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GS Paper: Agriculture and related issues

  • The price of food must figure in the policy

    Context

    The essential challenge of public policy for agriculture- the high price of food remains unsolved.

    Implications of high food prices

    • Increases poverty: A higher price of food increases poverty, especially as the rice and wheat supplied through the PDS constitute only a part of the total expenditure on food of the average Indian household.
    • Reduces the expenditure on other item: For the household, a high price of food crowds out expenditure on other items ranging from health and education to non-agricultural goods.
    • This prevents the market for non-agricultural goods from expanding.
    • This was one of the first discoveries in economics, made by the English economist David Ricardo about two centuries ago.

    Rising food prices in India

    • An indication of the elevation of the price of food in an economy is the share of food in a household’s budget.
    • In a global comparison we would find that this share is very large for India.
    • Data from the U.S. Department of Agriculture (2016) show that this share ranges from over 30% for India to less than 10% for the U.S. and the U.K.
    • This is in line with Ricardo’s understanding of how economies progress i.e., as food gets cheaper, growth in the non-agricultural economy is stimulated.
    • Agricultural policy in India has remained quite unaccountable in the face of a rising relative price of food.
    • Impact on manufacturing sector: Arguably, the high price of food has been a factor in the disappointing lack of expansion of the manufacturing sector in India despite repeated efforts to bring it about.

    Changes needed in agricultural policy

    • Both from the point of view of food security for low-income households and the dynamism of the non-agricultural sector, agricultural policy cannot ignore the price at which food is produced.
    • Focus on improving the yield: The fact of low agricultural yield in India by comparison with the rest of the world has been known for long, and little is done about it.
    • Management of soil nutrients and moisture: A superior management of soil nutrients and moisture, assured water supply and knowledge inputs made available via an extension service would be crucial.
    • Raising yields will ensure profitability without raising producer prices, which will inflate the food subsidy bill.

    How government intervention created problems

    • Given the importance of food for our survival, this justifies public intervention in agriculture.
    • The issue is the design and scale of this intervention.
    • In the mid-sixties, when India was facing food shortage that could not be solved through trade, a concerted effort was made to raise domestic agricultural production.
    • Profitability through MSP: It introduced the strategy of ensuring farm profitability though favourable prices assured by the state.
    • Further, it entrenched the belief that it is the farmer’s right to have the state purchase as much grain as the farmer wishes to sell to the state agency.
    • Created grain stockpile: This has resulted in grain stockpiles far greater than the officially announced buffer-stocking norm.
    • These stocks have often rotted, resulting in deadweight loss, paid for by the public though taxes or public borrowing.
    • Supply more than demand: Finally, with all costs of production reimbursable and all of output finding an assured outlet, supply has outstripped demand. 
    • Damage to natural environment: This has led to unimaginable pressure on the natural environment, especially water supply.

    Consider the question “India faces the challenge of high food prices. Examine the ways in which high food prices affects the overall economy. How far is the India’s agriculture policy responsible for the problem?”

    Conclusion

    India needs an agricultural policy that ensures that farming is profitable but this cannot be at the cost of a high price of food. The ‘food problem’ should no longer be seen only in terms of the availability of food from domestic sources.

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  • What true MSP means

    Context

    Amid the demand for a guarantee of MSP, many commentators fail to understand the true spirit of the demand for a legal MSP.

    How demand for legal backing for MSP is misinterpreted?

    • Mandatory enforcement of price above MSP: The demand has been interpreted as a mandatory enforcement of trade in agricultural produce, including private trade to be necessarily at or above the MSP for that crop.
    • Nationalisation of agricultural trade: Another interpretation is the nationalisation of agricultural trade whereby the government promises to buy all the crop produced at MSP.
    • Commentators have been using these two interpretations to project large estimates of government expenditure needed to implement.
    • They fail to understand the true spirit of the demand for a legal MSP.

    Current nature of MSP

    • It is not an income support program: By definition MSP is not an income support programme.
    • Intervention to stabilise prices: It is designed to be used as government intervention to stabilise prices, to provide remunerative prices to farmers.
    • Public procurement program to meet requirements of NFSA: Currently, it is no more than a public procurement programme to meet the requirements of the National Food Security Act (NFSA).
    • Only rice and wheat procured: As against the official announcement of MSP for 23 crops, only two, rice and wheat are procured as these are distributed in NFSA.

    Larger context of demand for legal backing to MSP

    • Droughts and declining commodity prices: In addition to the twin droughts of 2014 and 2015, farmers have also suffered from declining commodity prices since 2014.
    • Impact of demonetisation and GST: The twin shocks of demonetisation and hurried rollout of GST, crippled the rural economy, primarily the non-farm sector, but also agriculture.
    • Impact of pandemic: The slowdown in the economy after 2016-17 followed by the pandemic has ensured that the situation remains precarious for majority of the farmers.
    • Increased input prices: Higher input prices for diesel, electricity and fertilisers have only contributed to the misery.
    • In this context, the demand for ensuring remunerative prices is only a reiteration of the promise by successive governments to implement the Swaminathan Committee report.

    What should be the true nature of MSP?

    • Intervene to stabilise price: A true MSP requires the government to intervene whenever market prices fall below a pre-defined level, primarily in case of excess production and oversupply or a price collapse due to international factors.
    • It does not require the government to buy all the produce but only to the extent that creates upward price pressures in the market to stabilise prices at the MSP level.

    Way forward

    • Mechanism for market intervention: What is needed is a mechanism to monitor the prices.
    • While such a mechanism already exists, a policy for requisite market intervention is missing.
    • Use MSP as incentive to achieve nutritional security and reduce import dependence: MSP can also be an incentive price for many of the crops which are desirable for nutritional security such as coarse cereals, and also for pulses and edible oils for which we are dependent on imports. 
    • Include pulses, edible oil and millets in PDS: Despite repeated demands from food activists, there has not been any progress in including pulses, edible oils and millets in PDS.
    • A guaranteed MSP then is nothing more than restoring the true spirit and functions of MSP, applicable to a broad range of crops and all sections of farmers.

    Issues

    • The current MSP regime has no relation to prices in the domestic market.
    • Its sole raison d’être is to fulfil the requirements of NFSA making it effectively a procurement price rather than an MSP. 
    • It is basically a lack of understanding of what agriculture needs and above all a lack of political commitment to ensure remunerative prices to farmers.

    Conclusion

    An efficient and functional MSP is certainly the least that the government can do to protect a sector which remains the largest employer and a refuge for the poor and vulnerable as was seen during the pandemic.

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  • To check stubble burning, monitor policy implementation

    Context

    Every October and November, parts of north India are engulfed by a dense fog. Farmers resort to the practice due to the limited time they have between the harvesting of kharif paddy and sowing of the rabi wheat.

    Government initiatives to stop the stubble burning

    • Policy measures: In 2014, the Ministry of Agriculture and Farmers Welfare developed a National Policy for the Management of Crop Residue.
    • Ban by NGT: In 2015, the National Green Tribunal banned stubble burning in Rajasthan, Uttar Pradesh, Delhi, Haryana and Punjab.
    • Weak enforcement: The enforcement of the ban has, however, been weak, largely due to inadequate political will.
    • Legal measures: Stubble burning was considered an offence under Section 188 of the Indian Penal Code and in the Air and Pollution Control Act, 1981.
    • However, it has now been decriminalised as per a recent government announcement.
    • The Central Scheme on Promotion of Agricultural Mechanisation for In-Situ Management of Crop Residue was introduced in 2018-19.
    • Over 1.5 lakh crop residue management machineries have been supplied to farmers and custom hiring centres between 2018-19 to 2020-21.

    How successful were the measures?

    • As a result of these efforts, the number of crop residue burning events declined from 2016 to 2019.
    • This year satellite data did show an almost 50 per cent decline in the number of stubble burning events in Punjab, Haryana and UP in October.
    • However, after including burning events till November 21, the decline reduced to about 8 per cent.
    • Experts suggest that the respite in October was temporary as the initial decline can be attributed to the delayed withdrawal of monsoon.
    • It is thus evident that despite various government initiatives, substantial stubble burning continues in several states.

    Suggestions

    • Subsidise operational cost for crop residue management: To ease farmers’ financial burden, the government could consider subsidising operational costs along with providing farmers capital subsidy on crop residue management equipment.
    • Ex-situ management of crop residue: Ex-situ management of crop residue can also be explored under the schemes covering products such as bales and pellets for biomass power generation and supplementary feedstock in coal-fired power plants.
    • Awareness generation: Awareness generation and trust building exercises should be undertaken with the support of local civil society organisations.
    • Adopt targeted and cluster-based approach: Stubble burning is fairly concentrated in regions within states.
    • A targeted and cluster-based approach can be undertaken by identifying districts with a higher number of stubble burning incidents.
    • Central and state government interventions can then be concentrated in these districts.
    • Monitoring system at local level: To make these interventions effective, there is a requirement for formulating a robust monitoring system at the local level to track the progress of different activities.

    Consider the question “Stubble burning by farmers of the adjacent states contributes significantly to the air pollution in Delhi. In this context, examine the initiatives taken by the government to deal with the problem and suggest the way forward.”

    Conclusion

    Dealing with the practice of stubble burning requires efforts on multiple levels. A combination of these measures can complement the existing initiatives to encourage farmers to adopt zero stubble burning practices.

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  • A white touch to a refreshed green revolution

    Context

    November 26, 2021 was celebrated in Anand, Gujarat as the 100th birth anniversary of Verghese Kurien, the leader of India’s ‘white revolution’.

    Analysing the Green revolution

    • Purpose of green revolution: The purpose of the green revolution was to increase the output of agriculture to prevent shortages of food.
    • Technocratic enterprise: The green revolution was largely a technocratic enterprise driven by science and the principles of efficiency.
    • It required inputs, like chemical fertilizers, to be produced on scale and at low cost.
    • Therefore, large fertilizer factories were set up for the green revolution. And large dams and irrigation systems were also required to feed water on a large scale.
    • Monocropping on fields was necessary to apply all appropriate inputs — seeds, fertilizer, water, etc., on scale.
    •  Monocropping increased the efficiency in application of inputs.
    • Thus, farms became like large, dedicated engineering factories designed to produce large volumes efficiently.
    •  Diversity in the products and processes of large factories creates complexity.
    • Therefore, diversity is weeded out to keep the factories well-focused on the outputs they are designed for.

    The contrast between White and Green revolution

    • The contrast between the two revolutions provides valuable insights. Their purposes were different.
    • Purpose of white revolution: The purpose of the white revolution was to increase the incomes of small farmers in Gujarat, not the output of milk.
    • The white revolution was a socio-economic enterprise driven by political leaders and principles of equity.

    Understanding the success of Amul

    • Amul has become one of India’s most loved brands, and is respected internationally too for the quality of its products and the efficiency of its management.
    • The fledgling, farmer-owned, Indian enterprise had many technological problems to solve.
    • That is why they enrolled Kurien, who had studied engineering in the United States.
    • Indigenous solutions: Kurien and his engineering compatriots in the organisation were compelled to develop solutions indigenously when Indian policy makers, influenced by foreign experts, said Indians could not make it.
    • The enterprise achieved its outcome of empowering farmers because the governance of the enterprise to achieve equity was always kept in the foreground, with the efficiency of its production processes in the background as a means to the outcome.

    Increasing productivity and issues with it

    • ‘Productivity’, when defined as output per worker, can be increased by eliminating workers.
    • This may be an acceptable way to measure and increase productivity when the purpose of the enterprise is to increase profits of investors in the enterprise.
    • It is a wrong approach to productivity when the purpose of the enterprise is to enable more workers to increase their incomes, which must be the aim of any policy to increase small farmers’ incomes.
    • The need for new solutions to increase farmers’ incomes has become imperative.
    • Moreover, fundamental changes in economics and management sciences are necessary to reverse the degradation of the planet’s natural environment that has taken place with the application of modern technological solutions and management methods for the pursuit of economic growth.

    Suggestions to increase inclusion and improve environmental sustainability

    • Ensure inclusion and equity: Increase in the incomes and wealth of the workers and small asset owners in the enterprise must be the purpose of the enterprise, rather than production of better returns for investors.
    • Social side: The ‘social’ side of the enterprise is as important as its ‘business’ side.
    • Therefore, new metrics of performance must be used, and many ‘non-corporate’ methods of management learned and applied to strengthen its social fabric.
    • Local solution: Solutions must be ‘local systems’ solutions, rather than ‘global (or national) scale’ solutions.
    • The resources in the local environment (including local workers) must be the principal resources of the enterprise.
    • Practical use of science: Science must be practical and useable by the people on the ground rather than a science developed by experts to convince other experts.
    • Moreover, people on the ground are often better scientists from whom scientists in universities can learn useful science.
    • Sustainable solution through evolution: Sustainable transformations are brought about by a steady process of evolution, not by drastic revolution.
    • Large-scale transformations imposed from the top can have strong side-effects.

    Consider the question “Contrast the differences between the White Revolution and Green Revolution in India. What lessons can be applied to Indian agriculture from the success of the White Revolution in India?”

    Conclusion

    The essence of democratic economic governance is that an enterprise must be of the people, for the people, and governed by the people too.

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  • Emulating Amul’s success across other agricultural commodities

    Context

    Many wish for legendary “Milk Man of India” Verghese Kurien’s presence in our midst today as the conflict between the Central government and the farming community on the issue of the farm laws appears to be still unresolved.

    Adopting cooperative model

    • Kurien won the farmers over with his professional integrity and his vision of a central role for farmers in India’s journey of development.
    • It is on that foundation that Kurien went on to design his idea of Amul as a co-operative.
    • He turned it over the years into a global brand, and later launched the White Revolution that would make India the largest milk producing nation in the world.
    • Central to Kurien’s vision was the co-operative model of business development.
    • Kurien’s fascination for the co-operative model was also influenced by Gandhian thinking on poverty alleviation and social transformation.
    • Kurien could borrow from the ideas and the practices of the corporate world.
    • In areas such as innovations in marketing and management, branding and technology, the private sector excels and sets benchmarks for businesses across the world to follow and adopt.
    • Innovations and evolving technologies: At the same time, Amul was steadily emerging as a laboratory, developing significant innovations and evolving technologies of its own, and these have strengthened its competitive power against multinational corporations.

    Challenges facing cooperative movements in India

    • Amul’s success has not been the catalyst for similar movements across other agricultural commodities in India.
    • Bypassing digital revolution: India’s digital revolution has bypassed the agriculture sector.
    • The cooperative movement in India is in a state of flux.
    • Decline of cooperative movement: India has suffered due to lack of professional management, adequate finance and poor adoption of technology.

    Conclusion

    This is truly a moment to reflect on Verghese Kurien’s remarkable legacy and the unfinished task he has left behind.

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  • Reforming the fertilizer sector

    Context

    Since 1991, when economic reforms began in India, several attempts have been made to reform the fertilizer sector to keep a check on the rising fertilizer subsidy bill, promote the efficient use of fertilizers, achieve balanced use of N, P, and K (nitrogen, phosphorus, and potassium), and reduce water and air pollution caused by fertilizers like urea.

    Several attempts have been made to reform the fertilizer sector to keep a check on the rising fertilizer subsidy bill.

    Background

    • After years of unchanged prices, the budget of 1991 raised the issue prices of fertilizers by 40% on average. This rise was rolled down to 30% in a few months, with exemption to small and marginal farmers from the price increase.
    • Due to opposition, the increase in Urea price was further rolled back to 17% over the pre-reform price.
    • It resulted in a big shift in the composition of fertilizers used in the country in favor of urea and thus Nitrogen (N).
    • The government started Nutrient Based Subsidy in 2010 to address the growing imbalance in fertilizer use, which was skewed towards urea (N).
    • However, only non-nitrogenous fertilizers P and K (phosphorus and potassium) were included in NBS; urea was left out.

    Need for reforms on three fronts

    Reforms are needed to promote in three key areas:

    1) The efficient use of fertilizers.

    2) To achieve balanced use of N, P, and K (nitrogen, phosphorus, and potassium).

    3) To reduce water and air pollution caused by fertilizers like urea.

    Challenges in the fertilizer sector

    A] Distortion in use due to price difference

    • The Union Budget of July 1991 raised the issue prices of fertilizers by 40% on average.
    • Due to opposition to increasing fertilizer prices, the increase in the price of urea was rolled back to 17% a year later over the pre-reform price.
    • The shift in the composition of fertilizer used: This change disturbed the relative prices of various fertilizers and resulted in a big shift in the composition of fertilizers used in the country in favor of urea and thus N.
    • Farmers tended to move towards balanced use, but policy and price changes reversed the favorable trend a couple of times in the last three decades.
    • In 2019-20, fertilizer use per hectare of cultivated area varied from 70 kg of NPK in Rajasthan to 250 kg in Telangana
    • Further, the composition of total plant nutrients in terms of the N, P, K ratio deviated considerably from the recommended or optimal NPK mix.
    • It was 33.7:8.0:1 in Punjab and 1.3:0.7:1 in Kerala.

    2] Increasing fertilizer subsidy

    • Fertilizer subsidy has doubled in a short period of three years. For 2021-22, the Union Budget has estimated fertilizer subsidy at ₹79,530 crores (from ₹66,468 crores in 2017-18).
    • The subsidy is likely to reach a much higher level due to the recent upsurge in the prices of energy, the international prices of urea and other fertilizers, and India’s dependence on imports.
    • In order to minimize the impact of rising in prices on farmers, the bulk of the price rise is absorbed by the government through enhanced fertilizer subsidy.
    • This is likely to create serious fiscal challenges.
    • At current prices, farmers pay about ₹268 per bag of urea and the Government of India pays an average subsidy of about ₹930 per bag.
    • Thus, taxpayers bear 78% of the cost of urea and farmers pay only 22%. This is expected to increase and is not sustainable.

    3] Import dependence

    • Total demand for urea: The total demand for urea in the country is about 34-35 million tonnes (mln t) whereas the domestic production is about 25 mln t.
    • The requirement of Diammonium Phosphate (DAP) is about 12 mln t and domestic production is just 5 mln t.
    • This leaves the gap of nearly 9-10 mln t for urea and 7 mln t for DAP, which is met through imports.
    • The use of Muriate of Potash is about 3 mln t.
    • This is entirely imported.
    • The international prices of fertilizers are volatile and almost directly proportional to energy prices.

    Need to shift our focus to Bio-fertilizers

    • Bio-fertilizers are cheap, renewable, and eco-friendly, with great potential to supplement plant nutrients if applied properly. However, they are not a substitute for chemical fertilizers.
    • They improve the health of the soil. Since it provides nutrients to the soil in a small and steady manner, its immediate effects are not very visible.
    • Sales of biofertilizers in the country have not picked up because of a lack of knowledge and its slow impact on the productivity of the soil.
    • The use of biofertilizers is necessary to maintain soil health as more and more use of chemical fertilizers kills all the microorganisms available in the soil, which are so essential for maintaining soil health.
    • Supplementary use of biofertilizers with chemical fertilizers can help maintain soil fertility over a long period.
    • The overall strategy for increasing crop yields and sustaining them at a high level must include an integrated approach to the management of soil nutrients, along with other complementary measures.

    Way forward

    • Self-reliance: we need to be self-reliant and not depend on the import of fertilizers.
    • In this way, we can escape the vagaries of high volatility in international prices.
    • In this direction, five urea plants at Gorakhpur, Sindri, Barauni, Talcher, and Ramagundam are being revived in the public sector.
    • Extend NBS model to urea: The government introduced the Nutrient Based Subsidy (NBS) in 2010 to address the growing imbalance in fertilizer use.
    • However, only non-nitrogenous fertilizers (P and K) moved to NBS; urea was left out.
    • We need to extend the NBS model to urea and allow for price rationalization of urea compared to non-nitrogenous fertilizers and prices of crops.
    • Develop alternative sources of nutrition for plants: Discussions with farmers and consumers reveal a strong desire to shift towards the use of non-chemical fertilizers as well as a demand for bringing parity in prices and subsidy given to chemical fertilizers with organic and biofertilizers.
    • This also provides the scope to use large biomass of crop that goes waste and enhance the value of livestock by-products.
    • We need to scale up and improve innovations to develop alternative fertilizers.
    • Improve fertilizer efficiency:  India should pay attention to improving fertilizer efficiency through need-based use rather than broadcasting fertilizer in the field.
    • The recently developed Nano urea by IFFCO shows promising results in reducing the usage of urea.

    Consider the question “What are the challenges facing the fertiliser sector in India? How subsidies lead to distortion in the use of various types of fertilisers.”

    Conclusion

    These changes will go a long way in enhancing the productivity of agriculture, mitigating climate change, providing an alternative to chemical fertilizers and balancing the fiscal impact of fertilizer subsidy on the Union Budgets in the years to come.

    Back2Basics: Nutrient Based Subsidy

    • Under the NBS regime – fertilizers are provided to the farmers at subsidized rates based on the nutrients (N, P, K & S) contained in these fertilizers.
    • Also, the fertilizers which are fortified with secondary and micronutrients such as molybdenum (Mo) and zinc are given additional subsidy.
    • The subsidy on Phosphatic and Potassic (P&K) fertilizers is announced by the Government on an annual basis for each nutrient on a per kg basis – which are determined taking into account the international and domestic prices of P&K fertilizers, exchange rate, inventory level in the country etc.
    • NBS policy intends to increase the consumption of P&K fertilizers so that optimum balance (N:P:K= 4:2:1) of NPK fertilization is achieved.

    [pib] Nutrient Based Subsidy (NBS) for Phosphatic & Potassic (P&K) Fertilizers

  • Farm distress and the demand for guaranteed MSP

    Despite the announcement to repeal the three farm laws, farmers have decided to continue protesting for a legal mandate for Minimum Support Prices (MSP).

    What is the Minimum Support Price (MSP) system?

    • MSP is a form of market intervention by the Govt. of India to insure agricultural producers against any sharp fall in farm prices.
    • MSP is price fixed by GoI to protect the producer – farmers – against excessive falls in price during bumper production years.

    Who announces it?

    • The govt. announces MSPs for 22 mandated crops and fair and remunerative prices (FRP) for sugarcane.
    • MSP is announced at the beginning of the sowing season for certain crops on recommendations by Commission for Agricultural Costs and Prices (CACP).
    • It is announced by Cabinet Committee on Economic Affairs (CCEA) chaired by the PM of India.

    Why MSP?

    • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
    • They are a guaranteed price for their produce from the Government.
    • In case the market price for the commodity falls below the announced MSP due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced MSP.

    Need for Guaranteed MSPs

    • No legal protection: While the government does announce MSPs every year, it is not required to do so by law. The compulsion to procure on MSP is political, not legal.
    • Discretion of procurement: But if there were to be a law backing the MSP regime, the government would lose its existing discretion in choosing not to procure.
    • Compulsion: A legal mandate for MSP would force the government to purchase all the products that any farmer wants to sell at the declared MSP.
    • State-wide procurement: It would also have to procure from all states, and all crops for which MSPs are announced.

    Failures of MSPs

    • A legally mandated MSP regime is likely to be neither feasible nor sustainable in the long run since Demand-side constrains are never accounted while procuring.
    • Already grain stocks lying with the government are more than twice its buffer requirement, and sometimes end up rotting.
    • At a fundamental level, the problem is there are just too many people involved in Indian agriculture for it to be truly remunerative.
    • To a great extent, the solution to the economic distress of Indian farmers lies outside agriculture — in boosting India’s industrial and services sectors.

    Possible way forward

    • It seems logical that instead of bypassing the market by using MSPs, the government should make efforts to enable farmers to participate in the market.
    • The way forward is to ramp up investment in the agriculture sector.
    • This means better irrigation facilities, easier access to credit, timely access to power, and ramping up warehouse capacity and extension services, including post-harvest marketing.
    • The approach has to be to raise the farmers’ bargaining ability and choices before them.

     

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  • Economic, political implications of repeal of farm laws

    Context

    In a surprise move, Prime Minister Narendra Modi announced that the government will repeal the farm laws in the Winter Session of Parliament.

    Economic impact

    • Agri-growth rate to remain constant: The agri-GDP growth has been 3.5 per cent per annum in the last seven years.
    • One expects this trend to continue — there might be minor changes in the agri-GDP depending on rainfall patterns.
    • Cropping pattern to remain skewed: Cropping patterns will remain skewed in favour of rice and wheat, with the granaries of the Food Corporation of India bulging with stocks of grain.
    • Increase in food subsidy: The food subsidy will keep bloating and there will be large leakages.
    • Environmental impact: The groundwater table in the north-western states will keep receding and methane and nitrous oxide will keep polluting the environment.

    Suggestion on increasing farmers income

    • Average agri-household income: The latest Situation Assessment Survey of the NSO reveals that the income of an average agri-household in India was only Rs 10,218 per month in 2018-19.
    • This is not a very happy situation and all out measures need to be taken to increase rural incomes in a sustained manner.
    • How to increase farmers income: Given that the average holding size stands at just 0.9 ha (2018-19), and has been shrinking over the years.
    • Efficient functioning value chain: Unless one goes for high-value agriculture — and, that’s where one needs efficient functioning value chains from farm to fork by the infusion of private investments in logistics, storage, processing, e-commerce, and digital technologies — the incomes of farmers cannot be increased significantly.
    • Reforms: This sector needs reforms, both in the marketing of outputs as well as inputs, including land lease markets and direct benefit transfer of all input subsidies — fertilisers, power, credit and farm machinery.

    Implications

    • Demand for legal status to MSP could strengthen: Farmer leaders are already asking for the legal guarantee of MSPs for 23 agri-commodities.
    • Their demand could increase to include a larger basket of commodities.
    • Demand for privatisation: There could be demands to block the privatisation reforms of public sector enterprises — Air India, for instance — or to scuttle any other reform for that matter.
    • The net result is likely to be slowing down the economic reforms that are desperately needed to propel growth.

    Consider the question “The latest Situation Assessment Survey of the NSO reveal the low average agri-household income in India. All out measures need to be taken to increase rural incomes in a sustained manner. In the context of this, suggest the measures to increase the farmers’ income and challenges in it.

    Conclusion

    The most important lesson from the repeal of the farm laws is that the process of economic reforms has to be more consultative, more transparent and better communicated to the potential beneficiaries. It is this inclusiveness that lies at the heart of democratic functioning of India.

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  • Nutritional security and climate-friendly agriculture for Punjab

    Context

    As per the latest Situation Assessment Survey (SAS) of agricultural households conducted by the National Statistical Office (NSO), an average Indian farmer earned Rs 10,218 per month in 2018-19 (July-June).

    SAS analysis: Variation across the states and cause of concern for Punjab

    • Across states, the highest income was received by a farming household in Meghalaya (Rs 29,348) followed by Punjab (Rs 26,701), Haryana (Rs 22,841), Arunachal Pradesh (19,225) and Jammu and Kashmir (Rs 18,918).
    • While the lowest income levels were in West Bengal (Rs 6,762), Odisha (Rs 5,112) and Jharkhand (Rs 4,895).
    • But this is not a fair comparison as holding sizes vary widely across states.
    • After normalising these incomes of agri-households by their holding sizes, as in the SAS, Punjab’s ranking on per hectare income falls from 2nd to 11th and Haryana goes down from 3rd to 15th (see figure).
    • The states that would do well on this score are Jammu and Kashmir, Kerala, Meghalaya and Arunachal Pradesh.
    • In these states, people earn their income from cultivating fruits and vegetables, spices, and livestock.
    • These are high value in nature, not linked to MSPs, and market and demand-driven.
    • As per the SAS, the average operated area per holding for Punjab is 1.44 ha (we have used that in the figure), but the Census gives a much higher value of 3.62 ha of average operational holding.
    •  If we normalise incomes of agri-households using Census values of average holding sizes, Punjab’s rank would go further down to 21st (household monthly income Rs 7,376) out of 28 states.

    How can farmers in Punjab and Haryana augment their incomes with more sustainable agriculture?

    1) Swith from paddy to maize

    • Punjab’s former Chief Minister Amarinder Singh had approached the Centre with an idea to create a fund of around Rs 25,000 crore to help farmers switch from paddy to maize.
    • The Centre should give this idea a serious thought with the following modifications:
    • One, the fund should be under a five-year plan to shift at least a million hectares of paddy area (out of a total of 3.1 million hectares of paddy area in Punjab) to maize.
    • Two, the corpus should have equal contributions from the Centre and state.
    • Three, since Punjab wants that farmers be given MSP for maize, an agency, the Maize Corporation of Punjab (MCP), should be created to buy maize from farmers at MSP.
    • Four, this agency should enter into contracts with ethanol companies, and much of this maize can be used to produce ethanol as the poultry and starch industries will not be able to absorb this surplus in maize once a million hectares of paddy area shifts to maize.
    • Fifth, maize productivity must be as competitive as that of paddy in Punjab and the best seeds should be used for that purpose.
    • This is to ensure that ethanol from maize is produced in a globally competitive manner.
    • The GoI’s policy for 20 per cent blending of ethanol in petrol should come in handy for this purpose.

    2) Diversification

    • Other parts of the diversification strategy have to be along the lines of increasing the area under fruits and vegetables, and a more focused policy to build efficient value chains in not just fruits and vegetables but also livestock and fisheries.
    • They are more nutritious and the SAS data shows that their profitability is much higher in these enterprises than in crop cultivation, especially cereals.
    • The sector needs to be backed by proper processing, grading and packaging infrastructure to tap its full potential.

    Benefits of switching to maize from paddy

    • Punjab will arrest its depleting water table as maize needs less than one-fifth the water that paddy does for irrigation.
    • Also, Punjab will save much on the power subsidy to agriculture, which was budgeted at Rs 8,275 crore in the FY2020-21 budget, as paddy irrigation consumes much of the power subsidy.
    • This saving subsidy resulting from the switch from paddy to maize can be used to fund a part of the state’s contribution to the Maize Corporation of Punjab.
    • This could result in a win-win situation for all — farmers, the Government of Punjab and the country — as there will be lesser methane emissions and less stubble burning.
    • Moreover, ethanol will also reduce GHG emissions in vehicular pollution.

    Consider the question “Switching from paddy cultivation to maize can help the Punjab farmers deal with the several issues. In light of this, explain the issues with paddy cultivation and suggest the way forward.”

    Conclusion

    Their income on a per hectare basis needs to increase more sustainably, protecting the state’s land, water and air from further degradation, and producing more nutritious food. Punjab can then shine again on the nutritional security front with sustainable and climate-resilient agriculture.

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  • Agri-food systems need a transformative change

    Context

    There is an urgent need for reorientation of the long-term direction of agri-food systems to not only enhance farm incomes but also ensure better access to safe and nutritious foods.

    Challenge of malnutrition in India

    • The findings from the first round of the Fifth National Family Health Survey suggest that nutrition-related indicators have worsened in most States.
    • In addition, findings from the Comprehensive National Nutrition Survey (2016-18) have highlighted the role of micro-nutrient malnutrition.
    • Pathways for nutritional security consist of improving dietary diversity, kitchen gardens, reducing post-harvest losses, making safety net programmes more nutrition-sensitive, women’s empowerment, enforcement of standards and regulations, improving Water, Sanitation and Hygiene, nutrition education, and effective use of digital technology.

    Agri-food system: Significance and challenges it faces

    • The agri-food systems are the most important part of the Indian economy.
    • India produces sufficient food, feed and fibre to sustain about 18% of the world’s population (as of 2020). Agriculture contributes about 16.5% to India’s GDP and employs 42.3% of the workforce (2019-20).
    • A sustainable agri-food system is one in which a variety of sufficient, nutritious and safe foods are made available at an affordable price to everyone, and nobody goes hungry or suffers from any form of malnutrition.
    • However, the country’s agri-food systems are facing new and unprecedented challenges, especially related to economic and ecological sustainability, nutrition and the adoption of new agricultural technologies.
    • The edifice of India’s biosecurity remains vulnerable to disasters and extreme events.

    Way forward: Reorienting agri-food systems

    • There is an urgent need for reorientation of the long-term direction of agri-food systems to not only enhance farm incomes but also ensure better access to safe and nutritious foods.
    • Additionally, the agri-food systems need to be reoriented to minimise cost on the environment and the climate.
    • This need is recognised by the theme of World Food Day 2021: ‘Our actions are our future. Better production, better nutrition, a better environment and a better life’.
    • FAO’s support for the transformation of agri-food systems is rooted in agro-ecology.
    • The more diverse an agricultural system, the greater its ability to adapt to shocks.
    • Different combinations of integrated crop-livestock-forestry-fishery systems can help farmers produce a variety of products in the same area, at the same time or in rotation.
    • In January this year, FAO in collaboration with NITI Aayog and the Ministry of Agriculture convened a National Dialogue to evolve a framework for the transition to a more sustainable agri-food systems by 2030 and identify pathways for enhancing farmers’ income and achieving nutritional security.

    Consider the question “What are the challenges facing agri-food systems in India? Suggest the pathways to transform the agri-food system to enhance farm income and ensure food and nutrition security.”

    Conclusion

    Food systems can help combat environmental degradation or climate change. Sustainable agri-food systems can deliver food security and nutrition for all, without compromising the economic, social and environmental bases.

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