive
− Share of employment employment, not redistribution of
income
− Links with new markets • Aligned with the absolute
definition of pro-poor growth
• Fuelled by market-driven sources
with government providing a
facilitating function

Source: World Bank (2009), “What is inclusive growth?’; also, Commission on Growth and Development, Strategies for Sustained Growth and
Inclusive Development; Thorat (2010) “How Socially Inclusive has growth been?”; Planning Commission (2011), Faster, Sustainable and More
Inclusive Growth

December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 2

The Green Revolution: 20th Century India's
inclusive growth experience
 Agricultural productivity
growth, unleashed by the
Green Revolution, brought
some of the most dramatic
poverty reduction in India
resulting in more inclusive
development
 This poverty reduction
occurred – principally
through Ag GDP growth –
since India underwent the
‘Hindu rate of growth’ during
those decades

Source: World Bank (2008), World Development Report; national rural poverty line data


But, we could have done better
China and India: A comparative perspective ‘on pace’

% population in extreme
Poverty Rate
 Poverty
100
 Indian poverty rates have not 84

poverty
80
fallen as quickly as China: in
1981 China had 835 million 60
59.8 41.6
people living in extreme poverty 40
(compared to 420 million in
20
India), in 2005 that number was 15.9
down to 208 million (for India it 0
stood at 456 million - an 1981 1984 1987 1990 1993 1996 1999 2002 2005
absolute increase of 36 China India
million).

Cereal Yields
 Productivity
6000
 Cereal yield gains are 5000
5450
stagnating in India and kilos/hectare 4000
much lower than in China.
3000
Chinese yields are far above 1211
the world average and rapidly 2000
2572
converging with Western 1000
Europe and the US. 0 947
1961 1971 1981 1991 2001 2009

China India
Source: World Bank, PovCal database; FAO


Pattern of India’s development
Concentration of poverty in states Per capita incomes – a comparative lens on
‘pattern’

Brazil
Chandigarh
China
Delhi
Maharashtra
Punjab
Gujarat
Tamil Nadu
Kerala
Karnataka
India
Andra Pradesh
Uttarkhand
West Bengal
Orissa
Rajasthan
Assam
Uttar Pradesh
Madhya Pradesh
Rwanda
Bihar
Ethiopia
Source: Planning Commission, Data Tables; Economist Intelligence Unit; IMF, World Economic Outlook $0 $5,000 $10,000 $15,000


Pattern of development: an alternative view

Source: NASA, Visible Earth Catalog


Agricultural Renaissance in India: the pursuit
of inclusive development
 A strong focus on small-holder productivity growth is
critical to ensure inclusive development in India

• To achieve this goal, we need a two-pronged agricultural
development strategy that:

1. Links smallholders to supply chains to feed the growing urban
middle class
2. Increases small-holder agricultural productivity in lagging
regions


Linking smallholders to supermarkets to
feed the growing Indian middle class
 Leveraging the power of markets for inclusive
development

© 2011 Bill & Melinda Gates Foundation | 8

Share of Urban and Rural Income
(2005)

Source: World Bank, Perspectives on Indian Poverty and ICP


Smallholders are taking advantage of new
opportunities
Dairy
Hybrid feed maize
Fruits and vegetables


The Supermarket Reality
Supermarket Sales- Top 5 Retailers
(Account of ¾ share)
2000

1800

1600 1717

1400
1290
US $ million

1200
1223
1000
967
800
513
600
275
400
170
200 86

0
2003 2004 2005 2006 2007 2008 2009 2010
Futures Group* Reliance RPG (Spencer's) Vishal (Megamart) Aditya Birla (More)

Source: Reardon and Minten (2011)


FDI in retail: role in inclusive growth
What have been the lessons
of FDI in other sectors in the
Indian economy?

Name Sales We already have joint
 Metro Cash&Carry 281 mn multinational investment in
(Germany) the retail sector: has it hurt
 Bharti (Walmart) 116 mn the prospect of inclusive
growth?
 Tata (Tesco UK) 103 mn
Source: Reardon and Minten (2011)


How can policy facilitate this integration for
inclusive growth?
 Policies need to overcome the ‘scale mis-match’ by
reducing the costs of smallholder participation in
markets
• Various contractual and/or out-grower arrangements can help
overcome the ‘scale mismatch’
 Policies should make information access cheaper
and easier, and rules clearer
 Policies should aim to enhance capacity to meet
quality and safety standards
 Policies should help manage risk and provide credit
support


Back to the future: jumpstarting
‘Back to the future’: Increasing Agricultural Productivity in
agricultural for Inclusivein lagging regions
Lagging Regions growth growth

Emerging opportunities and contexts

© 2011 Bill & Melinda Gates Foundation | 14

Opportunities for jump-starting growth in
lagging regions for inclusive development
 We see new opportunities in catalyzing agricultural
growth in lagging regions
• Private Sector investment in Indian agriculture is increasing
rapidly
• Biotechnology offers exciting opportunities, much like high
yielding varieties during the Green Revolution
• Information revolution: mobile phones and other ICT
developments offer unique advantages for agriculture,
particularly in extension services


Role of the private sector in Ag R&D
The changing locus of Ag R&D in India
Share of Ag R&D Investments: '94-'95
16.6
India R&D Ag Investments
800

688.3
700

600
2005 USD mn

500 83.4

400
Share of Ag R&D Investments: '08-'09
300 271.8 251.3
200 30.9

100 54
0
1994-1995 2008-2009
Private Public
69.1

Source: Carl Pray et al, Private R&D in Agriculture in South Asia (forthcoming) Private Public


Private sector Ag investment in India: by
industry and origin
2008-09*  Private sector is
S No Industry
1984-85# 1994-95# Total Indian
USD (2005, mn)
MNCs
investing in a
Seed and variety of
1 Biotechnology 1.3 4.9 88.6 49.3 39.3
industry areas
2 Pesticides 9 17 35.7 24.4 11.3

3 Fertilizers# 6.8 6.7 7.9 4.9 0.0
 The MNCs are
Agricultural playing a major
4 Machinery 3.7 6.5 40.5 20.5 20.0
Biofertilizers & role
5 Biopesticides 0 0 1.3 1.3 0.0
 Private sector Ag
6 Poultry and feeds - 3.5 7.8 7.8 0.0

7 Animal Health 0.9 2.7 18.6 3.7 14.9
investments in
8 Sugar 0.9 2.5 10.8 10.8 0.0
progressive
9 Biofuels 0 0 13.1 13.1 0.0
states needs to
Food, Beverages & be leveraged for
10 Plantations 1.3 10.3 27 16.2 10.7
lagging regions
Total 23.9 54.1 251.3 155.0 96.2
Source: Pray (ibid)


Biotechnology: a revolution that’s already
begun globally


Will India lead or be left behind
 Should policy enable or retard India’s ability to use
biotechnology to help lagging regions accelerate their
growth?
 GMOs can help overcome pressing social challenges:
example of Golden Rice
 Biotech is not all GMOs—MAB selection
 Ex-ante estimates of financial benefits of speeding technology
development using MAB in India for rice has an NPV of $447
million
 Stress tolerant varieties: Swarna sub-1

Yield advantage of Sub1 version is
typically double, or around 1-2 t/ha
under submergence


The role of public sector in ensuring
biotech is leveraged aptly for inclusive
growth
 Seek collaboration and partnership with the private sector

 Concentrate on areas under-researched by the private
sector

 Establish IPR and bio-safety regulations

 Generate public goods and human resource capacity

 Explore new mechanisms for international collaboration


Harnessing the power of information: mobile
phones and ICT for agricultural development

Source: TRAI; PWC (2011)


New contexts for Agricultural
Development in India
 With rapid economic growth and urbanization, largely following
liberalization in the 1990s, we see several different contexts for
agricultural development in India

 Two key contexts that need to be understood more are:
• Rising wages
• Feminization of agriculture


Labor wages have increased rapidly

 Much of the employment growth is in the non-farm
sectors, which is creating a net pull away from
agricultural labor and driving up wage rates.
Source: Government of India


Dealing with rising labor scarcity
Short to medium term:
− Small scale mechanization
− Herbicide use & minimum tillage systems
− Labor saving management practices
− Changing contractual arrangements for leasing land

Longer term:
− Changes in the organization of production
− Changes in farming systems – towards lower labor intensity
− Reducing cropping intensities on marginal lands

December 28, 2011 © 2010 Bill & Melinda Gates Foundation |

Increasing feminization of Indian agriculture:
‘50 percent solution’ for inclusive development
 The symbolic (and real) face of the Indian small-holder has been the face of
a woman farmer
 Feminization of Indian agriculture is growing today, albeit in a different
context
• Migration from rural to urban areas is largely a story of men
• Women are increasing their role in farm management, entrepreneurship and have a greater voice
 Indian policy needs to leverage this development for inclusion


Key trends relevant to agricultural development in lagging regions

Description Implications for lagging regions’ agriculture

Small and • Operational land holdings in East Asia are small • Greater number of rural people relying on
fragmented and fragmented (Avg. size in Bihar is 0.75 ha) agricultural income from smaller plots of land
holdings • High incidences of landlessness (~32% of
landless live in our eastern lagging regions)

• Lagging regions adopted little of Green • Farmers cannot access useful information
Revolution’s technology advances about new technologies or markets
Water Scarcity
• They are behind the rest of India in crop • Farmers continue unsustainable and low-
productivity due to limited usage inputs yield farming practices

• A significant amount of cultivated land in East • Farmers are exposed to farm losses and
Climate-change India is vulnerable to flooding and droughts income fluctuations
• Food supply is often at risk

• Extension services offered at the central and • Farmers are not utilizing new technologies to
Weak extension state government levels are ineffective at improve crop yield
services delivery informing and training farmers • Outputs from research and development are
• Existing technologies are not delivered to not being adopted
farmers

• R&D in agriculture has declined since the Green • Farmers are unable to utilize new innovative
Infrastructure Revolution technologies to improve their crop yields
• SAUs do not have enough funding

Source: “Food Processing in Bihar,” Government of Bihar; “Orissa Agriculture Statistics 2009.”; Department of Agriculture and
Cooperation, GOI. “Regional disparities in electrification of India – do geographic factors matter?” Center for Energy Policy and
Economics, Swiss Federal Institutes of Technology, Nov 2006. Map created based on 1999-2000 NSS data. 26

Policy agenda for lagging regions and
inclusive development
 Invest in infrastructure to link lagging regions with
the mainstream economy
 Encourage smallholders to meet the rising food
and feed demand in the rapidly growing regions
 Promote crop neutral intensification
 Pro-actively connect agriculture and nutrition,
using new technologies
 Focus on education, health and safety-net
programs for the ultra-poor
 Emphasize the importance of girls’ education and
empower women


Conclusions
 The agricultural sector is key for India’s inclusive development – for
better pace and pattern of growth
• Small-holder productivity growth and links to emerging markets –
like organized food retail – will be critical
 The private sector and markets can and must play a major role in
catalyzing agricultural productivity
 New technologies need to be leveraged, particularly biotech, to better
the prospects of lagging regions
 The feminization of Indian agriculture is an immense opportunity
 Indian government development strategy should facilitate an
Agricultural Renaissance, this requires:
• Smart investments: particularly in Ag R&D
• Smart policies: to link small-holders to new markets, apt
policies for biotech, streamlined rules and regulations for
private sector in the Ag sector among others


Thank you!


Pingali - India Agricultural Renaissance

More Related Content

Viewers also liked

Similar to Pingali - India Agricultural Renaissance

Pingali - India Agricultural Renaissance