Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Can agri-exports be made more sustainable?


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Making agri-exports sustainable


In the fiscal year 2021-22 (FY22), agri-exports scaled an all-time high of $50.3 billion, registering a growth of 20 per cent over the preceding year.

What are the contributing factors?

  • The all time high agri-export was made possible largely by rising global commodity prices, but also by the favourable and aggressive export policy of the Ministry of Commerce and its various export promotion agencies like APEDA, MPEDA, and commodity boards.
  • Sustainability issue: From a strategic point of view, an important question that arises is how sustainable is this growth in agri-exports, given India’s resource endowments and the country’s domestic needs?
  • To answer this question rationally, let us first look at the composition of agri-exports.

Composition of agri-exports

  • Among the several agri-commodities exported in FY22, rice ranks first with exports of $9.6 billion in value (with 21.2 million metric tonnes (MMT) in quantity).
  • It is followed by marine products worth $7.7 billion (1.4 MMT), sugar worth $4.6 billion (10.4 MMT), spices worth $3.9 billion (1.4 MMT) and bovine (buffalo) meat worth $3.3 billion (1.18 MMT) (see figure).
  • Concerns with Rice and Sugar: Of these, two commodities, rice and sugar, are water guzzlers and serious thought should be given to their global competitiveness and environmental sustainability.

Competitiveness and environmental sustainability concerns with Sugar and Rice cultivation

  • India’s exports of 21 MMT constituted 41 per cent of a global rice market of 51.3 MMT.
  • Low export price: When most of the other commodity prices were surging in global markets, the price of rice (Thailand supplies 25 per cent) collapsed by about 13 per cent from $484/tonne in April 2021 to $429/tonne in April 2022, largely due to India’s massive exports.
  • This means that India had to export a greater quantity of rice to get the same amount of dollars.
  • In trade theory, it is a classic case for levying the optimal export tax of 5 to 10 per cent.
  • Optimal export: India should optimally not go beyond 12 to 15 MMT of rice exports, else the marginal revenue from exports will keep falling.
  • Subsidised water: Taking an average of about 4,000 litres of water per kg of rice, and assuming that half of this percolates into groundwater, exporting 21MMT of rice would mean the virtual export of 42 billion cubic meters (m3) of water.
  • Sugar is another water guzzler, whose exports touched 10.4 MMT in FY22.
  • Subsidies crossing WTO limits: It was backed partly by subsidies (including export subsidy) that crossed the 10 per cent limit mandated by the World Trade Organisation, bringing India into a dispute with other sugar exporting countries at the WTO.
  • However, from a sustainability point of view, we must note that exporting one kg of sugar amounts to roughly exporting 2,000 litres of virtual water.
  • That means in FY22, India exported at least 20 billion m3 of water through sugar exports.
  • So, by exporting 21 MMT of rice and 10 MMT of sugar in FY22, India exported at least 62 billion cubic meters of virtual water.
  • Much of this water is extracted from groundwater — as is being done in much of the Punjab and Haryana belt (for rice), where the water table is receding by 9.2 metres and 7 metres over the last two decades (2000-19), and in Maharashtra and Uttar Pradesh for sugar.
  • This can lead to a water disaster. 
  • Anthropogenic methane emission: Rice production systems are among the most important sources of anthropogenic methane emissions, contributing to 17.5 per cent of GHG emissions generated from agriculture (2021).
  •  This is all because of the distortionary policies of free power and highly-subsidised fertilisers, especially urea.

Way forward: Support farmers smartly

  • AWD and DSR: Innovative farming practices such as alternate wetting drying (AWD), direct seeded rice (DSR) that can save up to 25-30 per cent water and micro-irrigation that can save up to 50 per cent irrigation water, could be game-changing technologies in reducing the crop’s carbon footprint.
  • Switching to other crops: The real solution lies in incentivising the farmers to switch some of the area under rice and sugar cultivation to other, less water-guzzling crops.
  • Haryana has come up with two schemes, Mera Pani, Meri Virasat and Kheti Khaali, Fir Bhi Khushali.
  • A closer evaluation of non-basmati rice exports brings out another interesting fact.
  • The unit value of these exports was just $354/tonne, which is below the MSP of rice ($390/tonne).
  • One possibility is that a substantial part of the supplies through the PDS and PM Garib Kalyan Anna Yojana (PMGKAY) are leaking out and swelling rice exports.
  • Introduce the option of direct cash transfer: From a policy angle, it may be high time to introduce the option of direct cash transfers in lieu of almost free grains under the PDS and PMGKAY.
  • This will help plug leakages as well as save costs.


The best way to tackle this upcoming environmental disaster would be to support farmers smartly, by giving them aggregate input subsidy support on a per hectare basis and freeing up the input prices of fertilisers and power to be determined by market forces and their costs of production.

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How Indonesia’s ban on Palm Oil exports will hurt India?


From UPSC perspective, the following things are important :

Prelims level : National Edible Oil Mission-Oil Palm (NEOM-OP)

Mains level : India's import dependece for edible oils

The abrupt ban on palm oil exports by Indonesia, its biggest exporter, is expected to rock household economics globally.

Indonesia curbs palm oil export

  • Indonesia has clamped down on exports starting 28 April primarily because of soaring inflation in the country.
  • This is not the first time the South East Asian country decided to arrest local prices by banning exports—it had announced limited curbs in January too.
  • However, brokerages suggest that the ban will probably be a temporary measure of two to three weeks, as Indonesia cannot afford to lose out on exports for long.
  • Indonesia’s president Joko Widodo has stated that he would ensure that the availability of cooking oil in the domestic market becomes “abundant and affordable”.

How will this ban affect India?

  • Palm oil is among the world’s most-used cooking oils, and India’s dependence on Indonesia is expected to deal a supply-side shock.
  • The export ban could send food inflation soaring as India is the largest importer of palm oil from Indonesia.
  • It imports about 8 million tonnes of palm oil annually; the commodity accounts for nearly 40% share of India’s overall edible oil consumption basket.
  • Edible oil prices could surge as much as 100-200% in India if the government fails to find a new source of palm oil.
  • Cooking oil prices are already at record levels as the Ukraine war disrupted shipments of sunflower oil.
  • Prior to the war, the Black Sea region made up over 75% of global sunflower oil exports.

How could it impact packaged goods firms?

  • Since palm oil and its derivatives are used in the production of several household goods, the impact of the ban could eat into the margins of Indian packaged consumer goods players.
  • Analysts said listed firms such as Hindustan Unilever Ltd, Godrej Consumer Products Ltd, Britannia Industries Ltd, and Nestle SA could feel the impact of the ban in the near term.

What are India’s import options?

  • India is most likely to turn to Malaysia, the second-biggest palm oil exporter, to plug the gap.
  • But Malaysia is also facing a labour shortage owing to the pandemic which has resulted in a production shortfall.
  • Hence Malaysia is unlikely to be able to plug the gap.
  • Also the bilateral ties have soured since few years due to unwarranted comments by its former PM Mahathir Mohammed on Kashmir.
  • India could also explore importing from Thailand and Africa—they produce three million tonnes each.

How can India mitigate the impact of the ban?

  • Palm oil prices rose by nearly 5% over the weekend after the announcement of the export ban. Finding an immediate solution is going to be a challenge.
  • Even if India manages to find an alternative source, prices will be high as a major exporter is now out of the calculation.
  • The industry expects India to engage with Indonesia on an urgent basis, before the ban comes into effect on 28 April.
  • Besides, the Centre is likely to negotiate with other oil-supplying nations in Latin America and Canada.


National Edible Oil Mission (OP)


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How the Central and State governments procure Wheat?


From UPSC perspective, the following things are important :

Prelims level : MSP system

Mains level : Public procurement of wheat

Wheat procurement is now underway in various states of the country.

Wheat Procurement in India

  • The main purpose of procuring for the central pool is ensuring the MSP as well as the country’s food security by making food available to the weaker sections at affordable prices.
  • The Centre procures wheat by paying the minimum support price (MSP) announced for the crop.
  • The States do it under two systems:
  1. The centralised one, also called the non-decentralised procurement system (non-DCP) and
  2. The decentralised one, also called DCP

(1) Non-DCP

  • Under this system, the Food Corporation of India (FCI) directly or through state government agencies procure wheat from the purchase centres established across the states based on various parameters like moisture, lustre, broken/shrivelled etc.
  • In Punjab and Haryana, farmers sell their crop to the central agency or state agencies through Arhtiyas (commission agents).
  • The wheat procured by the state agencies is handed over to the FCI for storage or for transportation to the consuming states.
  • The FCI, which is the central nodal agency for wheat procurement, pays the cost of procured wheat to the state agencies.

(2) DCP

  • The decentralised system was brought in the late 1990s to promote local procurement and save the transportation cost and time.
  • The state government or its agencies procure, store and distribute wheat against the Centre’s allocation for targeted PDS and other weaker sections etc. with the state.
  • The excess stocks procured by the state and its agencies are handed over to the FCI for the central pool.
  • The expenditure incurred by the state government on the procurement, storage and distribution of stocks under the decentralised system are reimbursed by the Centre.

Role of Arhtiyas

  • Apart from paying the MSP, the Centre also reimburses the arhtiyas’ commission, administrative charges, mandi labour charges, transportation charges, custody and maintenance charges, interest charges, the gunny bag cost and statutory taxes.
  • The cost of excess stocks handed over to the FCI is reimbursed to the state government or agencies as per the Centre’s policies.
  • Procurement agencies ensure that the stocks brought to mandis are purchased as per the specifications fixed by the government and farmers are not compelled to sell their crop below the MSP.
  • But if a farmer gets a better price from private players, he can sell to them.

From how many states is wheat procured for the central pool?

  • There are 15 states on the procurement list for the central pool, but the contributions from seven of the states are negligible.
  • Only Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan are the main contributors to the central pool.
  • Bihar also contributed to some extent in the last season.

How much wheat is procured for the central pool by the FCI every year?

  • According to the records of the FCI, from 2011 to 2021, procurement for the central pool was between 25-40 per cent of the total wheat production.
  • The procurement has doubled in the past one decade as 22.5 million tonnes of wheat was procured in 2011 and 43.3 million in 2021.
  • The current season of procurement is going on.

What is the procurement scale against the total production of wheat in India?

  • In 2011 the total production of wheat was 88 million tonnes while it was around 109 million tonnes in 2021.
  • And the government’s procurement was 26 per cent and around 40 per cent in 2011 and 2021 respectively.
  • The procured grain is used for export purposes, the public distribution system and maintaining a particular stock for an emergency period.
  • The remaining 60 per cent of the production goes to the bakery industry and other wheat-related businesses.
  • Farmers also keep some of this wheat for their self-consumption.

What is the share of wheat contribution of various states to the central pool?

  • Barring 2020, Punjab has been the number one wheat contributor to the central pool.
  • The state has increased its contribution from 102.09 lakh tonnes in 2011 to 132. 22 lakh tonnes in 2021.
  • Haryana has also increased its contribution from 63.47 lakh tonnes to around 84.93 lakh tonnes in the same period.
  • Madhya Pradesh’s contribution was 35.38 lakh tonnes in 2011, which jumped to the highest among all states—129.42 lakh tonnes—in 2020 and was 128.16 lakh tonnes last year.
  • Uttar Pradesh’s contribution increased from 16.45 lakh tonnes to 56.41 lakh tonnes, and Rajasthan’s contribution rose from 4.76 lakh tonnes to 23.40 lakh tonnes in the same period.

Note: Punjab (despite its small size compared to MP, UP) is also the leading wheat producer state in India.

Back2Basics: Minimum Support Price (MSP)

  • MSP is a form of market intervention by the GoI to insure agricultural producers against any sharp fall in farm prices.
  • The MSP are announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
  • MSP is price fixed to protect the producer – farmers – against excessive fall in price during bumper production years.
  • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
  • The minimum support prices are a guarantee price for their produce from the Government.
  • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.

Methods of calculation

  • In formulating the level of MSP and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
  • The CACP makes use of both micro-level data and aggregates at the level of district, state and the country.
  • Other factors include cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.

Procurement agencies

  • Food Corporation of India (FCI) is the designated central nodal agency for price support operations for cereals, pulses and oilseeds.
  • Cotton Corporation of India (CCI) is the central nodal agency for undertaking price support operations for Cotton.


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What is Parboiled Rice, and why Centre wants to stop purchasing it?


From UPSC perspective, the following things are important :

Prelims level : Parboiled Rice

Mains level : Not Much

Last week, Telangana CM and members of his Cabinet staged a protest demanding a uniform paddy procurement policy. The protest came after the Centre said it was stopping the purchase of excess parboiled rice, of which Telangana is a major producer.

What is Parboiled Rice?

  • The dictionary meaning of ‘parboil’ is ‘partly cooked by boiling’.
  • Thus, the expression parboiled rice refers to rice that has been partially boiled at the paddy stage, before milling.
  • Parboiling of rice is not a new practice, and has been followed in India since ancient times.
  • However, there is no specific definition of parboiled rice of the Food Corporation of India or the Food Ministry.

How is it prepared?

  • There are several processes for parboiling rice.
  • The Central Food Technological Research Institute (CFTRI), Mysuru, uses a method in which the paddy is soaked in hot water for three hours, in contrast to the more common method in which paddy is soaked for 8 hours.
  • The water is then drained and the paddy steamed for 20 minutes.
  • Also, the paddy is dried in the shade in the method used by the CFTRI, but is sun-dried in the common method.
  • The Paddy Processing Research Centre (PPRC), Thanjavur follows a method known as the chromate soaking process.
  • It uses chromate, a family of salt in which the anion contains both chromium and oxygen, which removes the odour from the wet rice.
  • All processes generally involve three stages—soaking, steaming and drying. After passing through these stages, the paddy goes for milling.

Are all rice varieties suitable for parboiling?

  • Generally, all varieties can be processed into parboiled rice, but it is ideal to use long slender varieties to prevent breakage during milling.
  • However, aromatic varieties should not be parboiled because the process can make it can lose its aroma.

What are the benefits?

  • Parboiling makes rice tougher. This reduces the chances of the rice kernel breaking during milling.
  • It also increases the nutrient value of the rice.
  • It has a higher resistance to insects and fungi.

Certain disadvantages

  • The rice becomes darker and may smell unpleasant due to prolonged soaking.
  • Besides, setting up a parboiling rice milling unit requires a higher investment than a raw rice milling unit.

How much is the stock of parboiled rice in the country?

  • According to the Food Ministry, the total stock of parboiled rice is 40.58 lakh metric tonnes (LMT) as on April 1, 2022.
  • Out of this, the highest stock is in Telangana at 16.52 LMT, followed by Tamil Nadu (12.09 LMT) and Kerala (3 LMT).
  • The stock was in the range 0.04–2.92 LMT in 10 other states —Andhra Pradesh, Chhattisgarh, Odisha, Jharkhand, West Bengal, Karnataka, Bihar, Punjab and Haryana.
  • From the other 10 rice-producing states, including Telangana, the Ministry has no plan to procure parboiled rice.
  • In the coming days, the total parboiled rice stock will increase to 47.76 LMT.

How high is the demand?

  • The Food Ministry pegs the parboiled rice demand at 20 LMT per annum for distribution under the National Food Security Act, 2013.
  • According to the Ministry, the demand for parboiled rice has come down in recent years.
  • In the last few years, production in parboiled rice-consuming states such as Jharkhand, Kerala and Tamil Nadu has increased, resulting in less movement to the deficit states.
  • Earlier, the Food Corporation of India (FCI) used to procure parboiled rice from states such as Telangana to supply to these states.
  • But in recent years, parboiled rice production has increased in these states.
  • The current stock is sufficient to meet the demand for the next two years.


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Indonesia’s Palm Oil Crisis


From UPSC perspective, the following things are important :

Prelims level : Global edible oil crunch

Mains level : Read the attached story

The world’s largest producer and exporter of palm oil, Indonesia, is facing domestic shortages, leading to price controls and export curbs.

What is the news?

  • It’s rare for any country that is the largest producer and exporter of a product to experience domestic shortages of the same product.
  • Consumers are unable to access or paying through the nose for a commodity in which their country is the preeminent producer and exporter.

What is Oil Palm?

  • Palm oil is an edible vegetable oil derived from the mesocarp of the fruit of the oil palms.
  • The oil is used in food manufacturing, in beauty products, and as biofuel.

Palm oil production in Indonesia

  • Its palm oil production for 2021-22 (October-September) at 45.5 million tonnes (mt).
  • That’s almost 60% of the total global output and way ahead of the next bigger producer: Malaysia (18.7 mt).
  • It is also the world’s No. 1 exporter of the commodity, at 29 mt, followed by Malaysia (16.22 mt).

Do you know?

14,000 IDR is less than $1 or Rs 74! See the extent of depreciation one currency can undergo!

Have you ever heard of the Zimbabwean hyperinflation of 2009? One literally had to pay a heap of cash to buy a piece of bread!

Why in headlines?

  • Indonesia has seen domestic prices of branded cooking oil spiral, from around 14,000 Indonesian rupiah (IDR) to 22,000 IDR per litre between March 2021 and March 2022.
  • Much recently, the government imposed a ceiling on retail prices at 14,000 IDR.
  • This led to the product disappearing from supermarket shelves, amid reports of hoarding and consumers standing in long queues for hours to get a pack or two.

India’s imports of palm oil (in lakh tonnes)

Plausible factors

(1) Ongoing War

  • The possible reason has to do supply disruptions — manmade and natural — in other cooking oils, especially sunflower and soyabean.
  • Ukraine and Russia together account for nearly 80% of the global trade in sunflower oil, quite comparable to the 90% share of Indonesia and Malaysia in palm.
  • Russia’s invasion of Ukraine has resulted in port closures and exporters avoiding Black Sea shipping routes.
  • Sanctions against Russia have further curtailed trade in sunflower oil, the world’s third most exported vegetable oil after palm and soybean.

(2) Diversion for Bio-Fuels

  • Another factor is linked to petroleum, more specifically the use of palm oil as a bio-fuel.
  • The Indonesian government has, since 2020, made 30% blending of diesel with palm oil mandatory as part of a plan to slash fossil fuel imports.
  • Palm oil getting increasingly diverted for bio-diesel is leaving less quantity available, both for the domestic cooking oil and export market.

Impact on India

  • India is the world’s biggest vegetable oils importer.
  • Out of its annual imports of 14-15 mt, the lion’s share is of palm oil (8-9 mt), followed by soyabean (3-3.5 mt) and sunflower (2.5).
  • Indonesia has been India’s top supplier of palm oil, though it was overtaken by Malaysia in 2021-22 (see above table).
  • The restrictions on exports, even in the form of levy, take into cognizance Indonesia’s higher population (27.5 crores, against Malaysia’s 3.25 crore) as well as its ambitious biofuel program.
  • To that extent, the world – more so, the bigger importer India – will have to get used to lower supplies from Indonesia.


Answer this PYQ from CSP 2019:


Q.Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

(a) Spices

(b) Fresh fruits

(c) Pulses

(d) Vegetable oils


Post your answers here.
Please leave a feedback on thisx


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Self reliance in Agriculture


From UPSC perspective, the following things are important :

Prelims level : Agri-GDP

Mains level : Paper 3- Self reliance in food


For the Amrit Kaal (next 25 years) that the government has announced, we need to be self-reliant not just in missiles (defence equipment) but also in meals (food).

What does self-reliance in food mean?

  • Its true meaning lies in specialising in commodities in which we have a comparative advantage, export them, and import those in which we don’t have a significant comparative advantage.
  • Self-reliance in food does not mean that we have to produce everything ourselves at home, irrespective of the cost.
  • If some protection is needed for new areas to develop (infant industry argument), that may be okay.
  • But one should not aspire to be self-sufficient behind high tariff walls.

Importance of agri-R&D

  • What is it that gives a country an edge over others in attaining comparative advantage?
  • There is ample literature to show that agri-R&D raises total factor productivity and makes agriculture more competitive globally.
  • If India wants to be fully self-reliant in food, it is generally agreed that it must invest at least 1 per cent of its agri-GDP in agri-R&D.
  • The Economic Survey (2021-22) explicitly highlighted the correlation between spending on agri-R&D and agricultural growth.
  • Low expenditure on agri-R&D: But the budgets of both the Union government and the states put together reveal that this expenditure on agri-R&D and education hovers around 0.6 per cent of agri-GDP.
  • This is way below the minimum cut off point of 1 per cent and government policy must urgently work towards raising this substantially.
  • There are some global and local companies like Bayer, Syngenta, MAHYCO, Jain Irrigation, and Mahindra and Mahindra that spend a considerable amount of their turnover on R&D programmes and developing high-tech inputs.
  • The USP of these companies is that they develop technology that increases productivity while addressing the current challenges of limited net sown area, depleting water resources, vulnerability to climate change, and the need to produce nutrient-rich food.

Way forward

  • Role of private sector: The private sector need to come forward and help India attain supremacy in agri-R&D and innovation systems and a hub for exports and agri-technology.
  • Increase expenditure on Agri-R&D and education: The need of the hour is to focus on increasing expenditure on ARE and other development projects, which can aid in the sustainable growth of the agriculture sector.
  • India’s budget allocations in the agri-food space should thrive on creating “more from less”.
  • There is a need to work on building long-term sustainable solutions that have an aggressive approach to implementing relevant policies and developing new ones.
  • India’s current budgetary allocation strategy and trends need to be reoriented to ensure that there is more room for R&D expenditure by the government.
  • Incentivise private companies for R&D: In addition to this, the government should come out with policies that incentivise private companies to expand their R&D programmes and invest more financial resources on development projects, which have the potential to overcome the challenges of the current agrarian setup of India.


If India wants to be fully self-reliant in food, it must focus on agri-R&D and increase allocation in the Budget.

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Natural farming


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Natural farming in India


In her budget speech, Finance Minister Nirmala Sitharaman reaffirmed the Centre’s commitment to natural, chemical-free, organic and zero-budget farming.

No specific allocation in Budget

  • No specific allocations have been made to the Ministry of Agriculture and Farmers Welfare.
  •  In fact, currently-operational schemes such as the Paramparagat Krishi Vikas Yojana and the National Project on Organic Farming did not find any mention in the budget.
  • The Rashtriya Krishi Vikas Yojana, which has received a 4.2-times (year-on-year) larger allocation of Rs 10,433 crore, will earmark some funds for the on-ground implementation of chemical-free farming.


  • As the ministry plans the fund utilisation under RKVY, here are eight suggestions to scale up chemical-free farming.
  • 1] Focus on rainfed area: focus on promoting natural farming in rainfed areas beyond the Gangetic basin.
  • Home to half of India’s farmers, rainfed regions use only a third of the fertilisers per hectarecompared to the areas where irrigation is prevalent.
  • The shift to chemical-free farming will be easier in these regions. 
  • 2] Crop insurance:  enable automatic enrolment of farmers transitioning to chemical-free farming into the government’s crop insurance scheme, PM Fasal Bima Yojana (PMFBY).
  • 3] Promote microenterprise producing inputs:  promote microenterprises that produce inputs for chemical-free agriculture.
  • An often-cited barrier by farmers in transitioning to chemical-free agriculture is the lack of readily available natural inputs.
  • 4] Leverage NGOs:  leverage NGOs and champion farmers who have been promoting and practising sustainable agriculture across the country.
  • CEEW research estimates that at least five million farmers are already practising some form of sustainable agriculture and hundreds of NGOs are involved in promoting them.
  • 5] Upskill workers: Beyond evolving the curriculum in agricultural universities, upskill the agriculture extension workers on sustainable agriculture practices.
  • 6] Leverage community institution: Sixth, leverage community institutions for awareness generation, inspiration, and social support. In other words, the government should facilitate an ecosystem in which farmers learn from and support each other while making the transition.
  • 7] support monitoring and impact studies: Such assessments would ensure an informed approach to scaling up sustainable agriculture.
  • 8] Millet promotion: Dovetail the ambition on millet promotion with the aim to promote sustainable agriculture.
  • Instead of the two remaining in silos, why not promote chemical-free millets and create awareness about both?


India’s food system needs a holistic transformation in demand, production, and supply chains. Let’s hope 2022-23 is the inflection point when we convert intent into action in our journey towards achieving a chemical-free food system.

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New approach for India’s food systems


From UPSC perspective, the following things are important :

Prelims level : UN Food Systems Summit

Mains level : Paper 3- Transforming food system in India


The country faces the dual challenge of achieving nutrition security, as well as addressing declining land productivity, land degradation and loss of ecological services with change in land use. Not surprisingly, widespread concerns about poverty, malnutrition and the need for a second Green Revolution are being made in tandem.


Challenges for India

  • Macro- and micronutrient malnutrition is widespread in India.
  • 18.7% of women and 16.2% of men are unable to access enough food to meet basic nutritional needs.
  • Over 32% of children below five years are still underweight as per the recently released fifth National Family Health Survey (2019-2021) phase 2 compendium.
  • India is ranked 101 out of 116 countries in the Global Hunger Index, 2021.
  • Although India is now self-sufficient in food grains production in the macro sense, it has about a quarter of the world’s food insecure people, a pointer to the amount of food necessary to allow all income groups to reach the caloric target (2,400 kcal in rural and 2,100 kcal in the urban set-up). 

India needs to adopt ‘food systems’ for ‘sustainability’ and ‘better nutrition’

  • The UN Food Systems Summit called for action by governments in five areas: nourish all people; boost nature-based solutions; advance equitable livelihoods, decent work and empowered communities; build resilience to vulnerabilities, shocks and stresses; and accelerate the means of implementation.
  • Wholistic policy approach: In the context of the intensifying economic, environmental and climate challenges and crisis, the need of the hour is a good theory of transition encompassing the spatial, social and scientific dimensions, supported by policy incentives and mechanisms for achieving a sustainable, resilient and food secure agriculture.
  • Agro-climatic approach: An agro-climatic approach to agricultural development is important for sustainability and better nutrition.
  • Potential for crop diversification: Data compiled in the agro-climatic zones reports of the Indian Council of Agricultural Research and the erstwhile Planning Commission of India reveal enormous potential for crop diversification and precision for enhanced crop productivity based on soil type, climate (temperature and rainfall), and captive water resources.
  • The focus should be on improving farmers’ competitiveness, supporting business growth in the rural economy, and incentivising farmers to improve the environment.
  • Review of agro-climatic zones: It is assumed that a meticulous review of agro-climatic zones could make smallholders farming a profitable business, enhancing agricultural efficiency and socio-economic development, as well as sustainability.
  • Strengthening and shortening food supply chains, reinforcing regional food systems, food processing, agricultural resilience and sustainability in a climate-changing world will require prioritising research and investments along these lines.
  • A stress status of the natural resource base — soil and water in different agro-climatic zones — will help understand the micro as well as meso-level interventions needed with regard to technologies, extension activities and policies.
  • Infrastructure: Lastly, infrastructure and institutions supporting producers, agri-preneurs and agri micro, small and medium enterprises (MSMEs) in their production value chain are central to the transition.
  • Alignment with national and State policies: This should be aligned to the national and State policy priorities such as the National Policy guidelines 2012 of the Ministry of Agriculture for the promotion of farmer producer organisations, and the National Resource Efficiency Policy of 2019 of the Ministry of Environment, Forest and Climate Change.


Clearly, science, society and policy have a lot to gain from an effective interface encompassing the range of actors and institutions in the food value-chain and a multidisciplinary and holistic approach, along with a greater emphasis on policy design, management and behavioural change.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

‘climate smart’ agriculture


From UPSC perspective, the following things are important :

Prelims level : GHG from agriculture

Mains level : Paper 3- Moving toward net-zero agriculture


In the backdrop of the 2070 carbon neutrality target set by India at the CoP26 in Glasgow, the Union Budget for 2022-23 has listed “climate action” and “energy transition” as one of the four priorities for the Amrit Kaal.

Climate related announcement in Budget 2022-23

  • An additional allocation of Rs 19,500 crore for solar PV modules has been made.
  • The finance minister also talked of co-firing of 5-7 per cent of biomass pellets in thermal power plants, “sovereign green bonds” and a “battery-swapping policy”.
  • These are positive steps towards making the energy and transport sectors less polluting.

How agriculture impact environement

  • Agriculture contributes 73 per cent of the country’s methane emissions. 
  • Third largest emitter: India has kept away from the recent EU-US pledge to slash methane emissions by 30 per cent by 2030, despite the country being the world’s third largest emitter of methane.
  • As per the national GHG inventory, the agriculture sector emits 408 MMT of carbon-dioxide equivalent and rice cultivation is the third highest source (17.5 per cent) of GHG emissions in Indian agriculture after enteric fermentation (54.6 per cent) and fertiliser use (19 per cent).
  • Paddy fields are anthropogenic sources of atmospheric nitrous oxide and methane, which have been reckoned as 273 and 80-83 times more powerful than carbon dioxide in driving temperature increase in 20 years’ (Sixth Assessment Report IPCC 2021).
  • Moreover, paddy fields require about 4,000 cubic metres of water per tonne of rice for irrigation.
  •  There is scientific evidence that intermittent flooding reduces water and methane emissions but increases nitrous oxide emissions.
  • Thus, lowering of methane emissions through controlled irrigation does not necessarily mean net low emissions. 
  • Role of subsidies and procurement policies: The environmental damage caused by agriculture is largely a result of the various kinds of subsidies — on urea, canal irrigation and power for irrigation — as well as the minimum support prices (MSP) and procurement policies concentrated on a few states and largely on two crops, rice, and wheat.

Excess rice and wheat stock

  • As of January 1, the stocks of wheat and rice in the country’s central pool were four times higher than the buffer stocking requirement.
  • Rice stocks with the Food Corporation of India (FCI) are seven times the buffer norms for rice.
  • The financial value of these excessive grain stocks is Rs 2.14 lakh crore, of which Rs 1.66 lakh crore is because of excess rice stocks — as per the economic cost of rice and wheat given by the FCI.
  • All this does not just reflect inefficient use of scarce capital, the amount of greenhouse gases (GHG) embedded in these stocks is also large.

Way forward

  • Carbon tax: According to the IMF, the world needs a carbon tax of $ 75 per tonne by 2030 to reduce emissions to a level consistent with a 2 degree Celsius warming target.
  • India does not have an explicit carbon-price yet, but many countries have begun to implement carbon pricing.
  • Revisiting policies: The Economic Survey 2021-22 points out that the country is over-exploiting its ground water resource (see map), particularly in the northwest and some parts of south India.
  • This calls for revisiting policies to subsidise power and fertilisers, MSP and procurement and reorient them towards minimising GHG emissions.
  • Farmer groups and the private sector can be mobilised to develop carbon markets in agriculture, both at the national and international levels, which can reward farmers in cash for switching from carbon-intensive crops to lower GHG emissions.

Consider the question “Elaborate on the impact of agriculture on the environment. Suggest the changes needed in Indian agriculture policies to reduce the impact.”


Such a move towards “net-zero” agriculture will give India a “climate smart” agriculture in Amrit Kaal. And, if we can protect productivity levels with a low-carbon footprint, it will help India to access global markets too.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agriculture finance in India


From UPSC perspective, the following things are important :

Prelims level : AOI

Mains level : Paper 3- India's low AOI


While the overall budgetary allocation towards the agricultural sector has marginally increased by 4.4% in the Union Budget 2022-23, the rate of increase is lower than the current inflation rate of 5.5%-6%.

Agricultural Finance in India – A brief history

Phase 1 (1951-69):

  • Thrust on developing primary sector since 1st FYP in 1951.
  • National Credit Council in 1968 emphasized that commercial banks must increase financing to small scale industries and agriculture
  • Nationalization of banks in 1969 put thrust on the opening of rural/semi-urban bank branches

Phase 2 (1970-1990)

  • The decade of 1970s marked the entry of commercial banks into agricultural credit with the Lead Bank Scheme and regulatory prescription of Priority Sector Lending (PSL).
  • Regional Rural Bank Act, 1976 enacted to specifically provide banking and credit facilities for agriculture and
    other rural sectors.
  • National Bank for Agriculture and Rural Development (NABARD) was established in 1982 to promote agricultural and rural development, particularly by financing SHGs and MFIs.
  • RBI introduced in 1989 service area approach (SAA) & Annual Credit Plan (ACP) system to increase outreach
    to rural areas.

Phase 3 (1991-onwards)

  • Implementation of Narasimham Committee Report of 1991 to increase the operational efficiency of banks.
  • 1st major nationwide farm loan waiver in 1990.
  • Establishment of the Rural Infrastructure Development Fund (RIDF) with NABARD mainly meant for funding rural infrastructure projects.
  • NABARD started a pilot project SHG-Bank Linkage Programme in 1992.

Mechanisms of Agriculture Credit in India

  • Priority Sector Lending: PSL was introduced to ensure that vulnerable sections of the society get access to credit and that there is an adequate flow of credit to employment-intensive sectors like agriculture and MSME.
  • Interest Subvention Scheme (ISS) was launched for short-term crop loans in 2006-07. 2% interest subvention is given to farmers, which is reimbursed to banks (through RBI and NABARD). Additionally, a 3% prompt repayment incentive (PRI) is provided for good credit discipline.
  • Kisan Credit Card (KCC) Scheme, introduced in 1998, aimed at providing adequate and timely credit with flexible and simplified procedures for agriculture-related and also consumption requirements of farmer households.
  • Self Help Group- Bank Linkage Programme (SHG-BLP) aimed at harnessing the flexibility of an informal system with the strength and affordability of a formal system. The SHG-BLP model accepted informal groups as clients of banks – both deposit and credit linkage & allowed collateral-free lending to groups.
  • Joint Liability Groups (JLG) Scheme was initiated by NABARD in 2006 to enhance credit flow to share croppers/tenant farmers who do not have land rights.

Issues with India’s low spending in agriculture

  • The UN Food and Agriculture Organization (FAO) report for 2001 to 2019 shows that, globally, India is among the top 10 countries in terms of government spending in agriculture, constituting a share of around 7.3% of its total government expenditure.
  • However, India lags behind several low-income countries such as Malawi (18%), Mali (12.4%), Bhutan (12%), Nepal (8%), as well as upper-middle-income countries such as Guyana (10.3%) and China (9.6%).

Low budgetary allocation

a) Low allocation for important schemes

  • Drastic slashing of funds towards the allocation towards important schemes like Market Intervention Scheme and Price Support Scheme (MIS-PSS)- ₹1,500 crores (62% less than the previous allocation of ₹3,959.61 crores in the revised estimates (RE) of FY 2021-22).
  • Similarly, the Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) was allocated just ₹1 crore for the year as against an expenditure of ₹400 crores in 2021-22.

b) Low Capital Investment

  • Allocation for the promotion of rural development was 5.59% in the previous budget which has been further reduced to 5.23% for the present financial year

Other issues

a) Institutional vis-à-vis Non-Institutional Agricultural Credit: Traditionally, rural agrarian credit needs were met primarily through money-lenders, which led to large-scale indebtedness.

  • According to National All India Rural Financial Inclusion Survey (NAFIS 2015), the share of non-institutional credit still persists at around 28%.
  • Unavailability of credit for consumption purposes and to tenant farmers, sharecroppers, and landless labourers, who are not able to offer collateral security, further pushes them towards non-institutional sources.

b) Skewed agency share in institutional credit: Dependency on scheduled commercial banks in agricultural & allied credit is still large (~78-80% of the credit). Though co-operative institutions (~15%) and Regional Rural Banks (~5%) play a significant role in extending agricultural credit, their share is highly skewed geographically.
c) Regional Disparity in Agricultural Credit: States falling under central, eastern, and northeastern regions are getting very low agri-credit as % of their agri-GDP.
d) Poor deployment of agricultural credit to allied sectors (~6-7%) despite a share of 38-42% in the agricultural output indicates neglect of allied sectors by the banks.
e) Issues with Priority Sector Lending (PSL): Though at the aggregate level banks have been able to achieve the overall PSL target of 40%, so far they have failed to achieve the agriculture target of 18% at the system-wide level. Moreover, ~60% of Small & Marginal Farmers (SMFs) have not been covered by SCBs.
f) Interest Subvention Scheme (ISS) on short-term loans have skewed the distribution of agricultural credit in favor of production credit against crop-related investment credit, which is important for the long-term sustainability of the agriculture sector.
g) Kisan Credit Card: As per Agricultural Census 2015-16, only 45% of the farmers possess operative KCCs. Agricultural households are unable to get credit for their consumption requirements and hence, they are compelled to go-to money lenders.
h) Diversion of agriculture loans for non-agriculture purposes:
In many states like Tamil Nadu, Andhra Pradesh, Kerala, etc, agri-credit is far higher than their agri-GDP, indicating the possibility of diversion of
credit for non-agricultural purposes. Diversion accentuates the problem of debt overhang, fuels a high level of indebtedness, and deteriorates credit culture in long run.

Way forward

a) Improve the Reach of Institutional Credit:

  • Complete the digitization process and update land records in a time-bound manner.
  • Reforming of land leasing framework by adopting policies like the Model Land Leasing Act proposed by NITI Aayog, which intends to make all lease agreements formal and enhance access to formal credit.
  • Establish a federal institution in agriculture on the lines of GST Council to enable consultation with states during formulation & implementation of reforms.

b) Addressing regional disparity: PSL guidelines should be revisited for improving the credit off-take in central, eastern, and northeastern states.
c) Increasing Credit Flow to Allied Activities: Set separate targets for loans towards allied activities under Ground Level Credit (GLC) & Priority Sector Lending (PSL) guidelines.
d) Enhancing the sub-target of SMFs under PSL- Considering that the total operated area held by SMFs would amount to 51.85% by the year 2020-21, increase the share of agricultural credit under PSL to SMFs to 10% from the current 8%.
e) Agricultural Loans against Gold as Collateral: Banks should develop an MIS to flag agricultural loans sanctioned against gold as collateral in CBS in order to segregate such loans for effective monitoring of end-use of funds.
f) Utilizing Farmer Producer Organisations (FPOs): NABARD should promote women-oriented FPOs by identifying successful women SHGs. Government should expand the scope of its credit guarantee program through Small Farmers’ Agribusiness Consortium (SFAC).
g) Database for Indian Agriculture sector: Develop a centralized database capturing details related to crops cultivated, cropping pattern, output, sown/irrigated area, the health of the soil, natural calamity, etc. Besides, farmer-wise details like identity, land records, loan availed, subsidy given, insurance and details of crop cultivated, etc. should also be captured.
h) Convergence of National Highways development, Rural infrastructure, rural facilities, and increase the number of markets as recommended by the National Commission on Farmers. 


Consider the question “What explains India’s low score on Agriculture Orientation Index which is the ratio between government spending towards the agricultural sector and the sector’s contribution to GDP? Suggest the way forward.”


The intensification in government spending towards the agricultural sector is the key to attaining the sustainable development goals of higher agricultural growth and farm income.


Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Opportunity for agri-reforms in Punjab


From UPSC perspective, the following things are important :

Prelims level : Geo-tagging

Mains level : Paper 3- Agri-reforms in Punjab


It is no secret that Punjab, once the frontrunner of Indian agriculture, is struggling to retain its dynamism.

Need to diversify

  • While Punjab ranked at the top of major Indian states in terms of per capita income during 1967-68 to 2002-03, it has slipped below the 13th position.
  • Punjab’s agricultural growth rate, at 5.7 per cent, was more than double the country’s average of 2.3 per cent during 1971-72 to 1985-86.
  • This has reversed between 2005 and 2019 with Punjab at 1.9 per cent and India at 3.7 per cent.
  • Agriculture least diversified state: With almost 85 per cent of the gross cropped area under wheat and rice, agriculture is least diversified in the state. 
  • Mandi transactions cost about 8.5 per cent of the MSP, the highest in the country, making Punjab wheat and rice less competitive.

What explains low diversification in agriculture?

  • Policies: Guaranteed MSP for wheat and paddy, backed by assured procurement, free power and highly subsidised fertilisers, has disincentivised diversification.
  • Political economy: The political economy around wheat and rice is so intense that any effort to address its distortionary impact is met with fierce opposition by vested interest groups.

How to recalibrate Punjab agriculture towards higher, sustainable growth?

  • Augment livestock and milk processing: While fruits and vegetables account for 7.4 per cent of the value of the output of agriculture and allied sectors, livestock accounts for 31.5 per cent and fisheries less than 1 per cent.
  • The state has the highest per capita availability of milk but it can process less than 20 per cent of it.
  •  Promoting mega parks for value addition in fruits and vegetables, milk, and other livestock products through medium and small enterprises will strengthen its competitiveness.
  • Strengthen market for seed potato: It is also a significant player in seed potato and with the right package of practices, traceability systems, and infrastructure, the market for Punjab seed potato can be strengthened.
  • Scaling up alternative marketing channel: Alternative marketing channels for fruits and vegetables such as direct marketing, contract farming, and exports have been in place but these models need to be scaled up with the right ecosystem.
  • Shift to demand-driven agriculture: Punjab needs to switch from supply-driven agriculture to demand-driven agriculture.
  • The demand for fisheries, poultry, dairy, and fruits and vegetables is increasing way faster than the demand for wheat and rice.
  • Rationalise mandi charges:  Rationalising mandi charges to not more than 3 per cent will attract private sector investments in building efficient value chains.
  • Rationalise subsidies: Time-bound incentives in the form of freight subsidies for exporters of high-value agri-produce, tax exemptions for the processing of perishable commodities for value chain players would be more rational than the overloaded subsidies of urea and free power.
  • Use technology and start-up revolution: Punjab should leverage the start-up revolution that is unfolding in India, and use technology to ensure optimal utilisation of resources, expand markets, and augment farmers’ income.
  • Geo-tagging of farms can address concerns related to long-term leasing of land that is critical for large-scale investments and enable vibrant agricultural land markets.
  • Innovations in supply chain management, be it automated grain silos or state-of-art herd management will not only optimise the use of resources but also bring in traceability of farms and animals, early monitoring and prevention of disease outbreaks, and contain value chain losses.

How to manage financial resources?

  • Rationalise urea subsidy: It should rationalise its fertiliser subsidy regime by moving towards cash transfers on a per hectare basis and free up fertiliser prices.
  • Include urea in nutrient-based subsidy scheme: If that’s not possible, then urea should be included in the nutrient-based subsidy scheme.
  • Bring soluble fertiliser under subsidy: Bring soluble fertilisers under subsidy, which will enhance fertiliser use efficiency through fertigation.
  • This will also help reap environmental gains.
  • Rationalise food subsidy: Food subsidy can also be rationalised through direct cash transfers replacing PDS, as Punjab is a grain surplus state.


Both environmental and financial sustainability concerns related to business-as-usual farming in Punjab call for a rebooting strategy.

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The price of food must figure in the policy


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- High food prices in India and its implications


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?”


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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Zero Budget Natural Farming


From UPSC perspective, the following things are important :

Prelims level : ZBNF

Mains level : Natural farming practices and their sustainability

Zero budget natural farming (ZBNF) is back on top of the Government’s agricultural agenda, with PM set to highlight it at a national conclave.

Zero Budget Natural Farming (ZBNF)

  • ZBNF is a set of farming methods, and also a grassroots peasant movement, which has spread to various states in India.
  • Subhash Palekar perfected it during the 1990s at his farm in Amravati district in Maharashtra’s drought-prone Vidarbha region.
  • According to the “zero budget” concept, farmers won’t have to spend any money on fertilisers and other agricultural inputs.
  • Over 98% of the nutrients that crops require — carbon dioxide, nitrogen, water, solar energy — are already present in nature.
  • The remaining 1.5-2% are taken from the soil, after microorganisms convert them from “non-

Four Wheels of ZBNF

The “four wheels” of ZBNF are ‘Jiwamrita’, ‘Bijamrita’, ‘Mulching’ and ‘Waaphasa’.

  • Jiwamrita is a fermented mixture of cow dung and urine (of desi breeds), jaggery, pulses flour, water and soil from the farm bund.
  • This isn’t a fertilizer, but just a source of some 500 crore micro-organisms that can convert all the necessary “non-available” nutrients into “available” form.
  • Bijamrita is a mix of desi cow dung and urine, water, bund soil and lime that is used as a seed treatment solution prior to sowing.
  • Mulching, or covering the plants with a layer of dried straw or fallen leaves, is meant to conserve soil moisture and keep the temperature around the roots at 25-32 degrees Celsius, which allows the microorganisms to do their job.
  • Waaphasa, or providing water to maintain the required moisture-air balance, also achieves the same objective.

Astra’s of ZBNF against pest attacks

  • ZBNF advocates the use of special ‘Agniastra’, ‘Bramhastra’, and ‘Neemastra’ concoctions.
  • They are based on cow urine and dung, plus pulp from leaves of neem, white datura, papaya, guava, and pomegranates — for controlling pest and disease attacks.

Is it organic farming?

  • ZBNF uses farmyard manure or vermicompost.

Issues with ZBNF

  • Cost of labor: The cost of labor for the collection of dung and urine, apart from the other inputs used in the preparation of Jiwamrita, Neemastra or Bramhastra is quit higher.
  • Bovine cost: Keeping cows is also a cost that has to be accounted for. Farmers cannot afford to keep desi cows that yield very little milk.
  • Vulnerability to pest attacks:  ZBNF is scarcely practiced.  The crop grown would be vulnerable to attacks by insects and pests have already become pest-immune.


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A white touch to a refreshed green revolution


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Contrast between white and green revolution


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?”


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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Economic, political implications of repeal of farm laws


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Economic and political implications of repeal of farm laws


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.


  • 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.


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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PM announces repeal of three Farm Laws


From UPSC perspective, the following things are important :

Prelims level : Farm laws, Essential commodities

Mains level : Farmers protests and related issues

The Prime Minister has announced the withdrawal of the contentious farm laws.

Daniel Q. Gillion, author of The Political Power of Protest, and a sociologist at the University of Pennsylvania, says to be successful, a protest must be impossible to ignore.

What were the farm laws that have been repealed?

  1. Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020: It was aimed at allowing trade in agricultural produce outside the existing APMC mandis
  2. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020: It seeks to provide a framework for contract farming;
  3. Essential Commodities (Amendment) Act, 2020: It was aimed at removing commodities such as cereals, pulses, oilseeds, edible oils, onion and potato from the list of essential commodities.

Why were these reforms sought?

  • APMC reforms: There has been a long-pending demand for reforms in agricultural marketing, a subject that comes under the purview of state governments.
  • Long pending stagnation: It was in this backdrop that the present government went for reforms in the sector by passing these laws.

In what circumstances were the laws passed?

  • Ordinance route: The government initially cleared them as ordinances in June 2020, there were token protests with the country’s attention gripped by the first wave of Covid-19.
  • Without consultation and haste: In Parliament, there was no thorough scrutiny of the Bills by a parliamentary panel. The government dismissed these demands and pushed the legislation through.
  • Opposition disregard: The Opposition benches were suspended for a week for their “disorderly conduct” while protesting against the rushed passage of the laws.

Beginning of the protests

The protests gained momentum when the Centre pushed the Bills in Parliament in the Monsoon Session.

  • Fear over private mandis: Farmers feared that the existing APMC mandis where they sell their products would be shut down once private players started trading in agri-produce outside the mandi premises.
  • Non-guarantee over MSP: Once the APMC mandi system became redundant, procurement based on minimum support prices (MSP) too would come to an end.

After sporadic protests against the farm laws, including a nationwide road blockade, the farmers’ unions in Punjab and Haryana gave a call for a ‘Delhi Chalo’ movement.

How protests could sustain for so long?

  • Unity: The leaders of farmers’ unions were very strategic in their approach to the protest and decided to work together very early in the agitation.
  • Finances: The protest sites at the Delhi border needed a steady injection of resources to keep going. Aware of this need, the unions had begun making monthly collections.
  • People: The unions behind the farm stir are well-organized machinery with committees at the level of villages, blocks, and districts.
  • Communication: Social media has been central to the scale of this agitation.
  • Engagement: The unions kept the stakeholders engaged by ensuring that there was never a dull moment in this agitation.

In practical terms, what was the status of the three laws until the repeal?

  • The farm laws were in force for only 221 days — June 5, 2020, when the ordinances were promulgated to January 12, 2021, when the Supreme Court stayed their implementation.
  • The Supreme Court stayed the implementation of the three laws on January 12 this year.
  • Since the stay, the laws have been suspended.
  • The government has used old provisions of the Essential Commodities Act, 1955 to impose stock limits, having amended the Act through one of the three farm laws.

Reasons for the repeal

There are contrasting suggestions about the timing of the decision to announce the repeal.

  • Forthcoming elections: There are crucial Assembly elections early next year in five states, including Uttar Pradesh and Punjab.
  • Public appeasement: The PM sought to announce this on Guru Nanak Jayanti probably in a move to appease a community, to which a significant segment of protesting farmers from Punjab belongs.
  • Rising anxiety among Public: There was a risk that anxiety among the protesters could lead to tensions as there had been many deaths since the protests began.
  • Fury over year-long protests: The protest had created a ruckus on the streets of capital due to continuous blockades even after the intervention of Supreme Court.
  • Rising political differences: Given that it took the government a year to realise the socio-political costs, the repeal also signals a weakened political feedback mechanism within the party.

Significance of the repeal

  • Restores faith in the govt: In the immediate term, the repeal exposes the government to charges of being on the wrong path and against popular sentiments, notwithstanding its claims to the contrary.
  • Dedication over farmers’ cause: The govt moves were increasingly perceived as being not in tune with the needs of rural farming communities.
  • Political stewardship: The PM was clearly balancing his political posture that has thrived on the image of strong and decisive leadership.

Implications of the repeal

  • CAA standpoint: Although the anti-CAA protests were called off, almost two years on, the Home Ministry has not yet framed the rules for implementation of the CAA.
  • Statehood for J&K: There is no such unanimity over Article 370. Most of these parties have largely been united for the restoration of statehood to J&K, and early elections.

An analysis of the enactment-repeal conundrum

(1) Reforms are must

  • There may be some deficiencies in the exact design and mechanism of the reforms proposed in the three farm laws.
  • However, most advocates of agricultural reform would agree that they were in the right direction.

(2) Reforms don’t occur overnight

  • These laws could be a great example for passionate reforms. However, Legislative tapasya (penance) is all about listening to outer world (i.e the farmers), not inner self.
  • It requires listening to those for whose benefit laws and policies are crafted. It can’t be a meditation in isolation and implementation as a divine ordeal.

(3) Answerability and consultation matters

  • That the government chose to push these reforms through its own set of consultations left many stakeholders feeling left out, and created a backlash.
  • The repeal underlines that any future attempts to reform the rural agricultural economy would require a much wider consultation.

(4) Success lies in the acceptance of reforms

  • The better design of reforms ensures wider acceptance.
  • The repeal would leave the government hesitant about pursuing these reforms in stealth mode again.


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Turmeric Cultivation in India


From UPSC perspective, the following things are important :

Prelims level : Turmeric

Mains level : Not Much

Turmeric (Curcuma longa), native to India, has been studied extensively for its effects against viral diseases in recent decades, but the COVID-19 pandemic has renewed interest.

About Turmeric

  • Turmeric (Curcuma longa) is used as a condiment, dye, drug and cosmetic in addition to its use in religious ceremonies.
  • India is a leading producer and exporter of turmeric in the world.
  • The top five turmeric-producing states of India in 2020-21 are Telangana, Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh.

Climate and Soil

  • Turmeric can be grown in diverse tropical conditions from sea level to 1500 m above sea level.
  • It requires a temperature range of 20-35 C with an annual rainfall of 1500 mm or more, under rainfed or irrigated conditions.
  • Though it can be grown on different types of soils, it thrives best in well-drained sandy or clay loam soils with a pH range of 4.5-7.5 with good organic status.


  • A number of cultivars are available in the country and are known mostly by the name of locality where they are cultivated.
  • Some of the popular cultivars are Duggirala, Tekkurpet, Sugandham, Amalapuram, Erode local, Salem, Alleppey, Moovattupuzha and Lakdong.

Preparation of land

  • The land is prepared with the receipt of early monsoon showers.
  • The soil is brought to a fine tilth by giving about four deep ploughings.
  • Planting is also done by forming ridges and furrows.


  • Whole or split mother and finger rhizomes are used for planting and well-developed healthy and disease-free rhizomes are to be selected.

Why turmeric?

  • Post pandemic, turmeric is one of the fastest-growing dietary supplements.
  • The global curcumin market, valued at $58.4 million in 2019, is expected to witness a growth of 12.7 percent by 2027.
  • As the world’s largest producer, consumer and exporter of turmeric, India stands to gain from this.

Global standing

  • India produces 78 per cent of the world’s turmeric.
  • The country’s turmeric production saw a near consistent growth since Independence till 2010-11 after which it started fluctuating.
  • The pandemic has given a boost to the crop, with the production witnessing a rise of 23 per cent.
  • Though the production and export of turmeric has risen, farmers have not benefitted from its pricing.

Try this PYQ from CSP 2020:

With reference to the current trends in the cultivation of sugarcane in India, consider the following statements:

  1. A substantial saving in seed material is made when ‘bud chip settlings are raised in a nursery and transplanted in the main field.
  2. When direct planting of setts is done, the germination percentage is better with single-budded setts as compared to setts with many buds.
  3. If bad weather conditions prevail when setts are directly planted, single-budded setts have better survival as compared to large setts.
  4. Sugarcane can be cultivated using settlings prepared from tissue culture.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 3 only

(c) 1 and 4 only

(d) 2,3 and 4 only


Post your answers here.
Please leave a feedback on thisx



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Krishi UDAN 2.0 Scheme


From UPSC perspective, the following things are important :

Prelims level : E-KAUSHAL, Krishi UDAAN

Mains level : Agricultural promotion

The Union Minister of Civil Aviation has launched Krishi UDAN 2.0.

Krishi UDAN 2.0

  • The scheme proposes to facilitating and incentivizing movement of Agri-produce by air transportation.
  • It lays out the vision of improving value realization through better integration and optimization of Agri-harvesting and air transportation.
  • It works by contributing to Agri-value chain sustainability and resilience under different and dynamic conditions.
  • It will be implemented at 53 airports across the country mainly focusing on Northeast and tribal regions and is likely to benefit farmer, freight forwarders and Airlines.

Key highlights of the scheme

  • Facilitating and incentivizing movement of Agri-produce by air transportation: Full waiver of Landing, Parking, TNLC and RNFC charges for Indian freighters and P2C at selected Airports. Primarily, focusing on NER, Hilly, and tribal regions.
  • Strengthening cargo-related infrastructure at airports and off airports: Facilitating the development of a hub and spoke model and a freight grid.
  • Concessions sought from other bodies: Seek support and encourage States to reduce Sales Tax to 1% on aviation fuels for freighters / P2C aircraft as extended in UDAN flights.
  • Resources-Pooling through establishing Convergence mechanism: Collaboration with other government departments and regulatory bodies.
  • Technological convergence: Development of E-KUSHAL (Krishi UDAN for Sustainable Holistic Agri-Logistics).

What is E-KAUSHAL?

  • It is a platform to be developed to facilitate information dissemination to all the stakeholders.
  • This will be a single platform that will provide relevant information at the same time will also assist in coordination, monitoring and evaluation of the scheme.
  • Furthermore, integration of E-KUSHAL with the National Agriculture Market (e-NAM) is proposed.

Airports under the scheme

Proposed timeline Locations
2021 – 2022 Agartala, Srinagar, Dibrugarh, Dimapur, Hubballi, Imphal, Jorhat, Lilabari, Lucknow, Silchar, Tezpur, Tirupati, Tuticorin
2022 – 2023 Ahmedabad, Bhavnagar, Jharsuguda, Kozhikode, Mysuru, Puducherry, Rajkot, Vijayawada
2023 – 2024 Agra, Darbhanga, Gaya, Gwalior, Pakyong, Pantnagar, Shillong, Shimla, Udaipur, Vadodara
2024 – 2025 Holangi, Salem

7 focus routes & products

Routes Products
Amritsar – Dubai Babycorn
Darbhanga – Rest of India Lichis
Sikkim – Rest of India Organic produce
Chennai, Vizag, Kolkata – Far East Seafood
Agartala – Delhi & Dubai Pineapple
Dibrugarh – Delhi & Dubai Mandarin & Oranges
Guwahati  – Hong Kong Pulses, fruits & vegetables


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Nutritional security and climate-friendly agriculture for Punjab


From UPSC perspective, the following things are important :

Prelims level : Issues with paddy cultivation

Mains level : Paper 3- Pathway to switch from paddy to maize cultivation


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.”


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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Global Agricultural Productivity Report, 2021


From UPSC perspective, the following things are important :

Prelims level : Global Agricultural Productivity Report, 2021

Mains level : Agricultural Productivity

Global agricultural productivity (GAP) is not growing as fast as the demand for food, amid the impact of climate change, according to a new report.

GAP Report

  • The GAP Report is released by Virginia Tech’s College of Agriculture and Life Sciences.
  • It urges the acceleration of productivity growth from smallholders to large-scale farmers to meet consumers’ needs and address current and future threats to human and environmental well-being.

Key indicator: Total factor productivity (TFP)

  • In agriculture, productivity is measured as Total Factor Productivity or TFP.
  • An increase in TFP growth indicates that more crops, livestock, and aquaculture products were produced with the same amount (or less) land, labor, fertilizer, machinery, feed, and livestock.
  • TFP grows when producers increase output using improved technologies and practices, such as advanced seed varieties, precision mechanization, efficient nutrient and water management techniques, and improved animal care practices.
  • Using agricultural inputs efficiently to generate more output reduces agriculture’s environmental impact and lowers costs for producers and consumers.

Highlights of the report

  • Total factor productivity (TFP) is growing at an annual rate of 1.36 per cent (2020-2019).
  • This is below the annual target of 1.73 per cent growth to sustainably meet the needs of consumers for food and bioenergy in 2050.
  • Climate change has already reduced productivity growth globally by 21 per cent since 1961, the report said.
  • In the drier regions of Africa and Latin America, climate change has slowed productivity growth by as much as 34 per cent.
  • The report noted that middle-income countries including India, China, Brazil and erstwhile Soviet republics continued to have strong TFP growth rates.

Agricultural productivity in India

  • India has seen strong TFP and output growth this century.
  • The most recent data shows an average annual TFP growth rate of 2.81 per cent and output growth of 3.17 per cent (2010–2019).

Key recommendations

  • The report urged accelerating investments in agricultural R&D to increase and preserve productivity gains, especially for small farmers.
  • It identified six strategies and policies that would create sustainable agricultural growth at all scales of production:
  1. Invest in agricultural research and development
  2. Embrace science-and-information-based technologies
  3. Improve infrastructure for transportation, information and finance
  4. Cultivate partnerships for sustainable agriculture, economic growth and improved nutrition
  5. Expand and improve local, regional and global trade
  6. Reduce post-harvest loss and food waste


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India needs a carbon policy for agriculture


From UPSC perspective, the following things are important :

Prelims level : Fertigation

Mains level : Paper 3- Emissions from agriculture and related issues


The UK is set to host the 26th UN Climate Change Conference of the Parties (CoP26) in Glasgow from October 31 to November 12 with a view to accelerate action towards the Paris Agreement’s goals. The focus should be on climate finance and transfer of green technologies at low cost.

Cause of concern for India

  • According to the Global Carbon Atlas, India ranks third in total greenhouse gas emissions by emitting annually around 2.6 billion tonnes (Bt) CO2eq, preceded by China (10 Bt CO2eq) and the United States (5.4 Bt CO2eq), and followed by Russia (1.7Bt) and Japan (1.2 Bt).
  • India ranked seventh on the list of countries most affected due to extreme weather events, incurring losses of $69 billion (in PPP) in 2019 (Germanwatch, 2021).
  • The fact that 22 of the 30 most polluted cities in the world are in India is a major cause of concern.
  • Delhi is the world’s most polluted capital as per the World Air Quality Report, 2020.

Issues raised in global negotiation on climate change

  • Nations are still quibbling about historical global emitters and who should take the blame and fix it.
  • Global negotiations on climate change often talk about emissions on a per capita basis and the emission intensity of GDP.
  • Per capita emission: Of the top five absolute emitters, the US has the highest per capita emissions (15.24 tonnes), followed by Russia (11.12 tonnes).
  • India’s per capita emissions is just 1.8 tonnes, significantly lower than the world average of 4.4 tonnes per capita.
  • If one takes emissions per unit of GDP, of the top five absolute emitters, China ranks first with 0.486 kg per 2017 PPP $ of GDP, which is very close to Russia at 0.411 kg per 2017 PPP $ of GDP.
  • India is slightly above the world average of 0.26 (kg per 2017 PPP $ of GDP) at 0.27 kg, while the USA is at 0.25, and Japan at 0.21.
  • In our Nationally Determined Contributions (NDCs) submitted in 2016, India committed to “reduce emission intensity of its GDP by 33 to 35 per cent by 2030 from 2005 level.”

Sector-wise emission and share of agriculture in it

  • Global emissions show that electricity and heat production and agriculture, forestry and other land use make up 50 per cent of the emissions.
  • But the emissions pie in India owes its largest chunk (44 per cent) to the energy sector, followed by the manufacturing and construction sector (18 per cent), and agriculture, forestry and land use sectors (14 per cent), with the remaining being shared by the transport, industrial processes and waste sectors.
  • The share of agriculture in total emissions has gradually declined from 28 per cent in 1994 to 14 per cent in 2016.
  • However, in absolute terms, emissions from agriculture have increased to about 650 Mt CO2 in 2018, which is similar to China’s emissions from agriculture.
  • Agricultural emissions in India are primarily from the livestock sector (54.6 per cent) in the form of methane emissions due to enteric fermentation and the use of nitrogenous fertilisers in agricultural soils (19 per cent) which emit nitrous oxides; rice cultivation (17.5 per cent) in anaerobic conditions accounts for a major portion of agricultural emissions followed by livestock management (6.9 per cent) and burning of crop residues (2.1 per cent).

Way forward: Carbon policy for agriculture

  • Reward farmers through carbon credit: A carbon policy for agriculture must aim not only to reduce its emissions but also reward farmers through carbon credits which should be globally tradable.
  • Focus on livestock: With the world’s largest livestock population (537 million), India needs better feeding practices with smaller numbers of cattle by raising their productivity.
  • Switch areas from rice to maize: While direct-seeded rice and alternative wet and dry practices can reduce the carbon footprint in rice fields, the real solution lies in switching areas from rice to maize or other less water-guzzling crops.
  • Efficient fertiliser use: Agricultural soils are the largest single source of nitrous oxide (N2O) emissions in the national inventory.
  • Nitrous oxide emissions from use of nitrogen-fertiliser increased by approximately 358 per cent during 1980-81 to 2014-15.
  • An alternative for better and efficient fertiliser use would be to promote fertigation and subsidise soluble fertilisers.
  • Incentives and subsidies: The government should incentivise and give subsidies on drips for fertigation, switching away from rice to corn or less water-intensive crops, and promoting soluble fertilisers at the same rate of subsidy as granular urea.

Consider the question “Agriculture sector is one of the significant contributors to the greenhouse gas emissions. This underscores the importance of carbon policy for agriculture in India. In this context, suggest the steps needed to be taken under the policy.” 


Carbon policy for agriculture in India would help it meet its goals in reducing emissions while making agriculture climate-resilient.

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Back2Basics: Anaerobic conditions

  • An anaerobic process in which organic food is converted into simpler compounds, and chemical energy (ATP) is produced. Certain types use the electron transport chain system to pass the electrons to the final electron acceptor, which may be an inorganic or an organic compound, but not oxygen.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Seeding a data revolution in Indian Agriculture


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Digitization of Agriculture

In June this year, two significant documents relating to the Indian agriculture sector were released.

What are the reports about?

  • The first is a consultation paper on the India Digital Ecosystem of Agriculture (IDEA) and the second on Indian Agriculture: Ripe for Disruption from a private organisation, Bain and Company.
  • Through their work, these reports have depicted the agriculture reforms announced by the union government as a game-changer in the agriculture sector.

Challenges highlighted

The major challenges of the agriculture sector are:

  1. Food Sufficiency but Nutrition Deficiency
  2. High import of edible oil and oilseeds
  3. Yield plateaus
  4. Degrading soil, Water stress
  5. Inadequate market infra/linkages
  6. Unpredictable, volatile prices
  7. Post-harvest losses, wastages
  8. Lack of crop planning due to information asymmetry

Key takeaway: Way for doubling farmers income

  • These reports in short argues that benefiting from the huge investments into the agri-ecosystem, doubling farmers’ income targets can be achieved in near future.
  • The Indian agriculture sector in future will encompass farm to fork and pave the way for a single national market with a national platform with better connection between producer and consumers.

The forecast

  • The Bain report is a data-based prediction on agri-business scenarios, anchored to the agricultural set-up at present and predicting its future trajectories in another 20 years.
  • It includes targeting the production of alternative proteins, and food cell-based food/ingredients and initiating ocean farming, etc.
  • The report has a ‘today forward– future back approach’ and predicts a drastic investment opportunity development by 2025.
  • The agriculture sector (currently worth $370 billion), is estimated to receive an additional $35 billion investment.

The two enabling conditions for such investment opportunities are:

  1. Changes in the regulatory framework, especially recent changes in the Farm Acts and
  2. Digital disruption

The IDEA of integration

  • Digital disruption: The blueprint of “digital agriculture” is similar to the digital disruption mentioned in the Bain report.
  • Integration: Eventually, the farmer and the improvement of farmers’ livelihood is the aim of the IDEA concept and it is proposed to happen through tight integration of agri-tech innovation and the agriculture industry.
  • Enabling conditions: To be precise, the IDEA concept profounds the creation of second enabling conditions (which is described in the Bain report).
  • Openness of data: The IDEA principles explicitly talk about openness of data, which means open to businesses and farmers, indicating the kind of integration it aims at.
  • Value-added innovative services: by agri-tech industries and start-ups are an integral part of the IDEA architecture.
  • Data architecture: The services listed in the document (to be available on the platform) are equally important data for farmers and businesses.

A thread of digital disruption

  • The IT industry has opposition to IDEA mainly due to the ethics of creating a Unique Farmer ID based on one’s Aadhaar number and also the potential for data misuse.
  • Beyond the news coverage about the prospects of achieving the goal of Doubling Farmers Income on which the present government has almost lost its hope.

Issues with these reports

  • The Bain report has not been widely discussed — at least in the public domain.
  • The assumptions used by authors especially for its ‘future back approach’, need more or less focusing on widespread food production in controlled environments.
  • The emission, energy, and other resource footprints and sustainability issues around these techniques are not adequately studied.

Yet these reports are important

  • The report has convincingly demonstrated the business opportunity available in supply chains between farm to APMC mandi and mandi to the customer.
  • This can be realised with the support of digital disruption and the latest agriculture reforms.
  • Both these reports heavily rely on digital disruption to improve farmers’ livelihoods, without discussing how much farmers will be prepared to benefit from the emerging business.

An unconvincing ‘how’

  • Digital divide: The fact is that a majority of small and marginal farmers are not technology-savvy.
  • No capacity building: That most of them are under-educated for capacity building is ignored amidst these ambitious developments.
  • Unrealistic assumptions: The Bain report relies on the general assumption that more investments into the agriculture sector will benefit farmers; ‘but how’ has not been convincingly answered.
  • Overemphasis on technology: Similarly, how the technology fix will help resolve all the issues of Indian agriculture listed at the beginning of the report is unclear in the IDEA concept.
  • Reluctance by farmers: These reports ignore the protest of farmers against the reforms without considering it as a barrier or risk factor resulting in a repealing of these new farm laws.

Way ahead: Focus on the farmer

  • A data revolution is inevitable in the agriculture sector, given its socio-political complexities.
  • However, we cannot just count on technology fixes and agri-business investments for improving farmers’ livelihoods.
  • There need to be immense efforts to improve the capacities of the farmers in India – at least until the educated young farmers replace the existing under-educated small and medium farmers.
  • This capacity building can be done through a mixed approach through FPOs and other farmers’ associations where technical support is available for farmers.


  • Considering the size of the agriculture sector of the country this is not going to be an easy task but would need a separate program across the country with considerable investment.


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Revealing India’s actual farmer population


From UPSC perspective, the following things are important :

Prelims level : SAAH report

Mains level : Paper 3- India's farmer population and related issues


Depending on the source, there is a wide variation in the number of farmers in India.

What is the extent of variation?

  • The last Agriculture Census for 2015-16 placed the total “operational holdings” in India at 146.45 million.
  • The Pradhan Mantri-Kisan Samman Nidhi (PM-Kisan) scheme has 110.94 million beneficiaries.
  • National Statistical Office’s Situation Assessment of Agricultural Households (SAAH) report for 2018-19 pegs the country’s “agricultural households” at 93.09 million.

What explains the variation?

  • This wide variation has largely to do with methodology.
  • The Agriculture Census looks at any land used even partly for agricultural production, the land does not have to be owned by that person (“cultivator”), who needn’t also belong to an “agricultural household”.
  • The SAAH report, on the other hand, considers only the operational holdings of agricultural households.
  • Members of a household may farm different lands.
  • The SAAH takes all these lands as a single production unit.
  • It does not count multiple holdings if operated by individuals living together and sharing a common kitchen.
  • Accounting for only “agricultural households”, while not distinguishing multiple operating holdings within them, brings down India’s official farmer numbers to just over 93 million.
  • Expansive definition: SAAH’s definition of “agricultural households” is expansive.
  • It covers households having at least one member self-employed in agriculture and whose annual value of produce exceeds Rs 4,000.
  • Such self-employment needs to be for only 30 days or more during the survey reference period of six months.

So, what is the actual number of farmers?

  • The estimate of actual number is based on the following methodology.
  • The SAAH report gives data on agricultural household income from farm and non-farm sources, both state-wise and across different land-possessed/operational holding size classes.
  • From the above data, we can categorise “full-time/regular” farmers as those households whose net receipts from farming are at least 50 per cent of their total income from all sources.
  • The SAAH report also has state-wise estimates of agricultural households for each land-possessed size class.
  • By taking only those size classes in which the dependence ratios are higher than (or close to) 50 per cent, and adding up the corresponding estimated number of agricultural households, we are able to arrive at the total “full-time/regular” farmers for each state.
  • Following the above methodology, India’s “serious” farmer population, in turn, adds up to 36.1 million, which is hardly 39 per cent of the SAAH estimate.

Policy implications of having actual numbers of farmers significantly lower than estimated

  • If the actual number of farmers deriving a significant share of their income from agriculture per se is only 40 million a host of policy implications follow.
  • Targeted policy: One must recognise that farming is a specialised profession like any other.
  • “Agriculture policy” should, then, target those who can and genuinely depend on farming as a means of livelihood.
  • Minimum support prices, government procurement, agricultural market reforms, fertiliser and other input subsidies, Kisan Credit Card loans, crop insurance or export-import policy on farm commodities will matter mainly to “full-time/regular” farmers.
  • Land size matters: The SAAH report reveals that the 50 per cent farm income dependence threshold is crossed at an all-India level only when the holding size exceeds one hectare or 2.5 acres.
  • This is clearly the minimum land required for farming to be viable, which about 70 per cent of agricultural households in the country do not possess.
  • Policy for labourers: What should be done for this 70 per cent, who are effectively labourers and not farmers?
  • Their problems cannot be addressed through “agriculture policy”.
  • The scope for value-addition and employment can be more outside than on the farm — be it in aggregation, grading, packaging, transporting, processing, warehousing and retailing of produce or supply of inputs and services to farmers.

Consider the question “What explains the wide variation in the estimates of the number of farmers in India? What are the implications of such variations for agriculture policy?”


Agriculture policy should aim not only at increasing farm incomes but also adding value to produce outside and closer to the farms. A more sustainable solution lies in reimagining agriculture beyond the farm.

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From UPSC perspective, the following things are important :

Prelims level : PM-KUSUM

Mains level : Paper 3- Revitalising PM-KUSUM


The Union Minister of Power, New and Renewable Energy recently reviewed the progress of the PM-KUSUM scheme and reaffirmed the government’s commitment to accelerating solar pump adoption.


  • It was launched in 2019.
  • PM-KUSUM aims to help farmers access reliable day-time solar power for irrigation, reduce power subsidies, and decarbonise agriculture.
  • PM-KUSUM provides farmers with incentives to install solar power pumps and plants in their fields.
  • Three deployment models: Pumps come in three models: off-grid solar pumps solarised agricultural feeders, or grid-connected pumps.
  • Off-grid pumps have been the most popular, but the nearly 2,80,000 systems deployed fall far short of the scheme’s target of two million by 2022.
  • The other two models are also worth scaling up for they allow farmers to earn additional income by selling solar power to discoms, and discoms to procure cheap power close to centres of consumption.


  • Awareness challenge: Barriers to adoption include limited awareness about solar pumps.
  • Upfront contribution: The other barrier includes farmers’ inability to pay their upfront contribution.
  • Limited progress on two models: Progress on the other two models has been rather poor due to regulatory, financial, operational and technical challenges.


  • Extend the scheme’s timelines: Most Indian discoms have a surplus of contracted generation capacity and are wary of procuring more power in the short term.
  • Extending PM-KUSUM’s timelines beyond 2022 would allow discoms to align the scheme with their power purchase planning.
  • Level playing field: Discoms often find utility-scale solar cheaper than distributed solar (under the scheme) due to the latter’s higher costs and the loss of locational advantage due to waived inter-State transmission system (ISTS) charges.
  • To tackle the bias against distributed solar, we need to address counter-party risks and grid-unavailability risks at distribution substations, standardise tariff determination to reflect the higher costs of distributed power plants, and do away with the waiver of ISTS charges for solar plants.
  • Streamline regulation: We need to streamline land regulations through inter-departmental coordination.
  •  States should constitute steering committees comprising members from all relevant departments for this purpose.
  • Financing farmers contribution:  There is a need to support innovative solutions for financing farmers’ contributions.
  • Many farmers struggle to pay 30-40% of upfront costs in compliance with scheme requirements.
  • To ease the financial burden on farmers, we need out-of-the-box solutions.
  • Grid-connected solar pumps: Current obstacles to their adoption include concerns about their economic viability in the presence of high farm subsidies and farmers’ potential unwillingness to feed in surplus power when selling water or irrigating extra land are more attractive prospects.
  • Further, the grid-connected model requires pumps to be metered and billed for accounting purposes but suffers from a lack of trust between farmers and discoms.
  • Adopting solutions like smart meters and smart transformers and engaging with farmers can build trust and address some operational challenges.


These measures, combined with other agriculture schemes and complemented by intensive awareness campaigns, could give a much-needed boost to PM-KUSUM.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agri exports in India


From UPSC perspective, the following things are important :

Prelims level : Generalised System of Preference

Mains level : Paper 3- Agri-exports


The Indian government has been encouraging agricultural exports to meet an ambitious target of $60bn by 2022.

India’s agri-exports

  • The Ministry of Food Processing Industries shows that the contribution of agricultural and processed food products in India’s total exports is 11%.
  • Primary processed agricultural commodities form the majority share.
  • India’s export earnings will increase by focusing more on value-added processed food products rather than primary processed agricultural commodities (Siraj Hussain, 2021).
  • From 2015-16 to 2019-20, the value of agricultural and processed food increased significantly from $17.8bn to $20.65bn.
  • The Indian agricultural economy is shifting from primary to secondary agriculture where the focus is more on developing various processed foods.

Changes in India’s agricultural export basket

  • Traditionally, Basmati rice is one of the top export commodities.
  • However, now there is an unusual spike in the export of non-basmati rice.
  • In 2020-21, India exported 13.09 million tonnes of non-basmati rice ($4.8bn), up from an average 6.9 million tonnes ($2.7bn) in the previous five years.
  • Indian buffalo meat is seeing a strong demand in international markets due to its lean character and near organic nature.
  • The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.

Challenges in Increasing agri-export

  • Lack of comparative advantage: The export of processed food products has not been growing fast enough because India lacks comparative advantage in many items.
  •  Domestic prices of processed food products are much higher compared to the world reference prices.
  • Non-tariff measures: The exporters of processed food confront difficulties and non-tariff measures imposed by other countries on Indian exports (Siraj Hussain, 2021).
  • Some of these include mandatory pre-shipment examination by the Export Inspection Agency being lengthy and costly.
  • Compulsory spice board certification being needed even for ready-to-eat products.
  • Lack of strategic planning of exports by most State governments.
  • Lack of a predictable and consistent agricultural policy discouraging investments by the private sector.
  • Prohibition of import of meat- and dairy based-products in most of the developed countries.
  • Withdrawal of the Generalised System of Preference by the U.S. for import of processed food from India.

Consider the question “What are the challenges facing export of processed foods from India? Suggest the way forward.”

Way forward

  • The main objective of the Agriculture Export Policy is to diversify and expand the export basket so that the export of higher value items, including perishables and processed food, be increased
  • Support to industry: The policy needs to nurture food processing companies, ensuring low cost of production and global food quality standards, and creating a supportive environment to promote export of processed food.
  • Focus on reputed brands: Reputed Indian brands should be encouraged to export processed foods globally as they can comply with the global standard of codex.
  • Indian companies should focus on cost competitiveness, global food quality standards, technology, and tap the global processed food export market.


India has competitive advantages in various agricultural commodities which can be passed onto processed foods. It has the potential to become a global leader in the food processing sector.

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National Edible Oil Mission (OP)


From UPSC perspective, the following things are important :

Prelims level : National Edible Oil Mission-Oil Palm (NEOM-OP)

Mains level : Edible oil scarcity in India

Last week, the government announced the minimum support prices (MSP) of rabi crops for the marketing season 2022-23.

Key Highlight: Hike for Oilseeds MSPs

  • The MSP for wheat is up by 2 per cent while that of rapeseed-mustard is up by 8.6 per cent.
  • This indicates that the government wants to focus more on edible oils/oilseeds than on wheat.
  • It is important to note that PM recently announced a Rs 11,000-crore National Edible Oil Mission-Oil Palm (NEOM-OP), as a part of the Aatmanirbhar Bharat Abhiyan.


  • This is a bold step to augment domestic edible oil supplies, given that 60 per cent of the edible oil consumed in the country is imported — more than half of this is palm oil followed by soybean and sunflower.
  • In FY 2020-21, edible oil imports touched $ 11 billion or about Rs 80,000 crore (for 13.5 million tonnes).
  • Despite these imports, edible oil inflation remains very high (July 2021 was 32.5 per cent).
  • Against this backdrop, the move to promote oil palm is a step in the right direction.

Reasons for oil price hikes

  • Effective duty for rapeseed and cottonseed oils ranges from 38.5 per cent for crude and 49.5 per cent for refined oils.
  • It’s this high import duty, at a time when global edible oil prices have gone up by almost 70 per cent (y-o-y), that has caused high domestic inflation (32.5 per cent) in edible oils.

Why Oil Palm?

  • It is the only crop that can give up to four tonnes of oil productivity per hectare under good farm practices.
  • But it is a water-guzzling crop, loves humidity (requires 150 mm rainfall every month) and thrives best in areas with temperatures between 20 and 33 degrees Celsius.
  • The National Re-assessment Committee (2020) has identified 28 lakh hectares suitable for oil palm cultivation in the country — the actual area under oil palm cultivation, as of 2020, is only 3.5 lakh hectares.
  • Much of this (34 per cent) is in the Northeastern states, including Assam, followed by Andhra Pradesh (19 per cent) and Telangana (16 per cent).
  • A large potential is thus waiting to be tapped.

No reasons for farmers to switch

  • The government has a massive procurement programme for wheat, but a very meagre one for rapeseed-mustard even when the prices rule below MSP.
  • This relative incentive structure remains in favour of wheat.
  • So, we doubt if farmers will switch from wheat to mustard in any meaningful manner to bridge the edible oil deficit.

What can be done to make NEOM-OP more effective?

The NEOM-OP intends to focus on productivity and area expansion by supporting the farmers in the following ways:

(A) Financial assistance

  • Input assistance for planting material, additional assistance to cover maintenance/opportunity costs of farmers, with no limits on acreage.
  • Big-budget assistance to industries that plan to set up a five tonnes/hour processing unit.
  • Such a comprehensive assistance package will attract farmers as well as incentivize the industry to work with agriculturists and augment domestic edible oil production.

(B) Pricing mechanism for OP

  • There will be no MSP, but the FFB price for farmers would be fixed at 14.3 per cent of average landed crude palm oil price of the past five years, adjusted with the wholesale price index.
  • This is the most critical part of the pricing policy and the formula needs to be carefully calibrated.
  • However, the litmus test of pricing will be dovetailing it with the import tariff policy to protect the farmers in case landed prices fall below the cost of production.

Way forward

(1) Rationalizing import duties

  • The Commission for Agricultural Costs and Prices (CACP, which recommends MSP) recommended that India should keep an import duty trigger at $800/tonne (say).
  • If the import price falls below $800/tonne, the import tariff needs to go up in countercyclical manner.
  • Thus, import duty needs to be in sync with rational domestic price policy.
  • It is a necessary condition to give a fillip to aatmanirbharta in edible oils.

(2) Neutral incentive structure

  • But the sufficient condition would be revisiting the existing incentive structure that unduly favours rice, wheat and sugarcane through heavy subsidisation of power, fertilisers and open-ended procurement.
  • The need is to devise a crop-neutral incentive structure where cropping patterns are aligned with demand patterns, and the crops are produced in a globally competitive manner.


  • There is a huge deficit in edible oil production in the country.
  • Achieving self-sufficiency in edible oil production through the other oilseeds complex would require adding about 45 million hectares under oilseed cultivation.
  • This is not possible without drastically cutting down the area under cereal crops.
  • The best alternative is, therefore, to ensure proper care of palm oil crops, provide good planting material, better irrigation management, fertilizers and other inputs to raise productivity to four tonnes of oil/hectare.

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How India’s food systems must respond to the climate crisis


From UPSC perspective, the following things are important :

Prelims level : EAT-Lancet diet

Mains level : Paper 3- Food system issues


This month, the UN Secretary-General will convene the Food Systems Summit. There is a proposal to have an International Panel on Food and Nutritional Security (IPFN) — an “IPCC for food,” similar to the panel on climate change.

Issues with India’s agriculture?

  • What is a food system? According to the Food and Agriculture Organisation (FAO), food systems encompass the entire range of actors involved in the production, aggregation, processing, distribution, consumption and disposal of food products.
  • Effects of Green Revolution: The Green Revolution succeeded in making India food sufficient, however, it also led to water-logging, soil erosion, groundwater depletion and the unsustainability of agriculture.
  • Deficit mindset: Current policies are still based on the “deficit” mindset of the 1960s.
  • Biased policies: The procurement, subsidies and water policies are biased towards rice and wheat.
  • Three crops (rice, wheat and sugarcane) corner 75 to 80 per cent of irrigated water.
  • Lack of diversification: Diversification of cropping patterns towards millets, pulses, oilseeds, horticulture is needed for more equal distribution of water, sustainable and climate-resilient agriculture.

Issues with various elements of India’s food system

1) Changes needed in India’s agriculture

  • The narrative of Indian agriculture has to be changed towards more diversified high-value production, better remunerative prices and farm incomes.
  • Inclusive: It must be inclusive in terms of women and small farmers.
  • Similarly, women’s empowerment is important particularly for raising incomes and nutrition.
  • Women’s cooperatives and groups like Kudumbashree in Kerala would be helpful.
  • Small farmers require special support, public goods and links to input and output markets.
  • Better remunerative prices: Farmer producer organisations help get better prices for inputs and outputs for small-holders.
  • The ITC’s E-Choupal is an example of technology benefiting small farmers.
  • Innovation: One of the successful examples of a value chain that helped small-holders, women and consumers is Amul (Anand Milk Union Ltd) created by Verghese Kurien.
  • Such innovations are needed in other activities of food systems.

2) Hunger and malnutrition in India

  • The NFHS-5 shows that under-nutrition has not declined in many states even in 2019-20. Similarly, obesity is also rising.
  • A food systems approach should focus more on the issues of undernutrition and obesity.
  • Safe and healthy diversified diets are needed for sustainable food systems.
  • The EAT-Lancet diet, which recommends a healthy and sustainable diet, is not affordable for the majority of the population in India.
  • Animal-sourced foods are still needed for countries like India. For instance, per capita consumption of meat is still below 10 kg in India as compared to 60 to 70 kg in the US and Europe.

3) Ensuring sustainability of food system

  • Estimates show that the food sector emits around 30 per cent of the world’s greenhouse gases.
  • Sustainability has to be achieved in production, value chains and consumption.
  • How to achieve sustainability? Climate-resilient cropping patterns have to be promoted.
  • Instead of giving input subsidies, cash transfers can be given to farmers for sustainable agriculture.

4) Health and social protection

  • Food systems also need health infrastructure.
  • The Covid-19 pandemic has exposed the weak health infrastructure in countries like India.
  • Inclusive food systems need strong social protection programmes.
  • India has long experience in these programmes. Strengthening India’s National Rural Employment Guarantee Act, public distribution system (PDS), nutrition programmes like ICDS, mid-day meal programmes, can improve income, livelihoods and nutrition for the poor and vulnerable groups.

5) Role of non-agriculture

  • Some economists like T N Srinivasan argued that the solution for problems in agriculture was in non-agriculture.
  • Reduce pressure on agriculture: Therefore, labour-intensive manufacturing and services can reduce pressure on agriculture.
  • Income from agriculture is not sufficient for smallholders and informal workers.
  • Strengthening rural MSMEs and food processing is part of the solution.


India should also aim for a food systems transformation, which can be inclusive and sustainable, ensure growing farm incomes and nutrition security.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

The dangers of India’s palm oil push


From UPSC perspective, the following things are important :

Prelims level : National Mission on Oilseeds and Oil Palm

Mains level : Paper 3- Oil palm cultivation in India


On August 15, Prime Minister Narendra Modi announced a support of Rs 11,000 crore to incentivise oil palm production.

National Mission on Edible Oils and Oil Palm (NMEO-OP)

  • Under NMEO-OP, the government intends to bring an additional 6.5 lakh hectares under oil palm cultivation.
  • The agro-business industry has said the move will help its growth and reduce the country’s dependence on palm oil imports, especially from Indonesia and Malaysia.
  • Indonesia has emerged as a significant palm oil hub in the last decade and has overtaken Malaysia.
  • The two countries produce 80 per cent of global oil palm.
  • Indonesia exports more than 80 per cent of its production.

Reducing the import dependence

  • India imported 18.41 million tonnes of vegetable oil in 2018.
  • The National Mission on Oilseeds and Oil Palm are part of the government’s efforts to reduce the dependence on vegetable oil production.
  • The Yellow Revolution of the 1990s led to a rise in oilseeds production.
  • Though there has been a continuous increase in the production of diverse oilseeds — groundnut, rapeseed and mustard, soybean — that has not matched the increasing demand.
  • Most of these oilseeds are grown in rain-fed agriculture areas of Gujarat, Andhra Pradesh, Haryana, Karnataka, Rajasthan, Madhya Pradesh, Tamil Nadu and Uttar Pradesh.

Issues with oil palm cultivation in India

  • Impact on biodiversity: Studies on agrarian change in Southeast Asia have shown that increasing oil palm plantations is a major reason for the region’s declining biodiversity. 
  • The Northeast is recognised as the home of around 850 bird species, it is also home to citrus fruits, it is rich in medicinal plants and harbours rare plants and herbs.
  • Above all, it has 51 types of forests.
  • Studies conducted by the government have also highlighted the Northeast’s rich biodiversity.
  • The palm oil policy could destroy this richness of the region.
  • To preserve the environment and biodiversity, Indonesia and Sri Lanka have already started putting restrictions on palm tree plantation.
  • Water pollution: Along with adversely impacting the country’s biodiversity, it has led to increasing water pollution.
  • Climate change: The decreasing forest cover has significant implications with respect to increasing carbon emission levels and contributing to climate change.
  • Against the notion of self-reliance: Such initiatives are also against the notion of community self-reliance:
  • The initial state support for such a crop results in a major and quick shift in the existing cropping pattern that are not always in sync with the agro-ecological conditions and food requirements of the region.
  • Against commitment to sustainable agriculture: The policy also contradicts the government’s commitments under the National Mission for Sustainable Agriculture.
  • The mission aims at “Making agriculture more productive, sustainable, remunerative and climate resilient by promoting location specific integrated/composite farming systems.”
  • The palm oil mission, instead, aims at achieving complete transformation of the farming system of Northeast India.
  • Studies also show that in case of variations in global palm oil prices, households dependent on palm oil cultivation become vulnerable.

Consider the question “India depend on import for its vegetable oil requirements to a larger extent. What are the steps taken by the government to reduce the dependence? Can oil palm cultivation in India be a solution?”


Similar environmental and political outcomes cannot be ruled out in India. Apart from the possible hazardous impacts in Northeast India, such trends could have negative implications on farmer incomes, health, and food security in other parts of the country in the long run.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Liberalizing Trade in Agriculture Machinery


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Significance of mechnisation of agriculture


On July 15, the Centre issued a notification moving power tillers (PT) and their components from the “free” to “restricted” category indicating a clear intent to provide protection to the domestic industry.

How heterodox opening policies affects farming

Heterodox opening policies, being open on the export side while being closed on the import side, have long-term unintended consequences.

  • Productivity loss: One impact of heterodox policies is subpar mechanisation and productivity loss in agriculture.
  • India’s mechanisation coverage is around 40-45 per cent, compared to 90 per cent in developed countries.
  • At present, only Punjab, Haryana and western UP have mechanisation rates between 70 and 80 per cent whereas in eastern and southern states it is between 35 and 45 per cent, with even smaller coverage in North-Eastern states.
  • Comparatively high tariffs on agricultural machinery, placement under restricted trade hits the cog in the wheel of mechanisation.
  • Uncertainty and lower trade: A shift to restricted category and frequently changing tariffs engenders uncertainty and lowers trade.
  • Disincentivise innovation: Such policies also disincentivises domestic machine manufacturers to invest and innovate — the perils of protection.

What India can learn from Bangladesh on farm mechanisation

  • Starting lower, Bangladesh overtook India in mechanisation by 2006.
  • A perfect example of orthodox opening in the late 1980s, Bangladesh removed import bans on Power Tiller and other machinery like diesel engines.
  • By 1995, PT were made duty free and credit support was provided for purchases.
  • Studies have credited PT in increasing the rice yield in Bangladeh, which grew 2.1 per cent annually from 1990, compared to 1.6 per cent between 1960 and 1989.

Way forward

If productivity in agriculture and incomes of farmers were to go up significantly, Indian agriculture must hit the mechanisation frontier.

  • Liberal and Stable trade policies: Liberal and stable trade policies will increase access, competition will expand varieties and bring down the prices.
  • New trade economics teaches us that farmers would be successful in trading or accessing markets only when highly productive, which beckons large scale and intensive mechanisation.
  • Credit support: Bangladesh also shows the role of complementary policies such as credit support.
  • Once the farmers achieve sufficiently high productivity, they can access markets and even integrate with global value chains (GVC) if allowed by policy as intended in the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020.


Liberal trade in machinery presents an opportunity to access distant and international markets. The key is to be both ways open.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

What is Retractable Roof Polyhouse?


From UPSC perspective, the following things are important :

Prelims level : Retractable Roof Polyhouse

Mains level : Not Much

The CSIR-CMERI has recently inaugurated a “naturally ventilated polyhouse facility” and laid the foundation stone of “retractable roof polyhouse”.

What is a Polyhouse?

  • A polyhouse is a specially constructed structure like a building where specialized polythene sheet is used as a covering material under which crops can be grown in partially or fully controlled climatic conditions.
  • It is covered with a transparent material as to permit the entry of natural light. Polyhouses are also helpful in reducing threats such as extreme heat and pest attacks in crops.
  • This is especially important for crops growing in the open field with no protection from the weather, and therefore its yield, quality, and crop maturity timings are changed.

Retractable Roof Polyhouse

  • The retractable roof system is a modular screen system for greenhouses that helps in saving costs and time along with providing stability, flexibility & durability for the greenhouse structure.
  • Such polyhouse will have an automatic retractable roof which will be operated based on weather conditions and crop requirements from the conditional database using the software.

Advantages offered

  • Ability to use the benefits of natural weather conditions
  • Long life of the system and material used
  • Easy assembly and installation
  • Maximum insulation and complete protection from insecticides
  • Easy maintenance & even easier repair work during operation

Why need such polyhouse?

  • With rapidly rising temperatures due to mounting greenhouse gases in the atmosphere from human activities, crops are increasingly facing both threats — extreme heat and pest attacks — simultaneously.
  • Crop losses in India due to insect pests are about 15 percent at present and this loss may increase as climate change lowers the plant defense system against insects and pests.
  • Conventional greenhouses have a stationary roof to reduce the effect of weather anomalies and pests.
  • However, there are still disadvantages due to roof covering which sometimes lead to excessive heat and insufficient light (early morning).
  • Besides this, they are also prone to insufficient levels of carbon dioxide, transpiration, and water stress.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

How to exit farming risk trap


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Agriculture reforms to reduce the risk in agriculture in India


The farmers’ protest against farm laws brings into focus the factors afflicting agriculture in India.

Issues of Indian agriculture

  • Some 50 years after the Green Revolution, an all-India agricultural landscape is characterized by relatively low productivity levels that co-exist with high levels of variation in crop yields across our farming districts.
  • Excessive control: Various government agencies have a say on all aspects of the farmer’s livelihood — the latest count includes 13 central and countless state ministries and agencies.
  • These agencies oversee rural property rights, land use, and land ceilings; commodity prices, input subsidies, and taxes, infrastructure, production, credit, marketing and procurement, public distribution, research, education, trade policy, etc.
  • Poor policies: The result has been a mix of arbitrary and conflicting policy interventions by both the central and state government agencies.
  • Poor provision of basic public goods: This, combined with poor and varying levels of provision of basic public goods, including irrigation explains the poor state of Indian agriculture.

Risk-to-return in agriculture

  • The following figures indicate the median (typical) district-level yield (in tonnes-per-hectare) for four major crops — rice, wheat, maize, and cotton — along with the geographic variability of this yield (risk) across all reporting districts for each year from 1966 to 2018.
  • Combining these two values — median district yield and its geographic variability across all farming districts — provides us a measure of the all-India level of risk-to-return, in percentage terms.

Lessons from risk-to-return profile

  • One, the large gap in rice and wheat yields that opened up between Punjab and Haryana and the farm districts in the rest of the country remains far from being closed.
  • Limited mobility of ideas: There is severe unevenness in the provision of common goods across districts — irrigation, roads, power, etc.
  • There is also the absence of well-functioning markets for agricultural land, crops, and inputs, the slow labour reform, and the poor quality of education.
  • These two factors have worked to reduce overall resource mobility within and across our farming districts.
  • Most importantly, they have limited the mobility of ideas and technology needed to increase productivity and reduce the variation of yield across districts.
  • Decentralization failed: As a result of lack of mobility, the real promise of a decentralized system — of experimentation, of learning from each other, and the adoption of best practices and policies — has failed to materialize.
  • Distortion due to subsidies: Various input subsidies and minimum price guarantee procurement schemes provided by the state have worked to worsen the overall levels of productivity and the risk in agriculture, generating adverse effects for all of us, through the degradation of our water resources, soil, health, and climate.
  • At the same time, these policies have tightened the trap our farm households find themselves in.
  • Thus, as is evident in the next chart, outside of rice and wheat, the risk-to-return levels are even higher in the case of maize and cotton, including for Punjab.
  • As a result, the farm households of Punjab and Haryana fear both, the loss of state support for rice and wheat and the higher risks implied by a switch to other crops.

Way forward

  • Minimize risk: The guiding principle for three farm laws must be to create conditions that allow farm households to maximize their income while minimizing the overall level of risk in Indian agriculture.
  • Freedom of choice: Farmers must be made free to determine the best mix of resources, land, inputs, technology, and organizational forms for their farms.
  • More freedom: Farmers, just as entrepreneurs in the non-farm sector, must be allowed to enter and exit agriculture, on their own terms and contract with whomever they wish.
  • Allow entry of corporates: Entry of the large or small private corporates in the Indian agricultural stream will help the Indian farmer, along with the rest of us, move to a low-risk, high-return path of progress.


The more we delay the needed reforms, the more difficult it will prove to be for all of us to extract ourselves out of these risk-laden currents of agriculture.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

What is National Farmers Database?


From UPSC perspective, the following things are important :

Prelims level : National Farmers Database

Mains level : Read the attached story

The Centre’s new National Farmers Database will only include land-owning farmers for now as it will be linked to digitized land records.

National Farmers Database

  • The Central government had proposed an Agristack initiative to create a digital database that focuses on farmers and the agricultural sector.
  • As part of the first step of this initiative, the government has initiated a farmers database that would serve as the core of the Agristack.
  • The database would be linked to the digital land record management system and would thus only include farmers who were legal owners of agricultural land.
  • The database would facilitate online single sign-on facilities for universal access and usher in proactive and personalized services to farmers such as DBT, soil and plant health advisories, weather advisories
  • It would also facilitate seamless credit & insurance, seeds, fertilizers, and pesticide-related information.

Need for such database

  • India has 140 million operational farmland holdings.
  • The availability of a database would serve an important role in the formulation of evidence-based policies for the agricultural sector.
  • Also, the government can make use of the database for targeted service delivery with higher efficiency and in a focused and time-bound manner.
  • The database could be used to select beneficiaries of government schemes.
  • The availability of data will make it possible to implement digital technologies like AI/Machine Learning, IoT in the agricultural domain, thus opening up the sector to immense opportunities for improvement in productivity.

Back2Basics: AgriStack Initiative

  • The AgriStack is a collection of technologies and digital databases proposed by the Central Government focusing on India’s farmers and the agricultural sector.
  • The central government has claimed that these new databases are being built to primarily tackle issues such as poor access to credit and wastage in the agricultural supply chain.
  • Under AgriStack’, the government aims to provide ‘required data sets’ of farmers’ personal information to Microsoft to develop a farmer interface for ‘smart and well-organized agriculture’.
  • The digital repository will aid the precise targeting of subsidies, services, and policies.
  • Under the program, each farmer of the country will get what is being called an FID, or a farmers’ ID, linked to land records to uniquely identify them.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] Bhartiya Prakritik Krishi Padhati (BPKP)


From UPSC perspective, the following things are important :

Prelims level : Bhartiya Prakritik Krishi Padhati (BPKP)

Mains level : Promotion of Organic Farming

The Union Minister of Agriculture has provided useful information regarding the Bhartiya Prakritik Krishi Padhati (BPKP).

Bhartiya Prakritik Krishi Padhati (BPKP)

  • Natural farming is promoted as BPKP under a centrally sponsored scheme- Paramparagat Krishi Vikas Yojana (PKVY).
  • The scheme mainly emphasizes the exclusion of all synthetic chemical inputs and promotes on-farm biomass recycling.
  • It stresses biomass mulching; use of cow dung-urine formulations; plant-based preparations and time to time working of soil for aeration.
  • Under BPKP, financial assistance of Rs 12200/ha for 3 years is provided for cluster formation, capacity building, and continuous handholding by trained personnel, certification, and residue analysis.

About Paramparagat Krishi Vikas Yojana

  • “PKVY” is an elaborated component of Soil Health Management (SHM) of the major project National Mission of Sustainable Agriculture (NMSA).
  • Under PKVY Organic farming is promoted through the adoption of the organic village by cluster approach and PGS certification.

The Scheme envisages:

  • Promotion of commercial organic production through certified organic farming.
  • It will raise farmer’s income and create a potential market for traders.

Program implementation

  • Fifty or more farmers will form a cluster having 50 acres of land to take up the organic farming under the scheme.
  • In this way, during three years 10,000 clusters will be formed covering a 5.0 lakh acre area under organic farming.
  • There will be no liability on the farmers for expenditure on certification.
  • Every farmer will be provided Rs. 20,000 per acre in three years for the seed to harvesting crops and to transport produce to the market.
  • Organic farming will be promoted by using traditional resources and organic products will be linked with the market.
  • It will increase domestic production and certification of organic produce by involving farmers.

Answer this PYQ in the comment box:

Q.With reference to organic farming in India, consider the following statements:

  1. ‘The National Programme for Organic Production (NPOP) is operated under the guidelines and directions of the Union Ministry of Rural Development.
  2. ‘The Agricultural and Processed Food Products Export Development Authority (APEDA) functions as the Secretariat for the implementation of NPOP.
  3. Sikkim has become India’s first fully organic State.

Which of the above statements is/are correct? (CSP 2018)

(a) 1 and 2 only

(b) 2 and 3 only

(c) 3 only

(d) 1, 2 and 3

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] One District One Focus Product Scheme


From UPSC perspective, the following things are important :

Prelims level : One District One Focus Product

Mains level : Not Much

ODOFP programme

  • The ODOFP programme cover products of agriculture and allied sectors for 728 districts of the country.
  • The products have been identified from agricultural, horticultural, animal, poultry, milk, fisheries, aquaculture, marine sectors across the country.
  • These identified products will be supported under the PM-FME scheme of the Ministry of Food Processing Industries, which provides incentives to promoters and micro-enterprises
  • This scheme is being implemented for a period of five years from 2020-21 to 2024-25.
  • The scheme adopts One District One Product (ODOP) approach to reap the benefits of scale in terms of procurement of inputs, availing common services and marketing of products.

About ODOP

  • The ODOP scheme aims to identify one product per district based on the potential and strength of a district and national priorities.
  • A cluster for that product will be developed in the district and market linkage will be provided for that.
  • It is operationally merged with the ‘Districts as Export Hub’ initiative implemented by the Director-General of Foreign Trade (DGFT), Department of Commerce.
  • Under the initial phase of the ODOP programme, 106 Products have been identified from 103 districts across 27 States.

Back2Basics: PMFME Scheme

  • A centrally sponsored scheme that aims to enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry.
  • It aims to enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector,
  • It further aims to promote formalization of the sector and provide support to Farmer Producer Organizations, Self Help Groups, and Producers Cooperatives along their entire value chain.
  • The scheme envisions directly assist the 2,00,000 micro food processing units in providing financial, technical, and business support for the up-gradation of existing micro food processing enterprises.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

What the new Ministry of Cooperation needs to achieve


From UPSC perspective, the following things are important :

Prelims level : Ministry for Cooperation

Mains level : Paper 3- Performance of cooperative movement


Two weeks ago, the government created a new Ministry for Cooperation. India is, perhaps, the first country to have such a ministry. The Ministry can play an important role in the transformation of cooperatives in the country.

How 1991 economic reforms benefited agriculture

  • On July 24, 1991, India decided to unshackle the spirit of private sector entrepreneurship through the move to de-license industry and reduce tariffs on a host of commodities.
  • Trade policy changes improved the terms of trade for agriculture and benefitted millions of farmers.
  • Agri-exports increased, but this led to higher domestic prices.

The success story of dairy sector in India

  • In 1991, Manmohan Singh, then finance minister wanted to delicense the dairy sector as well, but there was stiff opposition from Verghese Kurien.
  •  It was after 10 years in 2002 that the dairy sector was fully de-licensed.
  • The competition between cooperatives and corporate dairy players has benefitted millions of farmers around the country.
  • With the entry of the private sector, the growth of the dairy sector accelerated at double the speed.
  • Today, both procure roughly the same quantities and growth in the organised private sector is faster than in cooperatives.

Performance of cooperative movement in India

  • India’s experience with the cooperative movement has produced mixed results — few successes and many failures.
  • There are cooperatives in the financial sector, be it rural or urban.
  • But the performance of these agencies when measured in terms of their share in overall credit, achievements in technology upgradation, keeping NPAs low or curbing fraudulent deals has been poor to average.
  • Sugar cooperatives of Maharashtra initially touted as exemplars of the movement, are in the doldrums now.
  • Many are being sold to the private sector.

Performance of cooperatives in dairy sector

1) Amul

  • The performance of the cooperative champion, Gujarat Cooperative Milk Marketing Federation (GCMMF) — with its poster brand, Amul — has been most successful.
  • During Operation Flood, it received a lot of capital at highly concessional terms.
  • But its success is also the result of professionalism, business and, therefore, keeping politics away.
  • But despite the grand success of Gujarat’s milk cooperatives in Gujarat, the model did not spread to other states as successfully.

2) Karnataka Milk Federation

  • In its eagerness to please milk farmers, the Karnataka Milk Federation (KMF), which sells its products under the brand name of Nandini, gives them Rs 5 to Rs 6 extra per litre.
  • This subsidy, given by the state government, cost the exchequer Rs 1,260 crore till 2019-20.
  • KMF procures a lot of milk and then dumps it at lower prices in the market for consumers.
  • This depresses prices in adjoining states like Maharashtra, affecting the fortunes of Maharashtra milk farmers.
  • If Maharashtra and Karnataka were two different countries, Maharashtra would be challenging Karnataka at the WTO.

Way forward

  • The new Ministry of Cooperation can work towards ironing out distortions in state price policies due to subsidization such as in Maharastra and Karnatak milk prices.
  • Cooperatives desperately need technological upgradation. 
  • The Ministry of Cooperation can give them soft loans for innovation and technology upgradation.
  • But such loans should also be extended to the private sector to ensure a level playing field.
  • The Ministry of Cooperation needs to ensure the least political interference in the operation of cooperatives.


The new Ministry of Cooperation can work towards bringing in professionalism in cooperatives and make them more competitive.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Cabinet extends Agri Infra Fund loans to APMCs


From UPSC perspective, the following things are important :

Prelims level : Agriculture Infrastructure Fund (AIF) Schemes

Mains level : Read the attached story

The Centre has decided to allow state-run market yards to access financing facilities through its Agricultural Infrastructure Fund to calm the fears of protesting farmers that such market yards are being weakened.

Agriculture Infrastructure Fund (AIF) Schemes

  • It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops.
  • The Union Cabinet approved this scheme in July 2020 for a period of 10 years.
  • It will support farmers, PACS, FPOs, Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.
  • These assets will enable farmers to get greater value for their produce as they will be able to store and sell at higher prices, reduce wastage and increase processing and value addition.

    Note the following things about AIF:

    1) It is a Central Sector Scheme

    2) Duration of the scheme

    3)Target beneficiaries

What exactly is the AIF?

  • The AIF is a medium – long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee.
  • Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with an interest subvention of 3% per annum.
  • It will provide credit guarantee coverage under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to Rs. 2 Crore.

Target beneficiaries

The beneficiaries will include farmers:

  • PACS, Marketing Cooperative Societies, FPOs, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects

What are the new changes?

  • The Union Cabinet decided to extend the AIF to State agencies and Agricultural Produce Marketing Committees (APMCs), as well as federations of cooperative organizations, Farmers Producers Organizations and self-help groups.
  • They will now be eligible for interest subvention for loans up to ₹2 crores, with APMCs allowed to access separate loans for different kinds of infrastructure projects to build cold storage, silos, sorting, grading and assaying units in their market yards.
  • The scheme has also been extended to 2032-33.

Why such a move?

  • The modifications in the Scheme will help to achieve a multiplier effect in generating investments while ensuring that the benefits reach small and marginal farmers.
  • The APMC markets are set up to provide market linkages and create an ecosystem of post-harvest public infrastructure open to all farmers.
  • This is also proof that APMC will not end as the farmers’ concern since the three farm laws.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Fighting hunger needs fighting climate change


From UPSC perspective, the following things are important :

Prelims level : SDGs

Mains level : Paper 3- Climate change and its implications for hunger

The article suggests pathways to achieve SDG-2 by the adoption of climate-friendly agriculture practices.

Food and SDG

  • Food is a common thread linking all 17 UN Sustainable Development Goals (SDGs) and critical to achieving overall goals within the timeframe.
  • NITI Aayog recently released the SDG India Index 2020-21, highlighting the national and states’ progress on SDGs.
  • The report states that 34.7% children aged under five in India are stunted.
  • 40.5% of children between 6-59 months are anaemic.
  • 50.3% of pregnant women between 15-49 years are anaemic.
  • India shares a quarter of the global hunger burden.
  • Four out of 10 children in India are not meeting their full human potential because of chronic undernutrition or stunting.
  • NFHS-5 shows many states have not fared well on nutrition indicators.
  • In addition to the malnutrition challenges, India’s food system faces negative consequences of the Green Revolution technologies.

Pathways to follow in meeting the targets under SDG-2 (Zero Hunger)

  • Crop diversification especially in those areas where the existing practices are ecologically unsustainable should be promoted.
  • While Indian agriculture is a significant contributor to GHG emissions.
  • As per third Biennial Update Report submitted by Government of India to UNFCCC, agriculture sector contributes 14% of the total emissions.
  • Some of the climate-smart interventions like conservation agriculture, organic farming and agro-ecological approaches can effectively address the environmental concerns while ensuring food security and nutrition.
  • Crop-residue burning has become a huge problem in parts of the country.
  • This is mainly propelled by monoculture and a package of subsidies.
  • Conservation agriculture offers solutions to such problems with good agronomy and soil management such as zero-tillage or no-till farming, crop rotation, in-situ crop harvest residue management/mulching, etc, and industrial uses like baling and bio-fuel production.
  • Use of botanical pesticides, green-manuring, biological pest control, etc. are nature-friendly and such practices lead to eco-conservation.
  • The organic movement, fortunately, is catching up in Sikkim, Himachal Pradesh, and a few other states.
  • Modifying consumer behaviour forms an essential ingredient to transform Indian food systems and correlate positively with crop and diet diversity.
  • POSHAN Abhiyaan, India’s national nutrition mission, can play an effective role in addressing the issues of persistent malnutrition.
  • According to FAO estimates, 40% of the food produced in India is either lost or wasted in every stage of supply chain.
  • Winning the fight against food loss and waste can save India $61 billion in 2050 through increased industry profitability and reduced food insecurity, as well as reduced GHG emissions, water usage, and environmental degradation.
  • Shifting towards a circular economy can enable India progress towards the SDGs including halving food waste by 2030 and improving resource efficiency.


India’s success is essential to achieve the planetary goal of Zero Hunger. There is a need for transformation towards sustainable, nutritious and resilient food systems to achieve the goal of zero hunger.


Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Why are edible oils getting costlier?


From UPSC perspective, the following things are important :

Prelims level : India's oil import

Mains level : Impact of covid on food basket

Edible oil prices have risen sharply in recent months.

How much have edible oil prices rising?

  • The prices of six edible oils — groundnut oil, mustard oil, vanaspati, soya oil, sunflower oil, and palm oil — have risen between 20% and 56% at all-India levels in the last year.
  • The prices of soya oil and sunflower oil, too, have increased more than 50% since last year.
  • In fact, the monthly average retail prices of all six edible oils soared to an 11-year high in May 2021.
  • The sharp increase in cooking oil prices has come at a time when household incomes have been hit due to Covid-19.

Trends of oil consumption in India

  • With rising incomes and changing food habits, consumption of edible oils has been rising over the years.
  • While mustard oil is consumed mostly in rural areas, the share of refined oils —sunflower oil and soyabean oil — is higher in urban areas.

How much is produced domestically and how much is imported?

  • In 2019-20, domestic availability of edible oils from both primary sources (oilseeds like mustard, groundnut etc.) and secondary sources (such as coconut, oil palm, rice bran oil, cottonseed) was only 10.65 million tonnes against the total domestic demand of 24 million tonnes.
  • Thus, India depends on imports to meet its demand.
  • In 2019-20, the country imported about 13.35 million tonnes of edible oils or about 56% of the demand.
  • This mainly comprised palm (7 million tonnes), soyabean (3.5 millon tonnes) and sunflower (2.5 million tonnes).
  • The major sources of these imports are Argentina and Brazil for soyabeen oil; Indonesia and Malaysia palm oil; and Ukraine and Argentina again for sunflower oil.

Answer this PYQ from CSP 2019:

Q.Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

(a) Spices

(b) Fresh fruits

(c) Pulses

(d) Vegetable oils

Global prices rising

  • The increase in domestic prices is basically a reflection of international prices because India meets 56% of its domestic demand through imports.
  • In the international market, prices of edible oils have jumped sharply in recent months due to various factors.
  • Even the FAO price index (2014-2016=100) for vegetable oils, an indicator of the movement of edible oil prices in the international market, has soared to 162 in April this year, compared to 81 in April last year.

But why are international prices rising?

  • One of the reasons is the thrust on making biofuel from vegetable oil. There is a shifting of edible oils from food basket to fuel basket.
  • There has been a thrust on making renewable fuel from soyabean oil in the US, Brazil and other countries.
  • Other factors include buying by China, labour issues in Malaysia, the impact of La Niña on palm and soya producing areas, and export duties on crude palm oil in Indonesia and Malaysia.

What are the options before the government?

  • One of the short-term options for reducing edible oil prices is to lower import duties.
  • However, the edible oil industry is not in favor of reducing duties.
  • If import duties are reduced, international prices will go up, and neither will the government get revenue nor will the consumer benefit.
  • The government can rather subsidize edible oils and make them available to the poor under the Public Distribution System.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] India’s Agriculture trade grows during 2020-21


From UPSC perspective, the following things are important :

Prelims level : Agri exports

Mains level : Paper 3- Agri exports

Consistent trade surplus in agricultural products

  • India has consistently maintained trade surplus in the agricultural products over the years.
  • The export of Agri and allied commodities during Apr, 2020 – Feb,2021 were Rs. 2.74 lakh Crore as compared to Rs. 2.31 Crore in the same period last year indicating an increase of 18.49%.
  • The imports of Agri and allied commodities during April, 2020 – Feb, 2021 were Rs. 1.41lakh Crore as compared to Rs. 1.37 lakh Crore in the same period last year witnessing a slight increase of 2.93%.

Commodities that posted positive growth

  • India has witnessed tremendous growth of 727 % for Wheat export.
  • On specific demand from countries, NAFED has exported 50,000 MT wheat to Afghanistan and 40,000 MT wheat to Lebanon under G2G arrangement.
  • Country has witnessed significant growth of 132% in export of (Non-Basmati) Rice.
  • Export of Non-Basmati Rice has gone up from Rs 13,030 crores in 2019-20 to Rs 30,277 crores in 2020-21.
  • This increase in exports is on account of multiple factors, mainly being India capturing new markets namely, Timor-Leste, Papua New Guinea, Brazil, Chile, and Puerto Rico.
  • Exports were also made to Togo, Senegal, Malaysia, Madagascar, Iraq, Bangladesh, Mozambique, Vietnam, Tanzania Rep and Madagascar.
  • India also enhanced export of Soya meals by 132%. Soya meal has gone up from Rs 3087 crores in 2019-20 to Rs 7224 crores in 2020-21.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] E-SANTA: Electronic marketplace to connect Aqua farmers and buyers


From UPSC perspective, the following things are important :

Prelims level : E-SANTA

Mains level : Aquaculture in India

Union Commerce and Industry Ministry has inaugurated E-SANTA, an electronic marketplace providing a platform to connect aqua farmers and buyers.


Aquaculture also known as aquafarming is the farming of fish, crustaceans, mollusks, aquatic plants, algae, and other organisms. It involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the harvesting of wild fish.

Mariculture commonly known as marine farming refers to aquaculture practiced in marine environments and in underwater habitats, opposed to in freshwater.


  • The term e-SANTA was coined for the web portal, meaning Electronic Solution for Augmenting NaCSA farmers’ Trade-in Aquaculture.
  • It will enable the farmers to get a better price and the exporters to directly purchase quality products from the farmers enhancing traceability, a key factor in international trade.
  • National Centre for Sustainable Aquaculture (NaCSA) is an extension arm of Marine Products Export Development Authority (MPEDA), Ministry of Commerce & Industry.
  • It will raise income, lifestyle, self-reliance, quality levels, traceability, and provide new options for our aqua farmers.
  • The platform will change the traditional way of carrying out business from a word of mouth basis to become more formalized & legally binding.

E-SANTA will RAISE the lives & income of farmers by:

  1. Reducing Risk
  2. Awareness of Products & Markets
  3. Increase in Income
  4. Shielding Against Wrong Practice
  5. Ease of Processes

Its’ utility

  • E-SANTA is a Digital Bridge to end the market divide and will act as an alternative marketing tool between farmers & buyers by eliminating middlemen.
  • It will revolutionize traditional aqua farming by providing cashless, contactless and paperless electronic trade platform between farmers and exporters.
  • It can become a tool to advertise collectively the kind of products the buyers, fishermen & fish producing organisations are harvesting.

How does it work?

  • E-SANTA is a completely paperless and end-to-end electronic trade platform between Farmers and exporters.
  • The farmers have the freedom to list their products and quote their price while the exporters have the freedom to list their requirements and also to choose the products based on their requirements.
  • This enables the farmers and buyers to have greater control over the trade and enables them to make informed decisions.
  • The platform provides a detailed specification of each product listing and it is backed by an end to end electronic payment system with NaCSA as an Escrow agent.
  • After crop listing and online negotiation, a deal is struck, advance payment is made and an estimated invoice is generated.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Production of Poppy Straw


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Opium cultivation

The Central government has decided to rope in the private sector to commence production of concentrated poppy straw from India’s opium crop.

What is the move?

  • The move aims to boost the yield of alkaloids, used for medical purposes and exported to several countries.
  • Among the few countries permitted to cultivate the opium poppy crop for export and extraction of alkaloids, India currently only extracts alkaloids from opium gum at facilities controlled by the Revenue Department.
  • This entails farmers extracting gum by manually lancing the opium pods and selling the gum to government factories.
  • The Ministry has now decided to switch to new technologies after trial cultivation reports submitted last year by two private firms showed higher extraction of alkaloids using the concentrated poppy straw (CPS).

Opium Poppy

  • The milky fluid that seeps from cuts in the unripe poppy seed pod has, since ancient times, been scraped off and air-dried to produce what is known as opium.
  • The seedpod is first incised with a multi-bladed tool.
  • This lets the opium “gum” ooze out.
  • The semi-dried “gum” is harvested with a curved spatula and then dried in open wooden boxes.
  • The dried opium resin is placed in bags or rolled into balls for sale.

Why such a move?

  • India’s opium crop acreage has been steadily declining over the years.
  • The CPS extraction method is expected to help cut the occasional dependence on imports of products like codeine (extracted from opium) for medical uses.

Amendments to NDPS Act

  • Uttar Pradesh, Rajasthan and Madhya Pradesh are the three traditionally opium-growing States, where poppy crop cultivation is allowed based on licences issued annually by the Central Bureau of Narcotics.
  • While roping in private players in producing CPS and extracting alkaloids from it is likely to require amendments to the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985.
  • The Revenue Department has decided to appoint a consultant to help frame the bidding parameters and concession agreements for the same.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Need for technological solutions to use water for agriculture more sustainably


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Using technology to use water sustainably in agriculture

The article examine the use of water for sugarcane and rice cultivation in India and its impact. 

Water availability and usage in India

  • As per the Central Water Commission’s reassessment of water availability, India receives a mean annual precipitation of about 3,880 billion cubic meters (BCM) but utilises only 699 BCM (18 percent) of this; the rest is lost to evaporation and other factors.
  • The demand for water is likely to be 843 BCM in 2025 and 1,180 BCM by 2050.
  • As per the UN’s report on Sustainable Development Goal-6 (SDG-6) on “Clean water and sanitation for all by 2030”, India achieved only 56.6 per cent of the target by 2019.
  • Further, as per the Niti Aayog’s Composite Water Management Index (2019), 75 per cent households in India do not have access to drinking water on their premises.
  • India ranks 120th amongst 122 countries in the water quality index.
  • India is identified as a water-stressed country with its per capita water availability declining from 5,178 cubic metre (m3)/year in 1951 to 1,544 m3 in 2011 — this is likely to go down further to 1,140 cubic metre by 2050.

How free or highly subsidised electricity skews water use pattern

  • Despite decades of large public and private investments in irrigation, only about half of India’s gross cropped area:198 million hectares is irrigated.
  • Groundwater contributes about 64 per cent, canals 23 per cent, tanks 2 per cent and other sources 11 per cent to irrigation.
  • This results primarily from incentive policy of free or highly subsidised power, particularly in the country’s north-west, the site of the erstwhile Green Revolution.
  • Overexploitation of groundwater has made this region amongst the three highest water risk hotspots.
  • Overall, about 1,592 blocks in 256 districts in India are either critical or overexploited.

Need to focus on rice and sugarcane

  • Agriculture uses about 78 per cent of fresh water resources.
  • As per a NABARD-ICRIER study on Water Productivity Mapping, these crops alone consume almost 60 per cent of India’s irrigation water.
  • We need a paradigm shift to increase land productivity measured as tonnes per hectare (t/ha), and to maximise applied irrigation productivity measured as kilogrammes, or Rs, per cubic metre of water (kg/m3).
  • Figure 1 shows applied irrigation water productivity against land productivity for rice and sugarcane in important growing states.
  • Note that while Punjab scores high on land productivity of rice, it is at the bottom with respect to applied irrigation water productivity.
  • In the case of sugarcane, irrigation water productivity in Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu is only 1/3rd of that in Bihar and UP (Figure 2).
  • There is, thus, a need to realign cropping patterns based on per unit of applied irrigation water productivity.

Use of technology

  • There are technologies to produce the same output of rice and sugarcane with almost half the irrigation water.
  • Jain Irrigation, for instance, has set up drip irrigation pilots for paddy and sugarcane.
  • The results of these pilots indicate while it takes 3,065 litres of water to produce 1 kg of paddy grain (yield level 7.75 t/ha) under traditional flood irrigation, under drip, it can be reduced to just 842 litres.
  • The benefit cost ratio of drip with fertigation in case of sugarcane in Karnataka is observed to be 2.64.
  • An extension to this is the “Family Drip System” innovated by Israel-based — Netafim.
  • The company has also launched its largest demonstration project in Asia at Ramthal, Karnataka.
  • Technologies like Direct Seeded Rice (DSR) and System of Rice Intensification (SRI) can also save 25-30 per cent of water compared to traditional flood irrigation.

Need for right pricing policies

  • Technological solutions cannot make much headway unless pricing policies of agri-inputs are put on the right track and farmers are incentivised for saving water.
  • The Punjab government, along with the World Bank and J-PAL, has started some pilots with an innovative policy of “Paani Bachao Paise Kamao” to encourage rational use of water among farmers.

Consider the question “Examine the impact of rice and sugarcane cultivation on the groundwater table in India. How technological solutions can help use water more sustainably for agriculture?”


Overall, it seems it is time to switch from the highly subsidised price policy of water/power (and even fertilisers) to direct income support on a per hectare basis, and investment policies that help with newer technologies and innovations.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

PM-Kisan: Income support to farmers needs to be more inclusive


From UPSC perspective, the following things are important :

Prelims level : Rythu Bandhu

Mains level : Paper 3- PM-KISAN and issues

The article highlights the challenge of exclusion error in the PM-KISAN and suggests measures to deal with the issue by drawing on the success of KALIA and Rythu Bandhu.

Exclusion in PM-KISAN

  • Budget FY22 announced an allocation of Rs 65,000 crore to the PM-Kisan scheme.
  • Since 2019, the PM-Kisan has been the largest component of the agriculture budget each year.
  • The scheme is targeted at farmers who own cultivable land as per land records of the state.
  • Unfortunately, this leaves out vulnerable sections such as tenant farmers, women farmers, tribal families and landless labourers.
  • The exclusion is the result of the challenge of first identifying these people, since our existing systems do not formally recognise them as farmers.

The need to identify farmers

  • Despite 73.2% of rural women engaging in agriculture, only 12.8% are reported to own land.
  •  Among tribal communities, of the 20 million tribal families, less than 2 million have received individual forest rights pattas; the rest are ‘invisible’ and left out of government safety nets.
  • Landless agricultural labourers and tenant farmers account for close to 150 million people in rural India, and they too are not part of state land records.
  • Although there are multiple welfare schemes for farmers, there is no standard government definition of a farmer.
  • The 2007 MS Swaminathan Committee called out that the term ‘farmer’ would include any person actively engaged in growing crops and other agricultural commodities, and would include not only landholders, but also cultivators, labourers, sharecroppers, tenants and tribal families, amongst others.

Learning from KALIA and Rythu Bandhu

  • Odisha has been a frontrunner in implementing an inclusive farmer welfare scheme, the KALIA.
  • The KALIA provides an unconditional income support of Rs 12,500 to landless agricultural households and an annual Rs 10,000 to small and marginal land-owning farmers as well as tenant farmers.
  • Odisha leveraged existing databases such as the Paddy Procurement Automation System, the Pradhan Mantri Fasal Bima Yojana and the National Food Security Act, and deployed close to 50,000 government staff at state, district and block levels to conduct extensive on-ground verification to identify eligible beneficiaries.
  • Telangana took a different approach prior to rolling out the Rythu Bandhu Scheme, a direct benefit transfer scheme for land-owning farmers.
  • The Rythu Bandhu Scheme targeted only land-owning farmers.
  • But the state took on the onus of updating land records before implementing the scheme.
  • The revenue and agriculture departments partnered to undertake a state-wide Land Records Updation Programme (LRUP).
  • This shows that updating and digitising land records databasse is possible with focused efforts.

Way forward

  • Instead of every scheme having its own farmer beneficiary database, the ideal solution would be to leverage the existing land records databases in every state.
  • The design should ensure women’s names are not excluded.
  • Implementation of the Forest Rights Act 2006 needs to be accelerated so that tribal families receive forest rights pattas and become part of the land records database.
  • The next challenge is to build in incentives in the process to encourage the maintenance of the land record database, such that all future transactions such as sale, gift etc. are regularly updated to increase the reliability of the records.

Consider the question “How lack of definition of farmer leads to inclusion and exclusion errors in the schemes for farmers. Suggest the measures to deal with the issue.”


The pandemic, more so than anything else, has highlighted the need for the government to have robust social security mechanisms to reach the most vulnerable sections of the population, and making PM-Kisan more inclusive is an important step in that direction.


Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] Multi-Layer Farming


From UPSC perspective, the following things are important :

Prelims level : Multi-Layer Farming, ATMA

Mains level : Not Much

ICAR is undertaking location-specific multi-layer farming involving crops of different heights.

Multi-Layer Farming

  • Multi-layer farming means growing and cultivating compatible plants of different heights on the same field and at the same time.
  • It is generally practised in orchards and plantation crops for the utmost use of solar energy even under high planting density.
  • It is mostly cash crop-based and it includes a combination of vegetables and fruits that can be grown together.

How it is done?

  • In Multi-layer farming, the crops are grown at different heights on the same land.
  • This farming cannot be done in open fields as shade is required. It is one type of intercropping.
  • Growing plants of different height in the same field at the same time is termed Multi-layer cropping. It is generally practised in orchards and plantation crops for maximum use of solar energy even under high planting density. It is the practice of several crops of varying heights, rooting pattern and duration to cultivate together.
  • The objective is to utilize vertical space more effectively.
  • In this, the tallest components have foliage of strong light and high evaporative demand and shorter components with foliage requiring shade and high humidity.

Try this PYQ:

Q.What are the advantages of fertigation in agriculture?

1.Controlling the alkalinity of irrigation water is possible.
2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
3. Increased availability of nutrients to plants is possible.
4. Reduction in the leaching of chemical nutrients is possible.

Select the correct answer using the code given below:

(a) 1, 2 and 3 only

(b) 1,2 and 4 only

(c) 1,3 and 4 only

(d) 2, 3 and 4 only

Benefits offered

  • Prevent water evaporation from the soil; as an effect, 70% of water is saved.
  • The income per unit area increases substantially
  • Minimize risks of crop yield loss and this system enables a steady supply of farm products the whole round the year.
  • Reduces the impacts of hazards such as high-intensity rainfall, soil erosion, and landslides.
  • Improve the soil characteristics and adds organic matter to the soil.
  • Effective utilization of leaching materials and helps in effective weed control.
  • Provide micro-climate conditions that advantage crops underneath.

What else?

: Agricultural Technology Management Agency (ATMA)

  • In addition to this, a Centrally Sponsored Scheme ‘Support to State Extension Programs for Extension Reforms” popularly known as ATMA Scheme is already under implementation since 2005.
  • Presently, the Scheme is being implemented in 691 districts of 28 states & 5 UTs in the country.
  • The scheme promotes a decentralized farmer-friendly extension system in the country.
  • Under the scheme, grants-in-aid are released to the State with an objective to make available the latest agricultural technologies and good agricultural practices in different thematic areas of agriculture and allied areas to farmers including training for multi-layer farming.
  • Training of farmers is one of the eligible activities of the ATMA Scheme.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

A high growth plan for Indian agriculture


From UPSC perspective, the following things are important :

Prelims level : AMFFRI

Mains level : Paper 3- Diversified strategies for agriculture growth

The article deals with the issue discussed in the recently published book ‘Revitalising Indian Agriculture and Boosting Farmer Incomes’. It suggests strategies for six Indian states and underlies the importance of the diversified approach to different states.

Why agriculture is central to Indian economy

  • Agriculture engages close to 42 per cent of the country’s workforce.
  • With its close interlinkage with poverty, it is best positioned to alleviate problems of malnutrition and hunger.
  • In addition, agriculture supplies inputs for other industries.
  • It is critical for triggering a multiplier effect in the economy, where a financially empowered farming community triggers a demand-led growth, particularly for manufactured products and services.
  • There is no doubt that the sector needs to grow not just for those employed in it but also for the economy as a whole.

Growth strategy needs to take into account diversity across the states

  • The growth process of agriculture should not just more efficient, and inclusive of India’s small and marginal but is also sustainable — both financially and environmentally.
  • But then comes the question of the diversity in Indian states, where they differ as much on factors of production like land and water as they do on access to market opportunities.
  • They even differ in their vulnerabilities to climate and weather changes.
  • This begs the question, should the roadmap not be customised to the needs, vulnerabilities, and resource-base of each state?

Strategies for six states

  • The recently published book “Revitalising Indian Agriculture and Boosting Farmer Incomes” proposes strategies for six Indian states: Punjab, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar and Odisha.
  • In the six states, three factors explained most of the agrarian growth.
  • One, access to infrastructure — mainly irrigation and roads.
  • Two, diversification to high value agricultural products like fruits, vegetables, and allied activities like dairy and poultry.
  • Three, price incentives or favourable terms of trade.
  • Bringing markets closer to farmers and increasing the efficiency of the value-chains emerged as an important factor that explained agricultural growth in Gujarat, Madhya Pradesh, Odisha, and Bihar.
  • By ensuring timely access to sufficient irrigation, states like Gujarat and Punjab could explain their high performances.
  • Role of uninterrupted quality power too emerged important in this.
  • Diversification of the agricultural basket of a state was found to strengthen a state’s agri-performance.

Relation between growth rate and policy reforms

  • The requirement to undertake policy reforms, mainly related to marketing, emerged as a key driver and predictor of growth.
  • The NITI Aayog’s Agricultural Markets and Farmer Friendly Reforms Index — AMFFRI evaluates Indian states on the extent to which each of them undertook required agri-reforms.
  • A low AMFFRI rank implies the state is undertaking desired reforms.
  • It was found that states that undertook reforms, and were thus ranked low on AMFFRI, witnessed a relatively faster agri-GDP growth rate.
  • States which did not undertake required reforms, and thus were ranked high on the AMFFRI witnessed relatively lower agri-GDP growth rates.
  • There were some exceptions: Karnataka, Haryana and Maharashtra.
  • These states undertook reforms, and thus had low AMFFRI ranks, but they witnessed a low agri-GDP growth rate.
  • This is likely to be attributed to the delayed effect of reforms on the agri-performance.

Way forward

  • As a part of the roadmap, the book makes a case for states to move beyond production-centric approach to a value-chain approach with FPOs at its centre.
  • It highlights importance and requirement of growing public investments in basic infrastructure.
  • And finally, in the longer run, rationalising subsidies via direct income transfer is suggested.

Consider the question “Despite its comparatively lower contribution to the GDP, agriculture plays a central role in the Indian economy. What are the factors that make agriculture central to the economy? Suggest the pathway to fuel the growth of the sector.”


If the government follows this path of investing in infrastructure, ensuring a more diversified agriculture and linking small-holder FPOs with markets, it will pay rich dividends not only to the farming community but also the entire economy.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Farmers produce organisations (FPOs)


From UPSC perspective, the following things are important :

Prelims level : FPOs

Mains level : Paper 3- Improving FPOs

The article analyses the role farmers produce organisations (FPOs) can play in improving the bargaining power of the small farmers and also suggest ways to improve FPOs.

Declining size of farm holdings

  • The average farm size in India declined from 2.3 hectares (ha) in 1970-71 to 1.08 ha in 2015-16.
  • The share of small and marginal farmers increased from 70 per cent in 1980-81 to 86 per cent in 2015-16.
  • At the state level, the average size of farm holdings in 2015-16 ranged from 3.62 ha in Punjab, 2.73 in Rajasthan and 2.22 in Haryana to 0.75 in Tamil Nadu, 0.73 in Uttar Pradesh, 0.39 in Bihar and 0.18 in Kerala.

Encouraging FPOs to help small farmers

  • Small farmers face several challenges in getting access to inputs and marketing facilities.
  • In the last decade, the Centre has encouraged farmer producer organisations (FPOs) to help farmers.
  • Since 2011, it has intensively promoted FPOs under the Small Farmers’ Agri-Business Consortium (SFAC), NABARD, state governments and NGOs.
  • The membership of an FPO ranges from 100 to over 1,000 farmers.
  • The ongoing support for FPOs is mainly in the following two forms:
  • 1) A grant of matching equity (cash infusion of up to Rs 10 lakh) to registered FPOs.
  • 2) A credit guarantee cover to lending institutions (maximum guarantee cover 85 per cent of loans not exceeding Rs 100 lakh).
  • The budget for 2018-19 announced supporting measures for FPOs including a five-year tax exemption.
  • The budget for 2019-20 talked of setting up 10,000 more FPOs in the next five years.
  • Some studies show that we need more than one lakh FPOs for a large country like India while we currently have less than 10,000.

Looking at the performance of FPOs in last decade

  • Experience shows a mixed performance of FPOs in the last decade.
  • Some estimates show that 30 per cent of these are operating viably while 20 per cent are struggling to survive.
  • The remaining 50 per cent are still in the initial phase of mobilisation and business planning.
  • NABARD has undertaken a field study on the benefits of FPOs in Punjab and Madhya Pradesh.
  • The study shows that in nascent FPOs, the proportion of farmer members contributing to FPOs activities is 20-30 per cent while for the emerging and mature FPOs it is higher at about 40-50 per cent.
  • A study by International Food Policy Research Institute (IFPRI) has undertaken a comparative study of FPOs in Maharashtra and Bihar.
  • In Maharashtra, some of the FPOs have organically evolved (OFPOs) when farmers have taken the lead to adopt market-oriented practices, develop cost-effective solutions in production and marketing.
  • In the case of Bihar, almost all FPOs have been promoted (PFPOs).


  • Studies of NABARD show that there are some important challenges for building sustainable FPOs.
  • Some of these are lack of technical skills, inadequate professional management, weak financials, inadequate access to credit, lack of risk mitigation mechanism and inadequate access to market and infrastructure.

Focusing on 3 issues for the improvement of FPOs

1) Getting credit

  • Issues such as working capital, marketing, infrastructure have to be addressed while scaling up FPOs.
  • Banks must have structured products for lending to FPOs.
  • These organisations lack professional management and, therefore, need capacity building.

2) Linking with input companies

  • FPOs have to be linked with input companies, technical service providers, marketing/processing companies, retailers etc.
  • They need a lot of data on markets and prices and other information and competency in information technology.

3) Augmenting the size of land

  • The FPOs can be used to augment the size of the land by focusing on grouping contiguous tracts of land as far as possible — they should not be a mere grouping of individuals.
  • Women farmers also can be encouraged to group cultivate for getting better returns.
  • FPOs can also encourage consolidation of holdings.

Consider the question “How FPOs can play an important part in helping the small farmers by improving their bargaining power? What are the challenges faced by the FPOs?”


The FPOs have to be encouraged by policy makers and other stakeholders apart from scaling up throughout the country to benefit particularly the small holders.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Enabling the Business of Agriculture (EBA) 2019,


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Regulatory constraints faced by the farmers

Enabling the Business of Agriculture (EBA) 2019, published by the World Bank highlights the constraints faced by farmers. The article highlights the key findings of the publication.

Constraints in carrying out farming activity

  • Debates around the farm laws have brought to light the issue of developing a sound regulatory framework to promote India’s agricultural growth.
  • The fact remains that farmers, mainly smallholders, across India continue to face various constraints.
  • They include constraints in accessing agricultural inputs, markets, finance, human resources, and information, which are critical for increasing farmers’ competitiveness.
  • A recent publication by the World Bank titled Enabling the Business of Agriculture (EBA) 2019 measures the extent to which government regulatory systems in 101 countries worldwide make it easier for their farmers to operate agricultural activities.
  • These indicators measure the strength of a country’s agricultural regulatory environment pertaining to market integration and entrepreneurship in agriculture.
  • Among 101 countries covered, India ranked 49 on the EBA aggregate score.

Key takeaways from EBA for India

  • India lags behind its close competitors in world agriculture, namely China, Brazil, and Russia.
  • Compared to these three countries, India has the weakest performance on five out of eight indicators.
  • They are registering fertilizer and machinery, securing water, sustaining livestock, and protecting plant health indicators.
  • Registering fertilizer and machinery indicators measure domestic laws and regulations that provide farmers access to fertilizer and agricultural machinery.
  • The regulatory processes that help farmers make appropriate decisions regarding the level of investment in irrigation are measured by securing water indicator.
  • Sustaining livestock indicator captures the quality of regulations affecting farmers’ access to livestock farming inputs.
  • The quality of legislation on phytosanitary standards (SPS) is captured through the protecting plant health indicator.

Need to develop a suitable regulatory system

  • Governments can play a critical role in this regard by enacting laws and regulations.
  • Such laws and regulations can influence farmers’ access to agricultural inputs, cost of production, agricultural markets and value chains, the competitiveness of farmers, and private investment in the farming sector.
  • The regulatory system that governs irrigation management is essential for reducing the variability of farm output, prices, and incomes, minimising vulnerability to natural shocks, and incentivising the production of riskier and high returns crops.
  • Gaining access to the global agricultural value chain requires a sound regulatory framework on SPS.

India’s strong areas

  • The comparative score of India on supplying seed, trading food, and accessing finance indicators is high.
  • Supplying seed indicator evaluates laws and regulations that ensure timely release of seed to farmers.
  • The trading food indicator assesses laws and regulations that facilitate exporting of farm products by farmers.
  • The regulatory framework on the use of warehouse receipts is assessed using accessing finance indicator.
  • A robust warehouse receipts system enables the farmers to obtain the credit needed to invest in agriculture.

Opportunity for India

  • The future of world agriculture and food production is expected to increasingly depend on middle-income countries such as China, India, Brazil, and Indonesia.
  • To make the best use of this great opportunity, India needs to put in place an agricultural regulatory system that would make it easier for its farmers to conduct agricultural activities.

Consider the question “Farmers, mainly smallholders, across India continue to face various constraints in carrying out farming activities. What are the implications of such constraints? What role government can play in removing these constraints?”


The EBA project results reveal that, compared to its close competitors, the strength of India’s agricultural regulatory environment is weak on the whole and with respect to key performance indicators.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Operation Green


From UPSC perspective, the following things are important :

Prelims level : Operation Green

Mains level : Paper 3- Expanding Operation Green

The article compares the performance of  Operation Flood with Operation Green and offers several lessons for the success of Operation Green.

Operation Green and its expansion

  • There were three basic objectives when OG was launched.
  • First, that it should contain the wide price volatility in the three largest vegetables of India (TOP).
  • Second, it should build efficient value chains of these from fresh to value-added products with a view to give a larger share of the consumers’ rupee to the farmers.
  • Third, it should reduce the post-harvest losses by building modern warehouses and cold storages wherever needed.
  • The Union budget for the FY 2021-22 proposes the expansion of Operation Green (OG) beyond tomatoes, onions, and potatoes (TOP) to 22 perishable commodities.
  • The move reflects the government’s intentions of creating more efficient value chains for perishables.

Comparing performance of OG with horticulture sector

  • A closer examination of the scheme reveals that it is nowhere near achieving its objectives.
  • ICRIER research reveals that price volatility remains as high as ever.
  • It also reveals that farmers’ share in consumers’ rupee is as low as 26.6 per cent for potatoes, 29.1 per cent in the case of onions, and 32.4 per cent for tomatoes (see graph).
  •  In cooperatives like AMUL, farmers get almost 75-80 per cent of what consumers’ pay.
  • Operation Flood (OF) transformed India’s milk sector, making the country the world’s largest milk producer, crossing almost 200 million tonnes of production by now.
  • Although OG is going to be more challenging than OF there are some important lessons one can learn from OF.

Lessons from operation flood

  • First and foremost is that results are not going to come in three to four years.
  • OF lasted for almost 20 years before milk value chains were put on the track of efficiency and inclusiveness.
  • There has to be a separate board to strategise and implement the OG scheme, more on the lines of the National Dairy Development Board (NDDB) for milk.
  • Second, we need a champion like Verghese Kurien to head this new board of OG.
  • The MoFPI can have its evaluation every six months, but making MoFPI the nodal agency for implementing OG with faceless leaders is not very promising.
  • Third, the criteria for choosing clusters for TOP crops under OG is not very transparent and clear.
  • The reason is while some important districts have been left out from the list of clusters, less important ones have been included.
  • What is needed is quantifiable and transparent criteria for the selection of commodity clusters, keeping politics away.
  • Fourth, the subsidy scheme will have to be made innovative with new generation entrepreneurs, startups and FPOs.
  • The announcement to create an additional 10,000 FPOs along with the Agriculture Infrastructure Fund and the new farm laws are all promising but need to be implemented fast.

Consider the question “What are the objectives of Operation Green? How far has Operation Green succeeded in achieving its objectives?”


These lessons from Operation Flood will help in securing the success of the expanded Operation Green.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Farm lessons from China, Israel


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Agri-marketing reforms and water accounting to solve the problems of agriculture

China and Israel offer two important lessons for India to transform its agriculture: agri-market reforms and water accounting.

Lessons from Israel and China

  • India, China and Israel — started off their new political journey in late 1940s, but today China’s per capita income in dollar terms is almost five times that of India, and Israel’s almost 20 times higher than India.
  • China produces three times more agri-output than India from a smaller arable area.
  • China started off its economic reforms in 1978 by taking up agriculture first.
  • It dismantled its commune system of land holdings and liberated agri-markets that allowed farmers to get much higher prices.
  • As a result, in 1978-84, farmers’ incomes in China increased by almost 14 per cent per annum, more than doubling in six years.
  • Israel cultivates high-value crops for exports (citrus fruits, dates, olives) by using every drop of water and recycling urban waste water for agriculture, by de-salinisation of sea waters.
  • Water accounting in Israel is something exemplary.

Need for agri-reform in India

  • The average holding size in China was just 0.9 ha in 2016-18, smaller than India’s 1.08 ha in 2015-16.
  • So there is no doubt that small holders can do wonders, if they are given the right incentives, good infrastructure and research support, and the right institutional framework to operate.
  • In India, the 1991 reforms did not include agriculture.
  • Indian agri-food policies remained more consumer-oriented with a view to protect the poor.
  • Export controls, stocking limits on traders, movement restrictions, etc all continued at the hint of any price rise.
  • The net result of all this was farmers’ incomes remained low and so did those of landless agri-labourers.

Way forward

  • India needs to change its policy framework from being subsidy-led to investment-driven, from being consumer-oriented to producer-oriented, and from being supply-oriented to demand-driven by linking farms with factories and foreign markets, and, finally, from being business as usual to an innovations-centred system.
  • Until India breaks away from the policy of free power for agriculture, there would be no incentive for farmers to save water.
  • In a state like Punjab where almost 80 per cent of blocks are over-exploited or critical, meaning the withdrawal of water is much more than the recharge.
  • Highly subsidised urea and open-ended procurement have become a deadly cocktail that are eating away the natural wealth of Punjab.
  • Out-of-box thinking is needed to break this regressive cycle for a brighter future for Punjab, for our own children.

Consider the question “What are the implications of subsidy oriented policies for Indian agriculture.”


Lessons from China and Israel suggest that India need reform in agri-food policies and water accounting to address several issues plaguing agriculture.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Laws that have distorted agriculture and labour markets need to go


From UPSC perspective, the following things are important :

Prelims level : Essential Commodities Act

Mains level : Paper 3- Ensuring growth while protecting the farmers

The article suggests the two steps to ensure growth while protecting the poor. The first is the creation of social safety net and next is factor market reforms.

Issue of farmers’ income

  • An Indian engaged in industry or any aspect of the services sector (this includes a waiter in a restaurant) earns more than an average farmer.
  • This is an anomaly.
  • So, despite all the pro-farmer laws and protection, why do farmers in India earn less?
  • A recent study by RBI showed that across all crops, the farmgate price is 40-60 per cent less than the consumer price.
  • The real challenge is how to encourage growth while protecting the poor.

Encouraging growth while protecting the poor: 2 steps

  • 1) A social safety net needs to be created to provide direct income transfers to the vulnerable.
  • 2) Factor markets involving labour and agricultural land need to be reformed to ensure productivity-enhancing growth.
  • Only way to ensure growth which benefits the poor is through employment creating in the manufacturing and services sector.

1) Social safety nets in India

  • Despite a narrow tax base, India has created a comprehensive social safety net, which can cushion growth-enabling market reforms.
  • Accurate targeting under India’s Food Security Act to the bottom 67 per cent through Aadhaar identification and digital ration cards paired with E-POS machines has considerably reduced the leakage of subsidised grains.
  • The National Social Assistance programme intends to provide direct income support to over 40 million elderly landless agricultural workers, poor women-headed households and families with physically-challenged children.
  • India also provides income support annually to 145 million farmers, paying out Rs 75,000 crore.
  • This benefits all farmers while MSP benefits only 6 per cent of farm produce.

2) Factor market reforms

  • If state support for social safety net has to become sustainable, wide-ranging growth, which will broaden the tax base, is essential.
  • India’s growth itself can be designed to reduce the number of people who need state support.
  • The agriculture and labour reforms recently passed create the conditions for productivity-enhancing growth, benefiting millions of small farmers and unorganised workers.

Let us take a look at what the farm laws achieve and how they will change the status quo

1) Amendment to Essential Commodities Act

  • The stock limits under the Essential Commodities Act do not enable large tur or moong and rice processors to procure in bulk for their entire season’s processing requirements.
  • This restricts large-scale processing units which can run throughout the non-harvest season.
  • This draconian anti-farmer rule has now been done away with.
  • This will enable the expansion of agro-processing and supply chains.
  • A larger share of the produce procured for agro-processing increases its shelf life, enabling the farmer to retain a greater value.
  •  30-40 per cent of the post-harvest value, particularly in vegetables and fruits, is lost due to inadequate storage, processing and transportation facilities.
  • Removal of stock limits and the accompanying contract farming act will bring in investments to tap the wasted resource.

2) APMC regulation

  • The second law, removes another distortion: Only traders registered in APMCs can buy farmers produce.
  • Even though conditions for perfect markets exist, the APMC regulation creates this bottleneck.
  • Intermediaries extract a greater share of value as they are price makers while farmers are price takers.
  • This situation is further aggravated as farmers are restricted to selling within the taluka boundaries or limits of the APMC, and if they have to sell in other APMC, they have to pay the APMC tax.
  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill 2020 confines the authority of the APMC to levy fees and give trader licences within the boundary of the market yard.
  • Farmers will continue to have the option to sell in APMCs but any private market/non-APMCs registered trader can also set up an agricultural market and compete with APMCs to buy the same produce.
  • Karnataka implemented the Uniform Market portal in 2014, enabling trade across taluka APMC limits without APMC fees.
  • An analysis by researchers at the MIT Sloan School of Management has shown that prices of many agricultural goods increased by 3.5 to 5.1 per cent.
  • Significantly, profit margins of small farmers increased by more than 36 per cent.

Labour reforms

  • Apart from agriculture, the abundance of labour is the second greatest comparative advantage of India.
  • However, multiple labour laws instead of encouraging employment, have created disincentives for job creation due to high costs of compliance.
  • While India’s employment elasticity with respect to GDP growth is only 0.2, China’s is at 0.44. Even for Bangladesh, the elasticity is 0.38.
  • India’s path-breaking labour reforms leverage the true comparative advantage of the country’s factor endowments to promote growth with higher employment elasticity.
  • The old labour laws protected existing jobs at the cost of preventing new job creation through creative destruction.
  • Bangladesh has shown the way to increase formal jobs by legalising fixed-term employment and banning union activity in FDI industries.
  • Raising the threshold for seeking prior permission for laying off workers will enable capital and land locked in sunset industries to move freely to new sunrise industries.

Consider the question “An Indian engaged in industry or any aspect of the services sector earns more than an average farmer. What are the factors responsible for this anomaly? Suggest ways to achieve growth that could ensure sustainable safety net?”


The need of the hour is to continuously communicate with those unhappy with the reforms to explain how the current status quo is hurting farmers and informal workers.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Bringing transparency in Budget in agri-food sector


From UPSC perspective, the following things are important :

Prelims level : Union Budget

Mains level : Paper 3- Transparency in the Budget, bias towards subsidies and neglect of RD in allocation to agriculture sector

The article analyses the Union Budget and highlights the emphasis on transparency by showing the borrowing of the FCI and arrears of the fertiliser companies in the Budget.

Transparency in food subsidy and arrears of fertiliser industry

  • Year after year, a substantial part of the food subsidy was being put under the carpet by increasing the Food Corporation of India’s (FCI) borrowings.
  • The amount had crossed Rs 3 lakh crore.
  • The revised estimate (RE) for FY 2020-21 is 3.66 times the budgeted figure, indicating that almost all borrowings of FCI have been cleared.
  • This is indeed a historic step towards introducing transparency in the Union Budget.
  • The Budget also cleared off the fertiliser industry’s arrears.
  • Against the budgeted figure of Rs 71,309 crore for FY 2020-21, the revised estimate is Rs 1,33,947 crore, an increase of Rs 62,638 crore.

Neglect of R&D

  • From a policy perspective one must point to the huge bias towards subsidies as compared to investments, especially research and development.
  • The allocation for agri-R&D is a meagre Rs 8,514 crore in FY 2021-22 against a RE of Rs 7,762 crore in FY 2020-21.
  • The marginal returns in terms of agri-growth from expenditures on agri-R&D are almost five to 10 times higher than through subsidies.
  • India spends not even half of what a private global company like Bayer spends on agri-R&D — almost Rs 20,000 crore every year.
  • This is why growth momentum in agriculture remains subdued and India keeps spending on freebies with sub-optimal results.

Subsidies needs a rethink

1) Food subsidy

  • The FCI’s economic cost of rice is Rs 37/kg and of wheat about Rs 27/kg.
  • This economic cost is roughly 40 per cent higher than the procurement price.
  • This calls for giving the public distribution system’s beneficiaries the choice of direct cash transfers.
  • This could create a more diversified demand which, in turn, will support diversification in agriculture.
  • Further, in food subsidy, it is time to revise the issue prices for beneficiaries except for the antyodaya (most marginal) category.
  • Percentage of population covered by the food subsidy should be brought down to 40 per cent.

2) Fertiliser subsidy

  • Massive subsidisation of urea, to the tune of almost 70 per cent of its cost, is leading to its sub-optimal usage.
  • It is time to move towards direct cash transfers to farmers based on a per hectare basis and free up prices of fertilisers.
  • This will help reduce leakages and imbalance in NPK (nitrogen, phosphorus, potassium) usage and lead to efficiency, equity and environmental sustainability.

Consider the question “If one looks at India’s Union Budget, it is easy to notice huge bias towards subsidies and neglect of the research and development in agriculure in the allocation for agriculture sector. What are the implications of such bias?” 


Overall, the expenditure on agri-R&D needs to be doubled or even tripled in next three years, if growth in agriculture has to provide food security at a national level and subsidies on food and fertilisers need to be contained. At the same time, food subsidy and fertiliser subsidy needs rationalisation.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agriculture credit


From UPSC perspective, the following things are important :

Prelims level : Agriculture Census

Mains level : Paper 3- Exclusion of small and marginal farmers from agri-credit

India’s agriculture credit increased by 500% in the last decade, however, this increase in the credit has not been reflected in the condition of the farmers. The article deals with the issues with the agri-credit in India.

Impact of credit on agriculture

  • Providing credit to small farmers at a reasonable rate has been the agenda of the Centre, the States, and the Reserve Bank of India (RBI) for decades.
  • However, the volume of credit has improved over the decades, its quality and impact on agriculture have only deteriorated.
  • In 2011-12, the target was ₹4.75-lakh crore; now, agri-credit has reached the target of ₹15-lakh crore in 2020-21 with an allocated subsidy of ₹21,175 crores.
  • Agricultural credit has become less efficient in delivering agricultural growth.

Issues with agri-credit: small farmers left-out

  • In the last 10 years, agriculture credit increased by 500% but has not reached even 20% of the 12.56 crore small and marginal farmers.
  •  95% of tractors and other agri-implements sold in the country are being financed by non-banking financial companies, or NBFCs, at an 18% rate of interest.
  • The RBI has also questioned agricultural households with up to two hectares getting only about 15% of the subsidized outstanding loan from institutional sources (bank, co-operative society).
  •  As per the Agriculture Census, 2015-16, the total number of small and marginal farmers’ households in the country stood at 12.56 crore which makes up 86.1% of the total holdings.
  • As in the Situation Assessment Survey of Agricultural Households by the National Sample Survey Office (NSSO), the share of institutional loans rises with an increase in land possessed.
  • This shows that the bulk of subsidized agri-credit is grabbed by big farmers and agri-business companies.

What are the reasons

  • A loose definition of agri-credit has led to the leakage of loans at subsidized rates to large companies in agri-business.
  • The RBI had set a cap that out of a bank’s overall adjusted net bank credit, 18% must go to the agriculture sector, and within this, 8% must go to small and marginal farmers and 4.5% for indirect loans, bank advances routinely breach the limit.
  • A review by the RBI’s internal working group in 2019 found that in some States, credit disbursal to the farm sector was higher than their agriculture gross domestic product (GDP) and the ratio of crop loans disbursed to input requirement was very unevenly distributed.
  •  This shows the diversion of credit for non-agriculture purposes.
  • One reason for this diversion is that subsidized credit disbursed at a 4%-7% rate of interest is being refinanced to small farmers, and in the open market at a rate of interest of up to 36%.

Way forward

  • The way forward is to empower small and marginal farmers by ‘giving them direct income support on a per hectare basis rather than hugely subsidizing credit.
  • Streamlining the agri-credit system to facilitate higher crop loans to farmer producer organizations, or the FPOs of small farmers against commodity stocks can be a win-win model to spur agriculture growth’.
  • With mobile phone penetration among agricultural households in India being as high as 89.1%, efforts to improve institutional credit delivery through technology-driven solutions can reduce the extent of the financial exclusion of agricultural households
  • There is a need to reforming the land leasing framework and creating a national-level agency to build consensus among States and the Centre concerning agriculture credit reforms.

Consider the question “Growth in the agriculture sector in India has not been commensurate with the growth in the agriculture credit. What are the reasons for this disparity? Suggest the measures to deal with the challenges in agri-credit delivery.”


Improving the access to credit at a reasonable rate will help in increasing their income but to do that reforms in credit delivery is the need of the hour.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Changes needed in India’s agri-food policy


From UPSC perspective, the following things are important :

Prelims level : FCI and MSP

Mains level : Paper 3- Making India's agri-food policies optimal

Basic parameters to design optimal agri-food policy

  • UN population projections (2019) indicate that India is likely to be the most populous country by 2027.
  • By 2030, the country is likely to have almost 600 million people living in urban areas, who would need safe food.
  • Indian agriculture has an average holding size of 1.08 hectares (2015-16 data) while engaging 42 percent of the country’s workforce.
  • Cultivable land and water for agriculture are limited and already under severe pressure.

What should be the basic features of agri-policy

  • 1) It should be able to produce enough food, feed, and fibre for its large population.
  • 2) It should do so in a manner that protects the environment — soil, water, air, and biodiversity and achieves higher production with global competitiveness.
  • 3) It should enable seamless movement of food, keeping marketing costs low, save on food losses in supply chains and provide safe and fresh food to consumers.
  • 4) Consumers should get safe and nutritious food at affordable prices.

Need to change from sub-optimal to optimal policies

  • Free electricity and highly subsidized fertilizers, especially urea, are damaging groundwater levels, especially in the Green Revolution states.
  • Sugar and wheat are being produced at prices higher than global prices, and these crops can’t be exported unless they are heavily subsidized.
  • Excessive stocks of wheat and rice with the Food Corporation of India (FCI) are putting pressure on the agency’s finances.
  • Rice remains globally competitive, but it should be remembered that in exporting rice we are also exporting massive amounts of precious water — almost 25-30 billion cubic meters, annually.
  • This is the water that is pumped for rice cultivation, enabled by the subsidized power supply.
  • In the marketing segment also, for most of our agri-commodities, our costs remain high compared to several other developing countries due to poor logistics, low investments in supply lines, and high margins of intermediaries.
  • All these are signs of sub-optimal agri-food policies.

Policy changes required: On the production level

  • Green Revolution states of Punjab, Haryana, and western Uttar Pradesh require crop diversification.
  • This can be done by switching from the highly subsidized input price policy (power, water, fertilizers) and MSP/FRP policy for paddy, wheat, and sugarcane, to more income support policies linked to saving water, soil, and air quality.
  • The Agri-marketing segment is also in the need of reforms especially with respect to bringing about efficiency in agri-marketing and lowering transaction costs.
  • It is believed that developing countries should invest at least one percent of their agri-GDP in agri-R&D and extension.
  • India invests about half.
  • It needs to double with commensurate accountability of R&D organizations, especially the ICAR and state agriculture universities to deliver.

Policy changes required: On the consumption level

  • The biggest challenge for the next 10 years is that of malnutrition, especially amongst children.
  • The public distribution of food, through PDS, that relies on rice and wheat, and that too at more than 90 percent subsidy over costs of procurement, stocking, and distribution, is not helping much.
  • It is increasing the finances of FCI, whose borrowings have touched Rs 3 lakh crore.
  • To address that, beneficiaries of subsidized rice and wheat need to be given a choice to opt for cash equivalent to MSP plus 25 percent.
  • The FCI adds about 40 percent cost over the MSP while procuring, storing, and distributing food.
  • This cash option will save some money and also lead to supplies of more diversified and nutritious food to the beneficiaries.

Consider the question “What are the issues with India’s agri-food policies? Suggest the changes in agri-food policies so as to make them optimal.


What we need is to set agri-food policies on a demand-driven approach, protecting sustainability and efficiency in production and marketing, and giving consumers more choices for nutritious food at affordable prices.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

PM-KISAN payout wrongly made to ineligible beneficiaries


From UPSC perspective, the following things are important :

Prelims level : PM-KISAN

Mains level : Not Much

PM-KISAN payments worth ₹1,364 crores have been wrongly made to more than 20 lakh ineligible beneficiaries and income tax payer farmers.

Try this PYQ:

Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)

  1. Working capital for maintenance of farm assets
  2. Purchase of combine harvesters, tractors and mini trucks
  3. Consumption requirements of farm households
  4. Construction of family house and setting up of village cold storage facility
  5. Construction of family house and setting up of village cold storage facility

Select the correct answer using the code given below:

(a) 1,2 and 5 only

(b) 1,3 and 4 only

(c) 2,3,4 and 5 only

(d) 1, 2, 3 and 4


  • The Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana) is a government scheme through which, all small and marginal farmers will get up to Rs 6,000 per year as minimum income support.
  • Under the PM-KISAN scheme, all landholding farmers’ families shall be provided with the financial benefit of Rs. 6000 per annum per family payable in three equal instalments of Rs. 2000 each, every four months.
  • The definition of the family for the scheme is husband, wife, and minor children.
  • State Government and UT administration will identify the farmer families which are eligible for support as per scheme guidelines.
  • The fund will be directly transferred to the bank accounts of the beneficiaries.

Why in news?

  • When it was launched just before the general election in 2019, it was meant to cover only small and marginal farmers who owned less than two hectares.
  • Later that year, large farmers were included in the scheme as the government removed land size criteria.

Certain exclusions

  • However, certain exclusions remained.
  • If any member of a farming family paid income tax, received a monthly pension above ₹10,000, held a constitutional position, or was a serving or retired government employee, they were not eligible for the scheme.
  • Professionals and institutional landholders were also excluded.

Who are NOT eligible for PM-KISAN?

The following categories of beneficiaries of higher economic status shall not be eligible for benefit under the scheme.

  • All Institutional Landholders.

Farmer families that belong to one or more of the following categories:

  • Former and present holders of constitutional posts
  • Former and present Ministers/ State Ministers and former/present Members of Lok Sabha/ Rajya Sabha/ State Legislative Assemblies/ State Legislative Councils, former and present Mayors of Municipal Corporations, former and present Chairpersons of District Panchayats.
  • All serving or retired officers and employees of Central/ State Government Ministries
  • All superannuated/retired pensioners whose monthly pension is Rs.10,000/-or more. (Excluding Multi-Tasking Staff / Class IV/Group D employees) of the above category
  • All Persons who paid Income Tax in the last assessment year
  • Professionals like Doctors, Engineers, Lawyers, Chartered Accountants, and Architects registered with Professional bodies and carrying out the profession by undertaking practices.

Note: It is not so easy to remember all such exclusions. But one must be able to recognize them by applying pure logic and thumb rule. This can be well understood from the PYQ given.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Misunderstanding the MSP


From UPSC perspective, the following things are important :

Prelims level : MSP, Public Procurement System

Mains level : Paper 3- Reasons for farmers concerns with MSP

The article explains the purpose of Minimum Support Price (MSP) and reasons for insecurity in farmers regarding its continuance.

Relation between MSP and time-bound procurement through PPS

  • MSP, public procurement system (PPS) and a strict time-bound purchase of output brought to the PPS(through APMCs) form a package deal.
  • Take out one aspect, the deal falls apart.
  • For example, if you have MSP but not compulsory PPS, the support price becomes redundant.
  • If you have MSP and PPS/APMC mandi but not strict time-bound purchase of the product brought to the PPS, the deal will fail.

Purpose of MSP

  • At the launch of the Green Revolution, MSP and PPS were designed to assist the country in achieving its goal of food self-sufficiency, which was met by the early Seventies.
  • The purpose of MSP and PPS/APMC is now two-fold.
  • One, to maintain food self-sufficiency because crop diseases and weather conditions such as droughts.
  • The second purpose is to ensure a reasonable, assured income to the farmers.
  • The recommendation to dismantle FCI public procurement, made by the Shanta Kumar Committee in its 2015 report, displayed a lack of recognition of the importance of these two purposes.

Issues with the Farm bills

  • The government’s assurance that MSP/APMC can co-exist with the big agro-business-controlled private markets is not tenable.
  • A farmer who has reached a contract will not be legally allowed to take the product to APMC if the APMC mandi offered him/her a better price.
  • The agro-business entity will take the non-compliant farmer to court, where the dispute resolution mechanism is stacked against the farmer due to the structural inequities of legal resources and social-cultural capital.
  • The proposed dispute resolution mechanism increases the choice of the trader to trade and not of the farmer to sell.
  • The central law will prevail in the private markets, while state laws will prevail in the APMC mandis.
  • Two markets with two regulatory frameworks will create conditions for perpetual Centre-state conflicts.
  • MSPs are announced for 23 crops but compulsory and timely public procurement, are provided mainly for two crops, wheat and rice, the support price does not work for the remaining 21 crops. 

Challenge in defining MSP

  • Farmers’ organisations are insisting on the Swaminathan Committee formula of C2+50 per cent.
  • The MSP announced by the government is based on the A2+Fl+50 per cent formula.
  • Unlike the C2+50 per cent formula, A2+Fl+50  formula does not cover all the costs of farming.


Agrarian reforms that recognise the importance of ecologically and economically sustainable agriculture are an absolute necessity. Such reforms would require more than merely changing the trade emphasis of existing laws. They will involve the creation of inclusive, transparent and well-informed laws compatible with these reforms.

Back2Basics: Understanding the cost formula

  • M S Swaminathan committee recommended minimum support prices (MSP) for crops at levels “at least 50 per cent more than the weighted average cost of production”.
  • The National Commission on Farmers did not elaborate on what really constituted “weighted average cost of production” in its report submitted in October 2006.
  • The Commission for Agricultural Costs and Prices (CACP), on the other hand, gives three definitions of production costs: A2, A2+FL and C2.
  • A2 costs basically cover all paid-out expenses, both in cash and in kind, incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel, irrigation, etc.
  • A2+FL cover actual paid-out costs plus an imputed value of unpaid family labour.
  • C2 costs are more comprehensive, accounting for the rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agricultural research in India


From UPSC perspective, the following things are important :

Prelims level : Water usage for agriculture in India

Mains level : Paper 3- Need for RD in agriculture

The article highlight the need for more emphasis on agricultural R&D as a solution to the woes of the farmers.

India needs low-input high-output agriculture

  • Amid farmers protest against farm acts, the current debates focus mainly on MSP, reducing farmers’ debt liabilities, reducing post-harvest losses, cash transfers and marketing reforms.
  • India with entrenched poverty requires low-input, high-output agriculture; low input in terms of both natural resources and monetary inputs.
  • Very little attention is being given to reducing the natural resource inputs — most critical being water —and agricultural R&D.
  • This cannot be achieved without science and technology.

Following are the areas in which Indian agriculture needs R&D to reduce agriculture inputs

1) Water usage for agriculture

  • India receives around 4,000 billion cubic meters (bcm) of rainfall, but a large part of it falls in the east.
  • Moreover, most of the rain is received within 100 hours of torrential downpour, making water storage and irrigation critical for agriculture.
  • India has one of the highest water usages for agriculture in the world — of the total 761 bcm withdrawals of water, 90.5 per cent goes into agriculture.
  • In comparison, China uses 385.2 bcm (64.4 per cent) out of the total withdrawals of 598.1 bcm for agriculture.
  • China’s per-unit land productivity in terms of crop production is almost two to three times more.
  • The total estimated groundwater depletion in India is in the range of 122-199 bcm .
  • The depletion is highest in Punjab, Haryana, and western UP.

2) Increasing the yields of coarse-grain crops and oilseed crops

  • Years of intense research on yield increase and yield protection by breeding varieties and hybrids resistant to pests and pathogens have made wheat, rice and maize stable high yielders.
  • Environmentalists suggest replacing rice with coarse grain crops — millets, sorghum etc.
  • However, the yields of these crops are not comparable to those of wheat and rice even when protective irrigation is available.
  • These crops have a serious R&D deficit leading to low yield potential as well as losses to pests and pathogens.
  • This leaves us with pulses and oilseeds.
  • In the 2017-18 fiscal year, India imported around Rs 76,000 crore worth of edible oils.
  • Three oilseed crops (mustard, soybean, and groundnut) are already grown very extensively.
  • Soybean and groundnut are legume crops and fix their nitrogen.
  • All three crops not only provide edible oils but are also an excellent source of protein-rich seed or seed meal for livestock and poultry.
  • Unfortunately, yields of the three crops are stagnating in India at around 1.1 tons per hectare, significantly lower than the global averages.

3) Genetic improvements of crops

  • Pests and pathogens can be best tackled by agrochemicals or by genetic interventions.
  • A recent global level study on crop losses in the main food security hotspots for five major crops showed significant losses to pests — on average for wheat 21.5 per cent, rice 20 per cent, maize 22.5 per cent, potato 17.2 per cent, and soybean 21.4 per cent.
  • India is one of the lowest users of pesticides.
  • In 2014, comparative use of pesticides in kilograms per hectare in some select countries/regions is as following: Africa 0.30, India 0.36, EU countries 3.09, China 14.82, and Japan 15.93.
  • A more benign method for dealing with pests is through breeding.
  • The Green Revolution technologies were based on the effective use of germplasm and strong phenotypic selections.
  • Recombinant DNA technologies since the 1970s have brought forth unprecedented opportunities for genetic improvement of crops.
  • Since 2000, genomes of all the major crops have been sequenced.
  • The big challenge is in the effective utilisation of the enormous sequence data that is available.
  • India’s efforts in all three areas are half-hearted.

Way forward

  • Over the last 20 years, India has been spending between 0.7 to 0.8 per cent of its GDP on R&D.
  • This is way below the percentage of GDP spent by the developing countries and Asia’s rapidly growing economies.
  • There are structural issues like lack of competent human resources and lack of policy clarity.
  • However, the biggest impediment to agricultural R&D has been overzealous opposition to the new technologies.

Consider the question “India needs low-input, high-output agriculture. This cannot be achieved without science and technology. In light of this, examine how R&D could play a role in the advancement of agriculture in India.”


Maybe the present crisis in agriculture would lead to a greater appreciation of the need for strong public supported R&D in agriculture.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Need for comprehensive agri policy


From UPSC perspective, the following things are important :

Prelims level : Agreement on Agriculture

Mains level : Paper 3- Challenges of farm subsidies and declining farm incomes

The article examines the reasons for declining farm incomes and the contribution of farm subsidies.

Contribution of agriculture

  • India’s agriculture, which also supports the rural workforce, was, forever, living beyond its means.
  • In 1950-51, agriculture’s share in the country’s GDP was 45%, the share of the workforce dependent on it was close to 70%.
  • Today, agriculture’s share in GDP is below 16%, but almost 50% of the country’s workforce depends on this sector.
  • The squeeze on the agricultural sector becomes even more evident from its terms of trade vis-à-vis the non-agricultural sectors.
  • Agriculture has been facing adverse terms of trade over extended periods since the 1980s, and even during the phases when the terms of trade have moved in its favour, for instance in the 1990s and again since 2012-13, there was no distinct upward trend.

Reason for fall in farm incomes: falling investment

  • The decline in farm incomes was triggered by growing inefficiencies.
  • This decline, in turn, was caused by a lack of meaningful investment in agriculture.
  • The share of this sector in the total investment undertaken in the country consistently fell from about 18% in the 1950s to just above 11% in the 1980s.
  • In the most recent quinquennium for which data are available (2014-15 to 2018-19), the average share of agriculture was 7.6%.

India’s dismal performance in term of yields of major crops

  • If one ranks countries in terms of their yields in wheat and rice — India’s two major crops — the country’s ranks were 45 and 59, respectively, in 2019.
  • This ranking would go down sharply if the areas recording high yields, such as Punjab and Haryana, are excluded.
  • In other words, for farmers in most regions of the country, it is an uphill battle for survival amid low yields.

Need for coherent policy for agriculture

  • The lack of a coherent policy for agriculture must surely be regarded among the most remarkable failures of the governments in post-Independence India.
  • Compare this failure with the United States, with less than 2% of its workforce engaged in agriculture, has been enacting farm legislations every four years since the Agricultural Adjustment Act was enacted in 1933.
  • These policies comprehensively address the needs of the farm sector through proactive support from the respective governments.

Issue of the farm subsidies in India

  • The subsidies are the price that the country pays for the failure of the policymakers to comprehensively address the problems of the farm sector.
  • Wanton distribution of subsidies without a proper policy framework has distorted the structure of production and, consequently, undesirable outcomes in terms of excessive food stockpiling.
  • And, yet, the fundamental ills of Indian agriculture are not adequately addressed.
  • Members of the World Trade Organization (WTO) are expected to notify their agricultural subsidies as a part of their commitment under the Agreement on Agriculture (AoA).
  • India’s latest notification, for 2018-19, shows that the subsidies provided were slightly more than $56 billion.
  • In most of the recent years, the largest component of India’s subsidies ($24.2 billion, or 43% of the total) is provided to “low income or resource-poor farmers”, a terminology that the AoA uses.
  • However, the designation of this category of farmers is left to individual members.
  • India has notified that 99.43% of its farmers are low income or resource-poor.
  • According to the agricultural census conducted in 2015-16, these are the farmers whose holdings are 10 hectares or less.
  • Thus, almost the entire farm sector comprises economically weak farmers.

Comparing subsidies given by various countries

  • America provided $131 billion in 2017 and the EU, nearly €80 billion (or $93 billion) in 2017-18.
  • Instead of absolute numbers; the ratios of subsidies to agricultural value addition for the three countries give a much better picture.
  • Thus, for 2017, India’s farm subsidies were 12.4% of agricultural value addition, while for the U.S. and the EU, the figures were 90.8% and 45.3%, respectively.
  • This then is the reality of farm subsidies that India provides.

Consider the question “Indian agriculture has been contributing beyond its means since Indian independence. However, agri incomes have shown a gradual decline. What are the reasons for such a decline? How far has farm subsidies succeeded in solving the low-income problem?” 


India needs a comprehensive Agri policy to deal with the distortion created by the subsidies.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Reforms with the future and farming needs in mind


From UPSC perspective, the following things are important :

Prelims level : Provisions in the act

Mains level : Paper 3- Provisions in the new farm laws and their purpose

Some provisions of the new farm laws are opposed by the farmers. The article explains the utility of these provisions.

Major objections to farm laws

  • The first objection is that the Agricultural Produce Market Committees (APMC) will be eventually closed,
  • The second objection is that Minimum Support Prices (MSP) will be stopped,
  • The third fear is that corporates will take over the agriculture trade, and farmers’ land will be taken over by powerful corporates.

Why reforms were needed

  • The gap between the agri-income of a farmer and that of a non-agriculture worker increased from ₹25,398 in 1993–94 to ₹1.42 lakh in 2011-12.
  • Aggregate food demand has fallen short of domestic production necessitating the export of a large quantity to prevent domestic prices from falling very low.
  • India is sitting on an excess stock of 60 lakh tons of sugar and nearly 72 million tons of extra buffer stock of wheat and rice which is causing a huge drain on fiscal resources.
  • India’s agri-exports are facing difficulty, imports are turning attractive as domestic prices are turning much higher.
  • Rural youth are looking for jobs outside agriculture and there is a serious problem of unemployment in the countryside.
  • There are numerous instances of market failure to the detriment of producers and consumers.
  • This is turning farmers to look at the government for remunerative prices through MSP for most agricultural products.
  • The growth rate in agriculture is driven by heavy support through various kinds of subsidies and output price support.
  • These costs and losses and subsidies will take away most of the tax revenue of the central government.

3 Provisions and their utility

1) Relation between MSP and APMC

  • APMC has nothing to do with the payment of the MSP.
  • The necessary and sufficient conditions for the MSP are procurement by the government, with or without the APMC.
  • Experience shows that even after fruits and vegetables were de-notified from the APMC, they continued to arrive at APMC mandis in large quantities while farmers got additional options.
  • The protesting farmers have raised concerns to keep the level-playing field for the APMC and private players, and the government has shown agreement to address this fully.

2) Criteria for traders

  • Protesting farmers are also opposing the provision of the simple requirement of a PAN card for a trader.
  • After having a PAN card, even a farmer can go for trading, his son can do agri-business and other rural youth can undertake purchases of farm commodities for direct sale to a consumer or other agribusiness firms.
  • If stringent criteria such as bank guarantee, etc. are included in the registration, then the spirit of the new law to facilitate farmers and rural youth to become agribusiness entrepreneurs will be lost.

3) Mistaking contract farming with corporate farming

  • Critics and protesting farmers are mixing contract farming with corporate farming.
  • The new Act intends to insulate interested farmers (especially small farmers), against market and price risks.
  • The Act is voluntary and either party is free to leave it after the expiry of the agreement.
  • It prohibits the transfer, sale, lease, mortgage of the land or premises of the farmer.
  • The Act will promote diversification, quality production for a premium price, export, and direct sale of produce, with desired attributes to interested consumers.
  • It will also bring new capital and knowledge into agriculture and pave the way for farmers’ participation in the value chain.


The policy reforms undertaken by the central government through these Acts are in keeping with the changing times and requirements of farmers and farming. If they are implemented in the right spirit, they will take Indian agriculture to new heights and usher in the transformation of the rural economy.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Government must promote crop diversification by setting MSP for other crops as well


From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : Read the attached story

Farmers’ genuine concerns must be addressed as soon as possible so that they can continue producing food and fibre needed for the ever-increasing population.

Green revolution and farmer’s contribution to the food sufficiency in India

  • In the early 1960s, near-famine conditions prevailed in India and some 10 million tonnes of wheat had to be imported from the US under the PL480 programme. The country’s situation was like“ship-to-mouth” existence.
  • High-yielding dwarf wheat varieties brought from Mexico were provided to Indian agricultural institutes.
  • The consequent miraculous gains in wheat yield and production ushered in the “Green Revolution.”
  • The Green Revolution occurred due to a confluence of favourable government policies, efforts of agricultural scientists and the adoption of new wheat varieties/selections by farmers.
  • Also, the contributions of farmers of Punjab (Haryana included) was also very important and they became the backbone of the revolution.
  • By 1974, the industrious farmers of the “food-bowl” states of Punjab, Haryana, and western UP had brought about self-sufficiency in foodgrain production, ridding the country of the “begging bowl”.

Practice Question: What are the concerns of the farmers after new agriculture reforms and how they can be addressed?

Farmer’s concerns

  • Consultation with farmers is important before drafting policies
  • There will be resistance no matter which organization enact the policies/rules without taking the affected people on board. A proactive approach is always better than a reactive one.
  • From the farmers’ standpoint, the ordinances were unfairly promulgated in June 2020, during the COVID-19 lockdown, without consulting them.
  • Loss of Income in the lockdown – Farmers could not sell their vegetables and fruits because of the lockdown causing the loss of income and then the imposition of the new laws aggravated them.
  • Uncertainty in the minds of farmers about the continuation of MSP
  • Farmers have been selling food grains (mainly wheat and rice) at Minimum Support Price (MSP) since the mid-1960s.
  • This has helped to create a central pool of food grains and the Public Distribution System to help poor people.
  • But MSP has not been guaranteed in the newly enacted farm laws, which is the major bone of contention.
  • The APMCs are under threat from the new farm laws as MSP and APMC go hand-in-hand.

New Middleman –

  • The central government has indicated that the new farm laws are meant to eliminate the “middlemen”.
  • But the farmers feel that a new class of middlemen, that is, lawyers belonging to big companies would emerge.
  • Thus, small farmers would be at a distinct disadvantage — more than 80 per cent of farmers own less than five acres of land.

Contract farming

  • According to the central government, the new laws will ensure contract farming.
  • The farmers fear that big companies might usurp their land and might not pay them an agreed price on the pretext of “poor quality” of produce.
  • They feel that big companies might become monopolies, and exploit both farmers and consumers. Farmers fear being made into labourers.

Way forward

MSP is a must

  • A clause should be added in the law to the effect that no matter who buys the produce (government or a private entity), the farmer must be given an MSP.
  • The National Farmers’ Commission’s recommendation of providing an MSP of 50 per cent over and above a farmer’s input expenses must be implemented.
  • APMCs should be continued – The fees that “Mandi Boards” collect (for example the Rural Development Fund) have helped build link roads. No private organization will do this.
  • MSP should be determined on the basis of grain quality.

Crop diversification is needed

  • The government must promote crop diversification by purchasing crops produced other than wheat and rice at MSP. This could help conserve the dwindling supply of underground water.
  • To encourage farmers to grow high-value crops, such as vegetables and fruits, the government should set up the adequate cold-chain infrastructure.
  • The farmers’ staying power must be improved so that they don’t have to sell all of their produce immediately after the harvest.
  • India has produced a number of World Food Laureates, including M S Swaminathan, Gurdev S Khush, Surinder K Vasal, and Rattan Lal. Such intellectuals should be in the “Agricultural Think Tank.”

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

In agri-reforms, go back to the drawing board


From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : Farmers agitation and the fuss

The intended beneficiaries often understand the realities of the systems better; policymakers need to build trust.

Practice Question: The farmers protest against the new farm laws rises the serious concerns about the policymaking and involvement of citizen in the process by experts. What can be done to improve the trust of the public and how the challenge of agricultural income be solved?

Reassessment is needed

  • The purpose of agriculture reforms is to increase farmers’ incomes. Farmers want the laws repealed.
  • The Supreme Court of India has called for discussions between the government and farmers around the country.
  • It is time to go back to the drawing board about the purpose and the process of agriculture reforms.
  • According to economists, fewer people must work on farms for farm productivity and incomes to be improved. Which begs the question of how the millions displaced from farms will earn incomes.
  • Indian industry is not growing much. There too, according to economists, humans should be replaced by technology for improving productivity.

Flipside of productivity

  • Landholdings are too small for mechanization to improve farm productivity. Their solution is to ‘scale-up’ farms.
  • Mechanization requires standardization of work, hence mechanized farming on scale requires monocropping.
  • Large-scale specialization upsets the ecological balance. Reduced diversity of flora enables pests to spread more easily; soil quality is reduced; water resources get depleted.
  • Solutions to these new problems require more industrial inputs, with more costs for farmers.
  • The harmful side-effects of this approach to improve agriculture productivity are very visible in Punjab nowhere farm incomes have grown at the cost of water resources.

Nature’s self-adaptive system

  • The ecological imbalance out of monocropping made the trees more vulnerable to pests.
  • Nature is a complex ‘self-adaptive’ system. It knows how to take care of itself.
  • When Man tries to overpower Nature with his science and industry, without understanding how Nature functions, he harms Nature — and ultimately himself.
  • Challenges of environmental degradation and increasing inequalities require that the economic calculus shifts from ‘economies of scale with standardization’ to ‘economies of scope for sustainability’.
  • This will make large-scale mechanization more difficult. It will require the use of more ‘flexible’ human labour.
  • In the long run, not only will this be good for the ecology, but it will also increase employment and incomes for people in the lower half of the economic pyramid.

Market access

  • Farm incomes can increase with access to wider markets for farm produce, which is an objective of the agricultural reforms.
  • Indian farmers fear that they will not have adequate pricing power when pushed into large supply systems and less regulated markets.
  • Connections into global supply chains can increase volumes of sales which always favour the larger players in the supply chains who have easier access to capital.
  • Studies show that farmers in developed countries formed collectives which enable their voice to be heard by politicians and they could set the rules of global trade.

Strengthen cooperatives

  • Institutions for cooperative ownership and collective bargaining must be strengthened to give power to small farmers before opening markets to large corporations.
  • A very good example is the Indian dairy sector. It’s ‘per person productivity is much lower than in New Zealand and Australian dairy producers’.
  • Still, it provides millions of tiny producers with reasonable incomes which large-scale industrial dairy producers do not.
  • Moreover, with its cooperative aggregation, the Indian dairy sector has also acquired political clout.
  • It has compelled the Indian government not to join the Regional Comprehensive Economic Partnership to connect the Indian economy with larger supply chains.

Low agriculture income

  • The problem of low incomes in India’s agriculture sector is a complex systems problem which cannot be solved by agriculture experts alone.
  • Experts from many disciplines must collaborate to find systemic solutions.
  • The intended beneficiaries of the new policies must be included in the designing of the new policies right at the beginning as they understand the realities of systems better than experts.
  • When policymakers say ‘the people don’t get it’ after the policy is announced and the intended beneficiaries protest, it is an indication that the experts didn’t get it.

The reforms of the 1990s

  • The stand-off in agriculture reforms has caused a flurry of discussions about democracy, consultation, and processes for economic reforms.
  • The immediate beneficiaries of the 1991 reforms were all Indian consumers, rich and poor, who would benefit from access to better quality products from around the world.
  • The principal opponents of the reforms were a few large industrialists whose products citizens were not satisfied with.
  • Governments have more power over a few industrialists than they have over the masses.
  • The 1991 reforms changed industrial licensing and trade policies — both subjects of the Union government.
  • ‘Factor market’ reforms, inland, agriculture, and labour regulations, which are necessary to realize the full benefits of the 1991 reforms are State subjects.
  • They affect the lives of people on the ground, and differently, around the country. Therefore, the central government, no matter how strong it is, must not force these reforms onto the States.


Silo experts cannot help

  • India’s policymakers must improve their expertise in solving complex, multi-disciplinary problems.
  • They must apply the discipline of systems thinking, and not rely on siloed domain experts.
  • Citizens around the country must be involved in the policymaking throughout the evolution of policies.
  • The policies of the government should create public value and it satisfies the desire of citizens for a well-ordered society, in which fair, efficient, and accountable public institutions exist.
  • Trust is essential for a well-governed society. The lesson for India’s leaders is- good processes for making public policies build trust between citizens and their governments.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Why Are Most Assam Farmers Not Protesting Against the Farm Laws?


From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : Concerns of farmers other than MSP

With most farming land held by only 20% of its cultivators in Assam, there is a perception that agriculture is unimportant. However, the new farm laws are equally detrimental to small and marginal farmers in the state.

Muted response from the state’s farming community

  • With more than 70% of Assam’s population directly or indirectly dependent for their livelihood on the agricultural sector, it is surprising that the state has only seen sporadic protests against the farm laws passed by the Central government.
  • Reformists would like to read this muted response from the state’s farming community as the voice of the silent majority who expect to benefit from the new farm laws.
  • The real answer lies in the political economy of the state’s rural sector, which has its origins in the colonial handling of its agrarian possibilities.

Q. Farmers agitations in India are often region-specific. Discuss

Ungrounded and uncultivated

  • The pre-Independence British administration had invested substantially in the agriculture in what today constitutes Punjab and Haryana, building dams and irrigation facilities and creating conditions that allowed farmers to benefit from the post-independence Green Revolution.
  • This gave rise to the capitalist class among them.
  • However, at the same time, peasants in Assam were arbitrarily taxed by the British Raj to make them voluntarily give up farming in favour of joining the labour forces of the tea industry in the region.
  • Its policies did result in the transfer of land from the peasantry to mid-level revenue officials, leading to a highly unequal land distribution that has persisted since that time.
  • Since the landed class tended to support the Indian National Congress-led freedom struggle, no land reform programme has ever been pursued seriously in the post-independence period.

Unequal land distribution

  • Seven decades after independence, Assam’s agrarian setting is still characterized by a very high level of unequal land distribution.
  • The evidence documented in the Assam Human Development Report, 2014 shows that 20% of farmers hold as much as 70% of the state’s farmland and shows tenancy at a much higher level of 26%.
  • The lack of legal recognition of tenants means most of them have never been beneficiaries of public policies in agriculture in the state.
  • The state’s agriculture is characterized by mono-cropping, with rice accounting for 90% of the land cultivated, but public procurement at the minimum support price (MSP) is conspicuously absent.
  • The latest information from the public information bureau (PIB) shows that the state produces 4.2% of the country’s rice, but only 0.2% of its farmers availed public procurement by the Food Corporation of India (FCI).
  • Most farmers had to bear with the low prices of rice in the open markets, even as the state was flooded with rice sourced from elsewhere through the public distribution system.
  • Frequent floods often ravage the region, reducing farming operations to just one season in most flood-affected districts. Assam’s cropping intensity of 146% is one of the lowest among all major rice-producing states.
  • In such a setting, the landed class takes little interest in farming, even as small and marginal farmers have increasingly been migrating, many even outside the state, to earn their livelihoods.
  • It’s not surprising that the state’s agriculture is still stuck at the subsistence level. The Assam Economic Survey 2017-18 shows only 38% of the state’s land under high yielding variety seeds and 26% of its land under irrigation.

APMC must be strengthened

  • The farmers of Assam might benefit from the breaking down of MSP procurement elsewhere through higher prices in the open market.
  • The new farm laws are more or less meaningless, which are more about APMC markets than about MSP.
  • With just 24 regulated APMC markets, Assam does not have enough marketing infrastructure to justify the argument made by the advocates of the new farm laws that the new Acts will liberate the farmers from the APMC markets’ monopoly and boost private investment in the sector.
  • With the state’s agricultural marketing largely revolving around 700-odd unregulated haats (village markets), the 24 APMC markets are hardly enough to curtail the farmers’ ‘freedom’ to dispose of their produce.
  • The credit deposit ratio (CDR) reported by major national banks in the state in 2017 is still below 40% compared to 72% at the national level, showing that the state is losing much of its savings to better-endowed states instead of receiving investment from outside the state.
  • The APMC market as a public institution still has a large role to play in reviving the state’s agricultural sector. Additionally, it can stop growing inter-state migration that has come to light in the wake of the COVID-19 pandemic.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Punjab, Haryana need to look beyond MSP crops


From UPSC perspective, the following things are important :

Prelims level : Green Revolution

Mains level : Crop diversification issues in Punjab/Haryana belt

In tackling agri-crises, these core Green Revolution States must shift to high-value crops and promote non-farm activities

Early adopters of Green Revolution Technology

  • The region comprising Punjab, Haryana and western Uttar Pradesh, was an early adopter of Green Revolution technology.
  • It was also a major beneficiary of various policies adopted to spread modern agriculture technology in the country.
  • The package of technology and policies produced quick results which enabled India to move from a country facing a severe shortage of staple food to becoming a nation close to self-sufficiency in just 15 years.

Practice Question:

Q. The traditional Green Revolution States of Punjab and Haryana would need to shed “business as usual” approach and embrace an innovative development strategy in agriculture and non-agriculture to secure and improve the future of farming and rural youth. Discuss.

The rice and wheat focus

  • Procurement of marketed surplus of paddy (rice) and wheat at Minimum Support Price (MSP) completely insulated farmers against any price or market risks. It also ensured a reasonably stable flow of income from these two crops.
  • Over time, the technological advantage of rice and wheat over other competing crops further increased as public sector agriculture research and development allocated their best resources and scientific manpower to these two crops.
  • Other public and private investments in water and land and input subsidies were the other favourable factors.
  • Thus, wheat in rabi and paddy in Kharif turned out to be the best in terms of productivity, income, price and yield risk and ease of cultivation among all the field crops (cereals, pulses, oilseeds).
  • It is no surprise then that the area share of rice and wheat in the total cropped area rose drastically in these states.
  • The progress and specialization towards these two crops served the great national goal of securing the food security of the country.

Problems of the Green Revolutionsurfaced during the mid-1980s

  • During the mid-1980s, some inimical trends related to the rice-wheat crop system in general and paddy cultivation, in particular, surfaced followed by serious second-generation problems of the Green Revolution.
  • Some experts foresaw the serious consequences of the continuation of paddy cultivation in the region and suggested diversification away from the rice-wheat system in the mid-1980s.
  • Since then a large number of reports and policy documents have been prepared to develop alternative options to reduce the area under paddy — necessitated by its adverse effect on natural resources, the ecology, the environment, and fiscal resources.
  • Serious concerns have also been expressed about plateauing productivity and stagnant income from rice-wheat cultivation. However, the area under these two crops has only increased rather than fallen.
  • In order to develop viable options to infuse dynamism in the agriculture economy of this Green Revolution belt, there is a need to understand: what attracts farmers to rice-wheat crops, why it needs to be changed, and how it can be changed.

Punjab, Haryana vs. States

  • High productivity, assured MSP which is often above open market price, free power, and fertilizer subsidy underlie the higher income per unit area from wheat and paddy cultivation.
  • Land-labour ratio is also very favourable in Punjab when compared to other States; on an average, a farmer owns and cultivates 2.14 hectares net sown area as against 1.42 hectares in Haryana and 1.17 hectares at the national level.
  • An estimate of income (derived from National Accounts Statistics) shows that all agriculture activities taken together to generate an annual net income of ₹5.31 lakh per cultivator in Punjab; it is ₹3.44 lakh in Haryana while the all-India average is ₹1.7 lakh (reference year, 2017-18).
  • A question often asked is that if per farmer agriculture incomes in Haryana and Punjab are two to three times more than the national average, then why is there so much talk of farmers’ distress in these two States?

Why farmers’ distress in these two States when everything looks good?

  • The reasons seem to be the loss of growth momentum in the income from the agriculture sector, which has fallen to 1% in Haryana and 0.6% in Punjab after 2011-12.
  • This is quite low by any standard and not keeping in pace with an increase in households’ expenditure. The prospects of further growth in agricultural income from the crop sector dominated by rice and wheat are very dim.
  • With the productivity of rice and wheat reaching a plateau, there is pressure to seek an increase in MSP to increase income. However, demand and supply do not favour an increase in MSP in real terms.
  • In India, the per capita intake of rice and wheat is declining and consumers’ preference is shifting towards other foods.
  • The average spending by urban consumers is more on beverage and spices than on all cereals. On the supply side, rice production is rising at the rate of 14% per year in Madhya Pradesh, 10% in Jharkhand and 7% in Bihar.

Issues related to procurement

  • The growing rice production will further increase pressure on the procurement and buffer stock of rice. Rice and wheat procurement in the country has more than doubled after 2006-07 and buffer stocks have swelled to an all-time high.
  • The country does not find an easy way to dispose of such large stocks and they are creating stress on the fiscal resources of the government.
  • The implication of all these changes is that farmers in the region will find it difficult to increase their income from rice-wheat cultivation and they must be provided alternative choices to keep their income growing.
  • Procurement of almost the entire market arrivals of rice and wheat at MSP for more than 50 years has affected the entrepreneurial skills of farmers to sell their produce in a competitive market where prices are determined by demand and supply and competition.
  • Thus, to enable Punjab and Haryana farmers to move toward high-paying horticulture crops requires institutional arrangements on price assurance such as contract farming.

Environmental issues, unemployment

  • The biggest casualty of paddy cultivation and the policy of free power for pumping out groundwater for irrigation is the depletion of groundwater resources.
  • In the last decade, the water table has shown a decline in 84% observation wells in Punjab and 75% in Haryana. It is feared that Punjab and Haryana will run out of groundwater after some years if the current rate of overexploitation of water is not reversed.
  • In the last couple of years, the burning of paddy stubble and straw has become another serious environmental and health hazard in the whole region.
  • Another rather more serious challenge for the two States is to provide attractive employment to rural youths. Most of the farm work in these two States is undertaken by migrant labour.
  • The younger generation is not willing to do manual work in agriculture and looks for better paying salaried jobs in non-farm occupations. Government jobs are few and far less than the number of job seekers.
  • Thus, the option left is to create jobs in the private industry and the services sector. This requires private investments in suitable areas.
  • Punjab has witnessed a flight of private capital from the State during the rise of militancy which hurt the State economy, employment and the revenues of the State.
  • This setback has pushed the rank of the State in per capita income from number one in the 1970s and the early 1980s to number 13 among the major states of the country.
  • For further progress and to meet the aspirations of rural youth to get satisfactory employment, the State needs large-scale private investments in modern industry, services, and commerce besides agriculture.

The solution lies in…

  • The solution to the ecological, environmental and economic challenges facing agriculture in the traditional Green Revolution States is not in legalizing MSP but to shift from MSP crops to high-value crops and in the promotion of non-farm activities.
  • Rather than focusing on a few enterprises, Punjab and Haryana should look at a large number of area-specific enterprises to avoid gluts.
  • This will require a mechanism to cover price and market risks. Farmers’ groups and farmer producer organizations can play a significant role in the direct marketing of their produce.

Agricultural specificities and way forward

  • Both Punjab and Haryana need to promote economic activities with strong links with agriculture tailored to State specificities.
  • Some options for this are: promotion of food processing in formal and informal sectors; a big push to post-harvest value addition and modern value chains; a network of agro- and agri-input industries; high-tech agriculture; and a direct link of production and producers to consumers and consumers without involving intermediaries.
  • The traditional Green Revolution States of Punjab and Haryana would need to shed “business as usual” approach and embrace an innovative development strategy in agriculture and non-agriculture to secure and improve the future of farming and rural youth.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Convergence of agrarian discontent in South


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Farmers agitation and the South Asia connection

With protests becoming catalysts for anti-authoritarian struggle, the air is ripe for new visions of rural emancipation

Recent policy changes and its impacts on agriculture

  • There has been a systematic attack on agriculture in South Asia over the last decades. This can be seen in ongoing protests in India.
  • Similar incidences of protests can be seen in Pakistan, where farmers protesting for support prices were beaten up and arrested in Lahore only a month ago, or Sri Lanka, where shortages of imported fertilizers and declining subsidies have led to farmers’ outcry.
  • In the middle of a long-simmering rural economic crisis pushed over the cliff by the COVID-19 pandemic, efforts by South Asian governments to project corporatization and deregulation as the way forward for agriculture have angered long-suffering farmers.
  • Successive governments have imposed a corporate agenda, seeking profits from food production and distribution by relaxing norms for cheap food imports, and encouraging export-oriented production, price speculation, agribusiness and retail supermarkets.
  • South Asia’s rural landscape has been profoundly reshaped by such ‘reforms’, dispossessing farmers of their land, and pushing them into wage labour and migration as coping mechanisms.
  • This hollowing out of rural livelihoods does not come with any assurance of stable jobs or a decent quality of life in urban areas.

Pandemic opportunism

  • The COVID-19 crisis has increased such efforts and policy changes.
  • India is not the only country to have attempted to seize this moment to deregulate agricultural markets. In Pakistan, the government inked an agreement with the World Bank to further deregulate the country’s wheat market.
  • In Sri Lanka, with the national budget just passed for 2021, there are only meagre allocations towards revitalizing agricultural livelihoods and policies focused on supporting technologies suitable for agribusinesses.
  • Instead of the current crisis sending governments back to the drawing board, South Asia’s authoritarian regimes, complicit with corporate interests, are railroading in anti-farmer agricultural policies.

Practice Question: Do you think there is a common ground between farmers protests in various South Asian countries. Discuss with proper examples.

Menace of the corporatization of Agriculture

  • Corporate agriculture further worsens the existential danger faced by South Asian farmers.
  • The corporate solutions do not address the role of middlemen and traders in denying farmers a fair price for their labour.
  • Instead, opening up markets to large corporations is likely to spark the same sort of race to the bottom that has been seen in the industrial and service sectors.
  • Deregulation makes farmers’ livelihoods even more precarious and threatens food sovereignty through increased dependence on global agricultural trade.
  • It was the collapse of global agricultural commodity prices in the 1970s that had a large role to play in the debt crisis that haunts countries such as Pakistan and Sri Lanka.

Reviving resistance

  • There is a powerful legacy of rural movements in South Asia that have fought for the rights of farmers, peasants and agricultural workers.
  • Rural movements played a crucial role in the anti-colonial struggle and fought for progressive land and agrarian reform after independence.
  • Seventy years on, they continue to fight against the recent waves of anti-farmer policies, while advancing new progressive visions such as peasant agro-ecology and food sovereignty, which put small food producers and the environment at the centre.
  • The current convergence of authoritarianism and corporate capital brings this existential crisis for rural agricultural producers even more sharply in focus.
  • Farmers’ movements have been aware of state connivance with exploitative actors, but they must now also contend with a breakdown of the democratic process and increased repression.
  • These should be ominous signs for regimes across South Asia which continue to act with impunity in the face of demands for economic and social justice.

Voices of movements

  • The COVID-19 pandemic has pushed food sovereignty back into the public imagination. The solution, of course, only begins with making farming a viable livelihood.
  • Dominant assumptions about inevitable rural-urban migration and techno-utopian transformation in agriculture must be challenged.
  • Questions of land redistribution and other rural inequalities must remain a crucial part of the political agenda.
  • The situation of mostly female agricultural workers, the rural landless and Dalits in South Asia remains precarious. Even as rural movements across South Asia fight the ongoing attack on their livelihoods, they must also tackle rural inequality head-on.


  • The air is ripe for new visions of rural emancipation in South Asia.
  • Rural movements are working to transform not just their world but are becoming catalysts for a broader anti-authoritarian struggle in South Asia.
  • The current phase of struggles has revived old questions while raising others about the future of our long-ignored rural world.
  • We must listen to the voices and demands of the rural movements converging across South Asia.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

The roots of the agricultural crisis run deep


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Concerns of farmers other than MSP

The standoff between farmers and the government continues even after a few rounds of discussion.

Un-timely reforms

  • Currently, the country was struggling with novel coronavirus-caused lockdowns, supply disruptions, job losses and falling incomes in an economy.
  • The reforms embedded in the three Acts are unlikely to help resolve the structural issues facing Indian agriculture, even their withdrawal is unlikely to change the ground reality.

Farmers protest continues

  • The immediate trigger for the current protests is the enactment of the three Acts, on agricultural marketing, contract farming and stocking of agricultural produce, which deregulates the existing Acts on these.
  • Farmer unions have rejected the proposal and continue to demand complete withdrawal of the three Acts along with making MSP a guarantee.

Government for negotiations

  • The latest proposal by the government indicates its willingness to amend the three agriculture-related Acts passed in September.
  • The government has proposed amendments which will empower the States to frame rules the contentious issues of registration of private traders, levy of taxes on trade outside the Agricultural Produce Market Committee (APMC) mandis.
  • Similar assurances have been given on access to the judiciary for dispute resolution and continuation of the Minimum Support Price (MSP) mechanism.

Many protests, one thread

  • The last four years have seen a series of large protests in most of the States.
  • For example, a group of farmers from Tamil Nadu camped in Delhi for over 100 days, Maharashtra was witness to the ‘Kisan Long March’ of farmers on more than one occasion, protests erupted in Rajasthan, UP, Haryana and MP.
  • The latest round of protests may have seen spirited protests from farmers from Punjab and Haryana but has found the support of farmers from the other States as well.
  • The common thread in all these protests — of declining agricultural incomes, stagnant wages and withdrawal of state support to agriculture.

Changing faces of agriculture

  • The real issue is the lack of remunerative prices for a majority of agricultural commodities, a sharp increase in price variability in recent years, and an unpredictable and arbitrary government policy regime.
  • The other major problem is the changing nature of agriculture which has seen increased dependence on markets, increasing mechanization along with increasing monetization of the agrarian economy.
  • The increased dependence on markets has contributed to increasing variability in output prices.
  • Limited government intervention in protecting farmers’ income and stabilizing prices through MSP-led procurement operations made the increased variability in frequency as well as its spread.
  • Other than rice and wheat — and to some sporadic instances, of pulses — most crops suffer from inadequate intervention from MSP operations.
  • Even these procurement operations are unable to stabilize prices with falling demand and a slowing economy. For example, wheat has seen a steady decline in year-on-year inflation based on Wholesale Price Index (WPI).
  • Uneven nature of procurement in some states is also responsible to arrest the decline in prices. Crops like paddy, maize have seen in many States significantly lower market prices than the MSP.

Factors behind vulnerability

  • Increasing mechanization and monetization have led to an increase in the cash requirement.
  • Most of these are met by non-institutional sources including middlemen which have contributed to the rising cost of cultivation and an increase in loan defaults.
  • The demand for loan waivers is unlikely to subside with the rising cost of inputs.
  • These trends have accentuated after 2010-11 when the Nutrient Based Subsidy (NBS) for fertilizers regime led to an increase in fertilizer prices.
  • The withdrawal of diesel subsidy and a rise in electricity prices also contributed to making agriculture unviable.
  • The government has declined the agricultural investment in the first four years which resulted in rising input costs and falling output prices.
  • The shocks of demonetization and the lockdown only increased the uncertainty and vulnerability in the agricultural sector both on input and output prices.

What lies ahead?

  • The demand for making MSP a guarantee for private trade is meaningless if the government is unable to ensure procurement for a majority of the 23 crops for which it announces MSP.
  • Thus, the withdrawal of the three Acts by the government will only seem to offer a temporary truce.

Policy overhaul needed

  • The existing policy framework with an excessive focus on inflation management and obsession with the fiscal deficit will likely lead to lower support from the government either in price stabilization or reduction in the cost of cultivation through fiscal spending.
  • The agricultural sector needs a comprehensive policy overhaul to recognize the new challenges of agriculture which are diversifying and getting integrated with the non-agricultural sector.
  • This not only entails a better understanding of the structural issues but also innovative thinking to protect farmers’ livelihood from the uncertainty of these changes.
  • Above all, it requires financial support and institutional structures to support the agricultural sector and protect it. Only this can lead to the government’s dream of doubling the farmers’ income.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Diversification of output to overcome the MSP trap


From UPSC perspective, the following things are important :

Prelims level : MSP

Mains level : Paper 3- Problems faced by the Punjab farmers and issue of MSP

The article analyses the state of agriculture in Punjab and the its dependace on the MSP regime and suggest the diversification as a solution to the MSP trap.

Punjab’s role in Green Revolution

  • India was desperately short of grains in 1965, and heavily dependent on PL 480 imports from the US against rupee payments, as the country did not have enough foreign exchange to buy wheat at global markets.
  • The entire foreign exchange reserves of the country at the time could not help it purchase more than 7 MMT of grains.
  • It is against this backdrop that the minimum support price (MSP) system was devised in 1965.

 India’s current grains management system: Issue of excess grains

  • Today, the Food Corporation of India (FCI) stocks grains touched 97 MMT in June this year against a buffer stock norm of 41.2 MMT.
  • The economic cost of that excess grain, beyond the buffer stock norm, was more than Rs 1,80,000 crore, a dead capital locked in without much purpose.
  • That’s the situation of the current grain management system based on MSP and open ended procurement.

Decline in Punjab’s economic level

  •  In 1966 Punjab had the highest per capita income.
  • Punjab’s position fell to 13th in 2018-19.
  • There are several reasons behind this deterioration, ranging from lack of industrialisation to not catching up even with respect to the modern services sector like IT, financial services.

What explains Punjab’s prosperity

  • Punjab’s agriculture is blessed with almost 99 per cent irrigation against an all-India average of little less than 50 per cent.
  • The average landholding in Punjab is 3.62 hectare (ha) as against an all-India average of 1.08 ha.
  • Punjab’s fertiliser consumption per ha is about 212 kg vis-à-vis an all-India level of 135 kg/ha.
  • The productivity levels of wheat and rice in Punjab stand at 5 tonnes/ha and 4 tonnes/ha respectively, against an all-India average of 3.5t/ha and 2.6t/ha.

Assesing Punjab’s real contribution to income and agriculture

  • In Punjab, the total farm families are just 1.09 million, a fraction of the all-India total of 146.45 million.
  •  The overall subsidy, from just power and fertilisers would amount to roughly Rs 13,275 crores.
  • That means each farm household in Punjab got a subsidy of about Rs 1.22 lakh in 2019-20.
  • This is the highest subsidy for a farm household in India.
  • Let’s not forget that the average income of the Punjab farm household is the highest in India.[2.5 time’s the India’s average].
  • But to assess the real contribution of farmers/states to agriculture and incomes, the metric is the agri-GDP per ha of gross cropped area of the state in question.
  • This is an important catch-all indicator, as it captures the impact of productivity, diversification, prices of outputs and inputs and subsidies.
  • On that indicator, unfortunately, Punjab has the 11th rank amongst major agri-states.

Way forward: Diversification of crops

  • States in south India like Andhra Pradesh, Tamil Nadu and Kerala have a much more diversified crop pattern tending towards high-value crops/livestock — poultry, dairy, fruits, vegetables, spices, fisheries.
  •  If Punjab farmers want to increase their incomes significantly, double or even triple, they need to gradually move away from MSP-based wheat and rice to high-value crops and livestock, the demand for which is increasing at three to five times that of cereals.
  • Punjab needs a package to diversify its agriculture — say a Rs 10,000 crore package spread over five years.


Once farmers diversify their farm output and double their incomes, they will not be stuck in the MSP trap.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

The many layers to agricultural discontent


From UPSC perspective, the following things are important :

Prelims level : APMC Act

Mains level : Paper 3- Farmers protest against Farms Acts

Farmers protest against the Farm laws is based on the multiple reasons. The article analyses these concerns of the protesting farmers.

Three farm laws and response to it

  • Three Farm Bills were passed by the Central government in September 2020.
  • In the process, the regulatory role the state played hitherto with regard to these issues was watered down to a great extent.
  • Apart from complex challenges that rural India confronts today, there is a substantial body of studies that demonstrates how the vagaries of the market and the role of the middlemen reinforce agrarian distress in India.
  • However, organised farmers’ bodies are not in sync with the reasoning of the government.

Role of the states

  • There is a debate around the constitutional provisions with regard to the respective domains of the State and the Union with regard to agricultural marketing,
  • However, issues affecting the farming community have a far greater bearing on the States relative to the Centre.
  • Ideally, given its immediacy, the States are the apt agencies to respond to a host of concerns faced by the farming community, which includes agricultural marketing.
  • While enacting the Farm Bills, the Centre extended little consideration to the sensitivity of the States.

Role of APMC

  • In Punjab and Haryana, tweaking the APMC system and its resultant bearing on Minimum Support Price (MSP) is seen by the farmers as a threat to an assured sale of their produce at a price.
  • MSP system provides a cushion, wherein the farmer can anticipate the cost of opting for these crops and tap the necessary supports through channels he has been familiar with.
  • Farmers are apprehensive of the vagaries of a competitive market where he would eventually be beholden to the large players including monopolies.
  • There is widespread apprehension that the measures proposed by the Farm Acts in addition to the existing agrarian distress, are only going to make the lot of the farmer even more precarious.
  • All across the country, the farming community is prone to sympathise with the demand to scrap the new laws, as they have little to offer to them in a positive sense.


Those with large holdings and produce for the market — are spearheading the present stand-off against the Farm Bills, as it affects them very deeply. But farming distress is shared in common by the different strata within the farming community, even though it has a differential impact on them.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

In farmers’ protests, the core is procurement


From UPSC perspective, the following things are important :

Prelims level : National Food Security Act 2013

Mains level : Paper 3- Farmers apprehension over MSP



  • Farmers’ protests have erupted once again in north India, their main worry is about a possible withdrawal of the Minimum Support Price (MSP) and a dismantling of the public procurement of grains.

Why farmers in Punjab and Haryana are protesting

  • Farmers in Punjab and Haryana are heavily dependent on public procurement and assured price through MSP.
  • Nearly 88% of the paddy production and 70% of the wheat production in Punjab and Haryana (in 2017-18 and 2018-19) has been absorbed through public procurement [Food Grains Bulletin and Agricultural Statistics at a Glance, Government of India].
  • In contrast, in the other major paddy States such as Andhra Pradesh, Telangana, Odisha and Uttar Pradesh, only 44% of the rice production is procured by public agencies.
  •  In the major wheat States of Madhya Pradesh and Uttar Pradesh, only 23% of the production is procured by public agencies.

Government needs to continue procurement

  • If farmers of Punjab and Haryana need the procurement system, the government needs it even more.
  • This is because of its obligations under the PDS and the National Food Security Act (NFSA).
  • Support under the NFSA is a legal and rights-based entitlement.
  • There are nearly 80 crore NFSA beneficiaries and an additional eight crore migrants who need to be supported under the PDS.
  • In the last three years, nearly 40% of the total paddy production in the country and 32% of wheat production has been procured by public agencies to supply the PDS.
  • Thus, the government has little option but to continue its procurement from these States in the foreseeable future.

Way forward

  • Therefore, it is imperative that the government reaches out to the farmer groups and assures them of the indispensability of MSP-procurement system.
  • The government needs to start this initiative immediately to allay their legitimate concerns.
  • Two of the major limitations in the laws that need to be addressed immediately:
  • 1) The absence of a regulatory mechanism to ensure fair play by private players vis-à-vis farmers.
  • 2) The lack of transparency in trade area transactions.


The severe trust deficit that resulted from the way the Farm Bills have been rushed through needs to be addressed by adopting a conciliatory approach towards farmers and the States.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Closing the communication gap with the farmers


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Farmers protest against farm laws

The article suggests the policy options with the government to deal with the protest of the farmers against the recently enacted farm laws.


  • Farmers have protested against the recently enacted farm laws by converging on Delhi’s highways connected to neighbouring states.

Why farmers are protesting

  • There is a gross communication failure on the part of the central government to explain to farmers what these laws are, and how they are intended to benefit them.
  • Neither do the laws say anything about it, nor is the MSP/APMC system going to disappear with these laws.
  • Nothing can be further from the truth.

1) Should government  repeal the laws

  • Punjab farmer leaders, including two major political parties, demand repeal of these laws.
  • However, repealing would mean bringing back controls, licence raj and the resultant rent-seeking.
  • Milk, poultry, fishery, etc. don’t go through the mandi system and their growth rates are 3 to 5 times higher than that of wheat and rice.
  • Overall, almost 90 per cent of the agri-produce is sold to the private sector.

2) Should the government make MSP legally binding

  • Another demand is making the MSP statutory and legally binding even on the private sector.
  • This is impractical as there are 23 commodities for which MSPs are announced, but in actual practice only wheat and rice enjoy MSPs in any meaningful manner, and that too only in 6-7 states.
  • Punjab is the biggest gainer as its 95-98 per cent of market arrivals of wheat and paddy are procured at MSP by state agencies on behalf of the Food Corporation of India (FCI).
  • The FCI is overloaded with grain stocks that are more than 2.5 times the buffer stock norms.
  • Such high stock indicates massive economic inefficiency in the grain management system.
  • If the government cannot cope up with excess production of just wheat and rice in any meaningful way, think of how it will handle 23 commodities under MSP.
  • In case of excess production the government will not have the wherewithal to buy all and stock them without any viable outlet.
  • It will massively distort markets, make Indian agriculture non-competitive and stocking of these will be financially unsustainable.
  • And then, why only 23 commodities, why not 40?
  • This type of state socialism is a sure path to financial disaster.

3) Optio of the Price Stabilisation Scheme

  • The third policy option is to use the Price Stabilisation Scheme to give a lift to market prices by pro-actively buying a part of the surplus whenever market prices crash.
  • It can be done directly by NAFED-type agencies that are already active in the case of pulses and oilseeds.
  • Farmers can use Commodity Derivatives Exchanges where farmers can buy “put options” at MSP before they even sow their crops, and if the market prices at the time of harvest turn out to be below MSP, government can compensate them partly for lower market prices.

4) Decentralise MSP: Let the states decide it

  • The fourth option is to totally decentralise the MSP, procurement, stocking, and public distribution system (PDS).
  • MSP and procurement exist basically to support farmers for supplying grains to the FCI to feed into the PDS.
  • So, the whole money on food subsidy can be allocated to states on the basis of their share in all-India poverty/proportion of vulnerable population, all-India wheat and rice production, all-India procurement of wheat and rice, etc.
  • A step further could include another Rs 1,00,000 crore of fertiliser subsidy and free up fertiliser prices from any controls.
  • Still further, even include another Rs 1,00,000, say, of MNREGA.
  • Let the Finance Commission work out a formula for distribution of this Rs 3,00,000 crore amongst states based on some tangible performance indicators.
  • And the Centre should get off from MSP, PDS, fertiliser subsidy, and MNREGA.


This would be true decentralisation, and can be accomplished provided enough ground work is done well in advance. But will this be acceptable to farmer leaders/opposing states/activists? Only time will tell.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Need to address farmers’ apprehensions


From UPSC perspective, the following things are important :

Prelims level : APMC Act

Mains level : Paper 3- Addressing the farmers apprehension about MSP

Farmers are protesting the farm laws which brought changes in the agri-produce marketing and the contract farming. Farmers are also demanding the legal backing of MSP. The article analyses the issues and suggests the measures to address them.

Analysing merits and feasibility of demands of protesting farmers

1) The Farmer Produce Trade and Commerce (Promotion and Facilitation) Act

  • The Act creates a new “trade area” outside the APMC market yards/sub-yards.
  • Any buyer with a Permanent Account Number (PAN) can buy directly from farmer sellers outside APMC market.
  • The state government can’t impose any taxes on such a transaction.
  • Therefore, it is expected that this would lower buying costs for buyers and that would automatically mean higher prices for farmers.

Concerns with the law

  • Buyers buying at lower cost does not necessarily mean they would pass on the cost saved on procurement to selling farmers.
  • The claim is also made that now farmers would have a choice of channels.
  • However, the majority of the farm produce across India with the exception of states like Punjab and Haryana does not go through APMCs.
  • Anybody with a PAN card allowed to buy agricultural produce could mean a free-for-all situation, which is not desirable.

2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act

What necessitated law on contract farming?

  • Contract farming has shown that marginal and small farmers are generally excluded.
  • The problems they face include the following-
  • Highly one-sided i.e. pro-contracting agency contracts.
  • Delayed payments.
  • Undue rejections and outright cheating.
  • Poor enforcement of contract farming regulation by the state governments.

Concerns with the law

  • The Act defined FPOs (farmer producer organisations) as farmers, which restricts them to the supply side.
  • But there is hardly any FPO in farm production.
  • Further, the contract farming Act does not provide for remedies when companies cancel contracts or there is delay in taking delivery of produce.
  • The Act says that sponsor would also pay, besides the minimum guaranteed price, a premium or bonus which will be linked to APMC or e-trading price.
  • This goes against the very concept of contract farming.
  • The contract price should be left to the contracting parties to decide.
  • Further, if the understanding is that mandis are not discovering prices well, then why peg the contract price to such mandi price?

Lessons from 2003 APMC Act

  • The government must go back to the 2003 Model APMC Act, which also had model contract agreement with mandatory and optional provisions in a contract.
  • In the 2003 Model APMC Act, the APMC was supposed to resolve the disputes.
  • Further under 2003 APMC Act when a licence is given to a trader or commission agent, there is a counterparty risk assurance.

Apprehensions about MSP

  • The Shanta Kumar Committee report and the CACP reports had suggested reducing procurement and an end to open-ended procurement from states like Punjab to cut down costs of FCI.
  • It is feared that FCI itself may start procuring directly from the new trade area to cut down buying costs like market fees and arhtiya commission.
  • It is more about the changes in the “social contract” between the state’s farmers and the Union government.
  • The demand for legal backing to MSP also arises from the fact that the government has been announcing MSP for 23 crops, but procurement is limited to a few crops.
  • Also, CACP in one of its reports in 2017-18 (kharif) suggested that “to instil confidence among farmers for procurement of their produce, a legislation conferring on farmers ‘the right to sell at MSP’ may be brought out.”
  • Punjab’s amendments to farm Acts — making MSP mandatory for wheat and paddy are ill-advised as this law will discourage private buyers from buying.
  • It is difficult to enforce such a law. Private agricultural markets cannot be run through such diktats.
  •  By creating stringent rules (fine or imprisonment), the government may create a situation where farmers would not be able to sell at all.
  • Maharashtra attempted this legality in 2018 in its APMC Act but had to reverse it after protests by traders.

Consider the question “What are the factors that necessitated the robust contract farming Act? What are the issues related to the Act? Suggest the measures to address these issues.”


Apprehension among the farmers related to the farm laws needs to be addressed and the concern in the laws need to be addressed.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

The perils of deregulated imperfect agrimarkets


From UPSC perspective, the following things are important :

Prelims level : FPTC Act 2020

Mains level : Paper 3- Agri marketing and related issues.

The article examine issue of agriculture produce marketing. The passage of FPTC Act 2020 sought to address the challenges faced by the farmers. However, these are several issues the Act fails to resolve. These issues are discussed here.

Why do farmers sell outside mandis?

  • Official data show that even for paddy and wheat, respectively, only 29% and 44% of the harvest is sold in a mandi.
  • In other words a large proportion of Indian harvest is not directly sold in a mandi.
  • Farmers are forced to sell outside the mandis for two reasons.

1) There are not enough mandis

  • The National Commission on Agriculture (NCA) had recommended that every Indian farmer should be able to reach a mandi in one hour by a cart.
  • Thus, the average area served by a mandi was to be reduced to 80 km2.
  • For this, the number of mandis was to increase to at least 41,000.
  • But there were only 6,630 mandis in 2019 with an average area served of 463 km2.
  • Using another set of criteria, a government committee in 2017 had recommended that India should have at least 10,130 mandis.
  • So, by all counts, India needs not less but more mandis.

2) Transport cost

  • Most small and marginal farmers, do not find it economical to bear the transport costs to take their harvests to mandis.
  • Thus, they end up selling their harvest to a village trader even if at a lower price.
  • Even if private markets replace mandis, small and marginal farmers will continue to sell to traders in the village itself.
  • The situation will change only if economies of scale rise substantially at the farm-level.

Why there is poor private investment in markets?

  • Already, 18 States have allowed the establishment of private markets outside the APMC; 19 States have allowed the direct purchase of agricultural produce from farmers; and 13 States have allowed the establishment of farmer’s markets outside the APMC.
  • Despite such legislative changes, no significant private investment has flowed in to establish private markets in these States.
  • The reason for poor private investment in markets is the presence of high transaction costs in produce collection and aggregation.
  • When private players try to take over the role of mandis and the village trader, they incur considerable costs in opening collection centres and for salaries, grading, storage and transport.
  • Corporate retail chains face additional costs in urban sales and storage, as well as the risk of perishability.
  • This is why many retail chains prefer purchasing from mandis rather than directly from farmers.

Issue of mandi tax

  • Many commentaries treat taxes in mandis as wasteful. This assertion is not fully true for two reasons:
  • 1) Much of the mandi taxes are reinvested by APMCs to improve market infrastructure.
  • A fall in mandi taxes would reduce the surplus available with APMCs for such investment.
  • 2) In States such as Punjab, the government charges a market committee fee and a rural development fee.
  • The Punjab Mandi Board uses these revenues to construct rural roads, run medical and veterinary dispensaries, supply drinking wate etc.
  • Such rural investments will also be adversely affected if mandis are weakened.

Weakening of MSP regime

  • Many policy signals point to a strategic design to weaken the MSPs.
  • 1) Rising input and labour costs necessitates a regular upward revision of MSPs to keep pace with costs of living.
  • However, MSPs are rising at a far slower rate over the past five to six years than in the past.
  • 2) The government has not yet agreed to fix MSPs at 50% above the C2 cost of production.
  • As a result, farmers continue to suffer a price loss of ₹200 to ₹500 per quintal in many crops.
  • 3) The Commission for Agricultural Costs and Prices (CACP) has been recommending to the government that open-ended procurement of food grains should end.
  • These policy stances have set alarm bells ringing among farmers.
  • The farmers Punjab, Haryana and western Uttar Pradesh feel that if mandis weaken and private markets with no commitment to MSPs expand, they fear a gradual erosion of their entitlement to a remunerative price.

Steps to be taken

  • 1) India needs an increase in the density of mandis, expansion of investment in mandi infrastructure and a spread of the MSP system to more regions and crops.
  • 2) This increase in density should happen hand-in-hand with a universalisation of the Public Distribution System.
  • 3) APMCs need internal reform to ease the entry of new players, reduce trader collusion and link them up with national e-trading platforms.
  • The introduction of unified national licences for traders and a single point levy of market fees are also steps in the right direction.

Consider the question “The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 was passed with a view to address the challenges faced by the farmers in selling their produce. However, there are concerns with the provision of the Act and its efficacy to addresss these challenges. What are the issues with the Act? Suggest the measures to address these issues.” 


The government’s must try to allay the fears of farmers over the Farm Bills and it is never too late to rethink. Unconditional talks with farmers would be an appropriate starting point.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Farmers’ protest


From UPSC perspective, the following things are important :

Prelims level : Recent Agricultural bills, MSP

Mains level : Concerns of farmers over this bill

Farmers all across the Punjab and Haryana have marched to New Delhi over the new legislations.

 Major cause of Farmers’ protest

  • Much of the opposition really is just to one of the three laws. It is the Farmers’ Produce Trade and Commerce (Promotion and Facilitation)  Act and its provisions that are seen as weakening the APMC mandis.
  • Even in that one — the act — there are only some contentious provisions, which, although key, can still leave doors open for negotiation.

A fight for privilege

  • Farmers, if anything, would gain from removal of stocking restrictions on the trade, as it potentially translates into unlimited buying and demand for their produce.

The contentious one: FPTC Act

  • The FPTC Act is a bone of contention. It permits sale and purchase of farm produce outside the premises of APMC mandis.
  • Such trades (including on electronic platforms) shall attract no market fee, cess or levy “under any State APMC Act or any other State law”.
  • An issue here is the very right of the Centre to enact legislation on agricultural marketing.
  • Article 246 of the Constitution places “agriculture” and “markets and fairs” in the State List.
  • But entry 42 of the Union List empowers the Centre to regulate “inter-State trade and commerce”.

An example of Central hegemony

  • While trade and commerce “within the State” is under entry 26 of the State List, it is subject to the provisions of entry 33 of the Concurrent List.
  • Under this, the Centre can make laws that would prevail over those enacted by the states.
  • Entry 33 of the Concurrent List covers trade and commerce in “foodstuffs, including edible oilseeds and oils”, fodder, cotton and jute.
  • The Centre, in other words, can very pass any law that removes all impediments to both inter- and intra-state trade in farm produce, while also overriding the existing state APMC Acts. The FPTC Act does precisely that.

Farmers question

  • Some experts make a distinction between agricultural “marketing” and “trade”.
  • Agriculture per se would deal with everything that a farmer does — right from field preparation and cultivation to also sale of his/her own produce.
  • The act of primary sale at a mandi by the farmer is as much “agriculture” as production in the field.
  • “Trade” begins only after the produce has been “marketed” by the farmer.

The centre’s overriding logic behind

  • Going by this interpretation, the Centre is within its rights to frame laws that promote barrier-free trade of farm produce (inter- as well as intra-state) and do not allow stockholding or export restrictions.
  • But these can be only after the farmer has sold.
  • Regulation of first sale of agricultural produce is a “marketing” responsibility of the states, not the Centre.

What do farmers’ want?

  • Farmers would want no restrictions on the movement, stocking and export of their produce.
  • For example, Maharashtra’s onion growers have vehemently opposed the Centre’s resort to ban on exports and imposition of stock limits whenever retail prices have tended to go up.
  • But these restrictions relate to “trade”.
  • When it comes to “marketing” — especially dismantling of the monopoly of APMCs — farmers, especially in Punjab and Haryana, aren’t very convinced about the “freedom of choice to sell to anyone and anywhere” argument.

Where lies the major issue?

  • Much of government procurement at minimum support prices (MSP) — of paddy, wheat and increasingly pulses, cotton, groundnut and mustard — happens in APMC mandis
  •  In a scenario where more and more trading moves out of the APMCs, these regulated market yards will lose revenues.
  • They may not formally shut, but it would become like BSNL versus Jio.
  • And if the government stops buying, farmers will be left with only the big corporates to sell to.

What could be negotiated?

  • If the protesting farmer union leaders were to sit down at the negotiating table, the government can possibly get them to agree to drop the demand on repealing all the three laws.
  • Their problem is essentially about the FPTC Act and its provisions that they see as weakening the APMC mandis.
  • These may be just fears, but they aren’t small.
  • From the government’s standpoint, the elephant in the room would be if the farmers insist on an additional demand: Making MSP a legal right.
  • This  would be still impossible to meet, even if the three farm laws were to be put on hold.


Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Understanding the interplay between subsidies and agri-pollution


From UPSC perspective, the following things are important :

Prelims level : Ground level pollution and its impact on agriculture

Mains level : Paper 3- Interplay between agri-subsidies and pollution

Agriculture’s contribution to air pollution

  • Agriculture’s contribution to air pollution runs deeper than what happens between crop seasons.
  • The Indo-Gangetic plain is also one of the world’s largest and rapidly-growing ammonia hotspots.
  • Atmospheric ammonia, which comes from fertiliser use, animal husbandry, and other agricultural practices, combines with emissions from power plants, transportation and other fossil-fuel burning to form fine particles.

Impact of pollution on agriculture

  • It is important to note that agriculture is a victim of pollution as well as its perpetrator.
  • Particulate matter and ground-level ozone formed from industrial, power plant, and transportation emissions among other ingredients cause double-digit losses in crop yields.
  • Ozone damages plant cells, handicapping photosynthesis, while particulate matter dims the sunlight that reaches crops.
  • Agriculture scientist Tony Fischer’s 2019 estimates of the two pollutants’ combined effect suggest that as much as 30 per cent of India’s wheat yield is missing (Sage Journals, Outlook on Agriculture).
  • Earlier, B Sinha et al (2015), in Atmospheric Chemistry and Physics Discussions, found that high ozone levels in parts of Haryana and Punjab could diminish rice yields by a quarter and cotton by half.

Role played by subsidies

  • The current system of subsidies is a big reason that there is stubble on these fields in the first place.
  • Free power — and consequently, “free” water, pumped from the ground — is a big part of what makes growing rice in these areas attractive.
  • Open-ended procurement of paddy, despite the bulging stocks of grains with the Food Corporation of India, adds to the incentives.
  • Subsidies account for almost 15 per cent of the value of rice being produced in Punjab-Haryana belt.
  • Fertiliser, particularly urea in granular form, is highly subsidised.
  • It is one of the cheapest forms of nitrogen-based fertiliser, easy to store and easy to transport, but it is also one of the first to “volatilise,” or release ammonia into the air.
  • This loss of nitrogen then leads to a cycle of more and more fertiliser being applied to get the intended benefits for crops.

Way forward

  • We need to shift the nature of support to farmers from input subsidies to investment subsidies.
  • This could involve the conversion of paddy areas in this belt to orchards with drip irrigation, vegetables, corn, cotton, pulses and oilseeds.
  • All of the above consume much less water, much less power and fertilisers and don’t create stubble to burn.
  • A diversification package of, say, Rs 10,000 crore spread over the next five years, equally contributed by the Centre and states, may be the best way to move forward in reducing agriculture-related pollution.
  • The approach to diversification has to be demand-led, with a holistic framework of the value chain, from farm to fork and not just focused on production.
  • On the fertiliser front, it would be better to give farmers input subsidy in cash on per hectare basis, and free up the prices of fertilisers completely.


Taken together, these measures could double farmers’ incomes, promote efficiency in resource use, and reduce pollution — a win-win solution for all.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

What is NAFED?


From UPSC perspective, the following things are important :

Prelims level : NAFED

Mains level : Food procurement

The central cooperative NAFED will soon begin importing onions in a bid to tame soaring prices before the festive season.

UPSC can frame statements based MCQ over the functions of NAFED.


  • National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) is an apex organization of marketing cooperatives for agricultural produce in India.
  • It was founded on 2 October 1958 to promote the trade of agricultural produce and forest resources across the nation.
  • It is registered under the Multi-State Co-operative Societies Act.
  • NAFED is now one of the largest procurement as well as marketing agencies for agricultural products in India.
  • With its headquarters in New Delhi, NAFED has four regional offices at Delhi, Mumbai, Chennai and Kolkata, apart from 28 zonal offices in capitals of states and important cities.

Functions of the NAFED

  • To facilitate, coordinate and promote the marketing and trading activities of the cooperative institutions, partners and associates in agricultural, other commodities, articles and goods
  • To undertake purchase, sale and supply of agricultural, marketing and processing requisites, such as manure, seeds, fertilizer, agricultural implements and machinery etc.
  • To act as a warehouseman under the Warehousing Act and own and construct its own godowns and cold storages
  • To act as agent of any Government agency or cooperative institution, for the purchase, sale, storage and distribution of agricultural, horticultural, forest and animal husbandry produce, wool, agricultural requisites and other consumer goods
  • To act as an insurance agent and to undertake all such work which is incidental to the same
  • To collaborate with any international agency or a foreign body for the development of cooperative marketing, processing and other activities for mutual advantage in India or abroad

Now try this PYQ:

Q.In, India, markets in agricultural products are regulated under the:

(a) Essential Commodities Act, 1955

(b) Agricultural Produce Market Committee Act enacted by States.

(c) Agricultural Produce (Grading and Marking) Act, 1937

(d) Food Products Order, 1956 and Meat and Food Products Order, 1973

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Allaying the fears of farmers over MSP regime


From UPSC perspective, the following things are important :

Prelims level : MSP

Mains level : Paper 3- Agri bills and issue of MSP

Question of MSP regime while arguing in favour of recently passed agri bills has made the farmers apprehensive of the purpose of the bill. The article argues for allaying the fears of the farmers and explains the salience of the MSP.

Flawed argument over MSP

  • The recently enacted farm bills have triggered debate on the desirability of the MSP regime.
  • But, the bills do not facilitate a policy to do away with Minimum Support Prices (MSPs).
  • The bills allow free entry to agents who wish to set up markets — whether they be private individuals, producer collectives or cooperatives.
  • This means that the Food Corporation of India (FCI) and other associated agencies can procure in the traditional mandis, or in a new market established under this law — or in their own backyard.
  • So, the argument that if the mandis cease to exist, the procurement will also cease is, in fact, flawed.
  • Supporters of the bills have quoted the Shanta Kumar committee’s figures to argue that MSPs are anyway irrelevant for most of the farmers in the country.
  • This linkage of the farm bills with the MSP only adds to the apprehension that farmers have about the bills.

Significance of MSP

  • It is true that the procurement has remained confined to only a few crops.
  • But the benefits to the farmers even beyond Punjab and Haryana are certainly not negligible.
  • It is true that only a small fraction benefits directly from the procurement.
  • But one cannot ignore the indirect benefit of this to all foodgrain producers in the country.
  • As the procurement significantly exceeds the PDS requirement, this creates additional demand in the foodgrain market, pushing up the prices.
  • This has been a great help for all the grain producers in the country, especially when the international prices have remained low for a long time now.
  • The RBI’s annual report of 2017-18 on impact of MSP on the food prices conclusively shows that MSP is a leading factor influencing the output prices of the farm produce in the entire country.
  • The issue of MSP is all the more important for rain-fed agriculturists, being deprived of irrigation, they don’t derive benefit from subsidies on electricity and fertiliser as their use is limited.
  • So, at the moment, the only state support these farmers (primarily cotton and pulse producers) have is that of MSPs.


The debate on whom and how the state should support is an issue that should be addressed independently of the farm acts. Presenting these acts as an alternative to MSPs will not persuade farmers.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Give reforms a chance


From UPSC perspective, the following things are important :

Prelims level : APMC Act

Mains level : Paper 3- Agri bills and their implications for the farmers.

Agri-bill passed by the Parliament resulted in the protest from farmers from several states. The bills have also been challenged on the legal footing as well. This article explains how the bills will benefit the farmers and also examines the legal basis used for their passage.

States trying to nullify the agri bills passed by Parliament

  • Parliament has passed three bills on agriculture reform. This has evoked protests, largely in Punjab and Haryana.
  • Taking recourse to Article 254 of the Constitution, the Punjab government has passed its own bills to nullify some provisions of the central acts.
  • Similar action by the Chhattisgarh and Rajasthan governments seems to be on the anvil.

Legal justification for Parliament passing the laws related to agriculture

  • The Constitution has placed agriculture on the state list.
  • Various petitions have also been filed in the Supreme Court claiming that the central laws infringe upon the jurisdiction of state governments.
  • However, it is the Centre which decides and announces support prices for major crops for the entire country.
  • It also decides issues such as bank loan waivers.
  • International agreements and multilateral trade in agricultural products also fall in the Union government’s domain.
  • Agricultural and dairy products, in fact, had a prominent role in India not joining the Regional Comprehensive Economic Partnership (RCEP).
  • Entry 33 in the concurrent list limits the power of states in agriculture, by empowering both governments to legislate on production, trade and supply of a range of agricultural foodstuffs and raw material.

Use of Article 254 to bypass Central law

  • The Punjab bill has set in motion the process of states taking refuge under Article 254 to pass their own pieces of legislation.
  • All state bills that seek to nullify central acts have to be approved by the President after they have received the consent of the governor of the state.

Way forward

  • Reformist chief ministers and astute policy planners should grab this opportunity and encourage investment in private infrastructure to create supply chains and give the farmer the benefit of demand-led prices.
  • They should also take appropriate action to create institutional mechanisms, such as farmer producer organisations or aggregators, to ensure greater farmer participation.


It would be in the interests of the farming community and state governments to give the much-delayed reform measures a fair chance by giving them access to competitive purchases, affording better prices.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Politics and economics of farm bills


From UPSC perspective, the following things are important :

Prelims level : MSP

Mains level : Paper 3- Delay in agri-reforms and politics

Reforms in agriculture have been overdue. But the passage of farm bills by the Parliament has evoked opposition from several stakeholders. However, the passage of bills by the Punjab Assembly is the first from any State Assembly. The article explains how politics dominates agriculture reforms and its implications for economic growth.

States trying the negate the farm bill passed by Parliament

  • By passing its farm bills, Punjab has become the first state to legislate to negate impact of legislation enacted by Parliament last month.
  • Other states like Rajasthan and Chhattisgarh, could follow suit soon.
  • Notwithstanding whether President Ram Nath Kovind gives his assent to the state bills that undermine the central ones, the important issue is to determine how much of this conflict is about economics aimed at helping farmers and how much sheer politics.

Issues with Punjab’s farm bills

  • Punjab’s farm bills prohibit private players from buying wheat and paddy below the MSP even outside the APMC markets.
  • It doesn’t apply to other crops, say maize, cotton, pulses and oilseeds that are under the ambit of the central MSP system.
  • The point is that this pertains only to wheat and paddy.
  • The bill could even have been extended to milk and vegetables by declaring local MSPs for them, but it didn’t do that.
  • Because the state government knows full well that it will create a fiasco in agri-markets, which might boomerang on it politically.
  • Law for wheat and paddy will not help farmers as the Centre already buys more than 95 per cent of Punjab’s wheat and paddy at MSP through the Food Corporation of India (FCI) and state procurement agencies.

Economic roots of politics over MSP: Lessons from the past

  • Demand that MSP be made a legal instrument (rather than indicative) actually exhibit deep distrust of the private sector and markets.
  • In1972 government announced that the wholesale trade in wheat and rice (paddy) will be taken over by the government as traders were being unscrupulous in not giving farmers their due MSP and manipulating prices.
  • The first marketing season of the government takeover of wholesale wheat trade, in 1973-74, saw a major fiasco.
  • Market arrivals dropped, and wheat prices shot up by more than 50 per cent. It was a bitter lesson.

Long overdue reforms in agriculture

  • Economic reforms in 1991 took some time to yield results, but, by the 2000s, India was taking 7 per cent.
  • But even the 1991 economic reforms bypassed agriculture marketing reforms.
  • It was only in 2003, a model act on agri-marketing was circulated to the states.
  • But that model act did not go far enough.
  • From 2004 to 2014 government did not pursue any major agri-marketing reforms.
  • In food government enacted the National Food Security Act in 2013, giving 5 kg wheat or rice to 67 per cent of the population at Rs 2/kg and Rs 3/kg.
  • A high-level committee (HLC) under Shanta Kumar was formed in 2014 to restructure the grain management system.
  • The committee suggested major changes, including cash transfers in the public distribution system, and overhauling the FCI’s operations and free markets to make the system more efficient.
  • But the government could not undertake bold reforms, except some marginal tinkering of labour rules in the FCI.


The COVID-19 crisis opened a window of opportunity to reform the agri-marketing system. The government grabbed it — this is somewhat akin to the crisis of 1991 leading to de-licensing of industry. Patience and professionalism will bring rich rewards in due course, not noisy politics.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Promotion of nutri-cereals(Millet crop) in India


From UPSC perspective, the following things are important :

Prelims level : Cereals producer states in India

Mains level : Paper 3- Encouraging cereals production in India to deal with the health issue

Promotion of millet crops serves the dual purpose of securing health and supporting farmers. This article explains the strategy adopted by the government to achieve the same.

Millet crops in India

  • The three major millet crops currently growing in India are jowar (sorghum), bajra (pearl millet) and ragi (finger millet).
  • India also grows a rich array of bio-genetically diverse and indigenous varieties of “small millets” like kodo, kutki, chenna and sanwa.
  • Major producers include Rajasthan, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Gujarat and Haryana.

Advantages of millet cultivation

  • Millets are good for the soil, have shorter cultivation cycles and require less cost-intensive cultivation.
  • These unique features make millets suited for and resilient to India’s varied agro-climatic conditions.
  • Millets are not water or input-intensive, making them a sustainable strategy for addressing climate change and building resilient agri-food systems.

Reasons for decline in millet production in India

  • In the 1960s before the Green Revolution, millets were extensively grown and consumed in India.
  • With the Green Revolution, the focus, rightly so, shifted to food security and high-yielding varieties of wheat and rice.
  • An unintended consequence of this policy was the gradual decline in the production of millets.
  • Millets were increasingly seen as “poor person’s food”.
  • The cost incentives provided via MSPs also favoured a handful of staple grains.

Health issues related to refined food

  • Along with declining millet production, India saw a jump in consumer demand for ultra-processed and ready-to-eat products, which are high in sodium, sugar, trans-fats and even some carcinogens.
  • This demand was again met by highly-refined grains.
  • With the intense marketing of processed foods, even the rural population started perceiving mill-processed rice and wheat as more aspirational.
  • This has lead us to the double burden of mothers and children suffering from micronutrient deficiencies and the astounding prevalence of diabetes and obesity.

Strategy for promotion of nutri-cereals

1) Rebranding the cereals as nutri-cereals

  • The first strategy from a consumption and trade point of view was to re-brand coarse cereals/millets as nutri-cereals.
  • As of 2018-19, millet production had been extended to over 112 districts across 14 states.

2) Incentive through hiking MSP

  • Second, the government hiked the MSP of nutri-cereals, which came as a big price incentive for farmers.
  • From 2014-15 to 2020 MSPs for ragi has jumped by 113 per cent, by 72 per cent for bajra and by 71 per cent for jowar.
  • MSPs have been calculated so that the farmer is ensured at least a 50 per cent return on their cost of production.

3) Providing steady markets through inclusion in PDS

  • To provide a steady market for the produce, the Modi government included millets in the public distribution system.

4) Increasing area, production and yield

  • The Ministry of Agriculture & Farmers’ Welfare is running a Rs 600-crore scheme to increase the area, production and yield of nutri-cereals.
  • With a goal to match the cultivation of nutri-cereals with local topography and natural resources, the government is encouraging farmers to align their local cropping patterns to India’s diverse 127 agro-climatic zones.
  • Provision of seed kits and inputs to farmers, building value chains through Farmer Producer Organisations and supporting the marketability of nutri-cereals are some of the key interventions that have been put in place.

5) Intersection of agriculture and nutrition

  • The Ministry of Women and Child Development has been working at the intersection of agriculture and nutrition by -1) setting up nutri-gardens, 2) promoting research on the interlinkages between crop diversity and dietary diversity 3) running a behaviour change campaign to generate consumer demand for nutri-cereals.

Consider the question “What are the reasons for decline in the millet production in India? What are the steps taken by the government to encourage its production?”


As the government sets to achieve its agenda of a malnutrition-free India and doubling of farmers’ incomes, the promotion of the production and consumption of nutri-cereals seems to be a policy shift in the right direction.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] Asafoetida (Heeng) cultivation in Himalayan Region


From UPSC perspective, the following things are important :

Prelims level : Cultivation of heeng

Mains level : Paper 3- Heeng cultivation in India

Farmers of the remote Lahaul valley in Himachal Pradesh are taking up cultivation of asafoetida (Heeng) to utilize vast expanses of waste land in the cold desert conditions of the region.

Try this PYQ:
Q.Which one of the following reflects back more sunlight as compared to other three?
(a) Sand desert
(b) Paddy crop land
(c) Land covered with fresh snow
(d) Prairie land

Asafoetida cultivation in India

  • Asafoetida is one of the top condiments and is a high-value spice crop in India.
  • Raw asafoetida is extracted from the fleshy roots of Ferula assafoetida as an oleo-gum resin.
  • Although, there are about 130 species of Ferula found in the world, but only Ferula asafoetidais the economically important species used for the production of asafoetida.

Why cultivate it?

  • Heeng is not cultivated in India.
  • Government data states that India imports about 1,200 tonnes of raw heeng worth Rs 600 crore from Iran, Afghanistan and Uzbekistan.

Regions for its cultivation

  • Asafoetida best grows in dry and cold conditions.
  • The plant can withstand a maximum temperature between 35 and 40 degree, whereas during winters, it can survive in temperatures up to minus 4 degree.
  • During extreme weather, the plant can get dormant.
  • Regions with sandy soil, very little moisture and annual rainfall of not more than 200mm are considered conducive for heeng cultivation in India.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Farm Bills latest step in sequential freeing up of farm sector


From UPSC perspective, the following things are important :

Prelims level : APMC Act

Mains level : Paper 3- Need for agri reforms

The recently passed agri bills seek to expand the choices and opportunities available with the farmers and will help in increasing their income.

Diversified product segment

  • The Minimum Support Price (MSP) evolved as a mechanism to guard farmers against supply and demand shocks in the cereals segment. 
  •  Now, however, farmers and agricultural producers have diversified their product segments, cereals no longer dominate production.
  • In the last decade itself, India has witnessed tremendous change in the GVA composition of the agri-sector.
  • The share of crops has decreased from 65.4% in 2011-12 to 55.3% in 2018-19, projected to further fall to 45.6% in 2024-25.
  •  In the same period, value add of livestock and fishing & aquaculture is steadily increasing, as are the total value outputs of sub-segments like horticulture, milk and meat.
  • With differentiated production strategies that are less reliant on cereals and more on other segments, farmers are accruing better incomes.
  • By diversifying their produce, they are moving away from one-crop risks.

Government schemes and policies

  • Keeping farmers dependent on subsidies and restricted by APMCs, and acts like the Essential Commodities Act wasn’t in the nation’s long-term interests.
  • Recognising this, the government has been making sequential changes in the system.
  • It started with the introduction of the National Agriculture Market (e-NAM) to facilitate online trading of agri-produce.
  • Then PM-KISAN was introduced to provide minimum income support to nine crore marginal farmers, at Rs 6,000 annually.
  • The KISAN credit card with an allotment of a total of Rs 2 lakh crore credit to maintain larger workforces and implements during harvest season is helping farmers plan and organise their harvests better.
  • The Rs 1 lakh crore Agri Infrastructure Fund as part of Atmanirbhar Bharat Abhiyan will help by the creation of agri-infrastructure.

Need for structural changes

  • The government recently passed three agri-bills, these are:-
  • 1) The Farmers’ Produce Trade and Commerce Bill.
  • 2) Farmers Agreement on Price Assurance and Farm Services Bill.
  • 3) Essential Commodities (Amendment) Bill.
  • They enable farmers the freedom to diversify their crops and produce, which reduces mono-crop dependence and increases income avenues.
  • They can also now sell their produce anywhere, to the highest bidder across the country.
  • The farmers are no longer are they required to go to the mandis where they are subject to middlemen and layers of bureaucracy.
  • Contract farming enable farmers them to boost the value-add of their products via contracts and assured procurement by the food processing industries.
  • Retaining the MSP system means the government is underwriting the whole network for certain crops to ensure farmers receive assured income for those crops.

Focusing on the export market

  • The passage of agri bills gives India the long-awaited opportunity to orient its agriculture sector towards export markets.
  • By catering to just the Indian economy, the exposure is hardly $3 trillion ; instead, export-orientation caters to an $82 trillion global economy —a 27x expansion.
  • India’s agri exports in 2018 were at $38.5 billion.
  • India can comfortably triple this by providing infrastructure for grading, sorting, and supply chain distribution.


The farm Bills are liberating farmers at a pivotal juncture, the nation and farmers have a generational opportunity here to break out of a 70-year sectoral stagnation and aim bigger.


Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Issues with the MSP in the age of surplus production


From UPSC perspective, the following things are important :

Prelims level : MSP. SAP

Mains level : Paper 3- Issues with the MSP regime

The author analyses the inefficiencies in the MSP regime while comparing it with the sugar sector and the milk sector. The recent agri-reform in the opinion of the author could help to make the Indian agriculture more efficient.

MSP system Vs. Market-driven system

  • MSP regime was the creation of the era of scarcity in the mid-1960s.
  • Indian agriculture has, since then, turned the corner from scarcity to surplus.
  • In a surplus economy, unless we make agriculture demand-driven, the MSP route can spell financial disaster.
  • This transition is about changing the pricing mix — how much of it should be state-supported and how much market-driven.
  • The new laws are trying to increase the relative role of markets without dismantling the MSP system.
  • Currently, no system is perfect, be it the one based on MSP or that led by the markets, but the MSP system is much more costly and inefficient.
  • The market-led system will be more sustainable provided we can “get the markets right”.

Issues with the MSP

  • A perusal of the MSP dominated system of rice and wheat shows that the stocks with the government are way above the buffer stock norms.
  • The economic cost (to FCI) of procured rice comes to about Rs 37/kg and that of wheat is around Rs 27/kg.
  • No wonder, market prices of rice and wheat are much lower than the economic cost incurred by the FCI.
  • So, grain stocks with the FCI cannot be exported without a subsidy[i.e. export below the cost], which invites WTO’s objections.
  • The FCI’s burden is touching Rs 3 lakh crore which is not reflected in the Central budget as the FCI is asked to borrow more and more.
  • The FCI can reduce costs if it uses policy instruments like “put options”.

2 Lessons: from sugarcane and milk pricing

1) Populism resulted in making sugar industry globally non-competitive

  • In the case of sugarcane, the government announces a “fair and remunerative price” (FRP) [not MSP]to be paid by sugar factories [not paid by the Government].
  • While some states like Uttar Pradesh announces its own “state advised price” (SAP).
  • The sheer populism of SAP has resulted in cane arrears amounting to more than Rs 8,000 crore, with large surpluses of sugar that can’t be exported.
  • This sector has, consequently, become globally non-competitive.
  • Unless sugarcane pricing follows the C Rangarajan Committee’s recommendations the problems of the sugar sector will not go away.

2) Success story of milk sector

  • In the case of milk co-operatives, pricing is done by the company in consultation with milk federations.
  • It is more in the nature of a contract price.
  • It competes with private companies, be it Nestle, Hatsun or Schreiber Dynamix dairies.
  • The milk sector has been growing at a rate two to three times higher than rice, wheat and sugarcane.
  • Today, India is the largest producer of milk — 187 million tonnes annually.

So, how the recent reforms will help the farmers

  •  As a result of changes in farm laws in the next three to five years companies will be encouraged to build efficient supply lines somewhat on the lines of milk.
  • These supply lines — be it with farmers producer organisations (FPOs) or through aggregators — will, of course, be created in states where these companies find the right investment climate.
  • These companies will help raise productivity, similar to what has happened in the poultry sector.
  • Milk and poultry don’t have MSP and farmers do not have to go through the mandi system paying high commissions, market fees and cess.


The pricing system has its limits in raising farmers’ incomes. More sustainable solutions lie in augmenting productivity, diversifying to high-value crops, and shifting people out of agriculture to high productivity jobs elsewhere, the recent reforms are the steps in this direction.

Back2Basic: What is MSP

  • Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
  • The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
  • The minimum support prices are a guarantee price for their produce from the Government.
  • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
  • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.

What are ‘put options’

  • Put options give holders of the option the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time frame.
  • Put options are available on a wide range of assets, including stocks, indexes, commodities, and currencies.
  • Put option prices are impacted by changes in the price of the underlying asset, the option strike price, time decay, interest rates, and volatility.
  • Put options increase in value as the underlying asset falls in price, as volatility of the underlying asset price increases, and as interest rates decline.
  • They lose value as the underlying asset increases in price, as volatility of the underlying asset price decreases, as interest rates rise, and as the time to expiration nears.


Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] Kasturi Cotton


From UPSC perspective, the following things are important :

Prelims level : Kasturi Cotton Brand

Mains level : Not Much

Now India’s premium Cotton would be known as ‘Kasturi Cotton’ in the world cotton trade.

Kasturi Cotton

  • It is the first-ever Brand and Logo for Indian Cotton on Second World Cotton Day.
  • The Kasturi Cotton brand will represent Whiteness, Brightness, Softness, Purity, Luster, Uniqueness and Indianness.

Do you know?

  1. Cotton is one of the principal commercial crops of India and it provides livelihood to about 6.00 million cotton farmers.
  2. India is the 2nd largest cotton producer and the largest consumer of cotton in the world.
  3. India produces about 6.00 Million tons of cotton every year which is about 23% of the world cotton.
  4. India produces about 51% of the total organic cotton production of the world, which demonstrates India’s effort towards sustainability.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Reform is about giving farmers choice


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Agriculture reforms

The article analyses the regional variation in the problems and issues of the farmer and how it has implications for the reforms in agriculture.

An issue of estimating the number of farmers in India

  • Almost 111 million are registered for the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan).
  • Other than some categories being barred from PM-Kisan benefits, not every eligible farmer has necessarily registered for PM-Kisan.
  • The last Agriculture Census in 2015-16 gave us 146 million holdings.
  • If the agricultural landholding is conditional on being a farmer, apart from a possible further increase since 2015-16, 146 million is possibly the upper bound.
  • Every definition of “farmer” is not contingent on the ownership of land.
  • The Protection of Plant Varieties and Farmers’ Rights Act of 2001 is an example where status as a farmer depends on cultivating land (or supervising cultivation), not owning it.
  • That issue was also flagged by the National Commission on Farmers, such as in the Draft National Policy for Farmers (2006), where “farmers” included agricultural labourers, sharecroppers, tenants and so on.

Issues with making landholding prerequisite for being a farmer

  • The Committee on State Agrarian Relations and the Unfinished Task in Land Reforms (2009) noted that “the Survey and Settlement Operations in the Permanently Settled Areas have not been taken up and where they have been taken up, for instance in Bihar, they tend to never conclude”
  • The last extensive survey and settlement in India was conducted two to three decades prior to Independence.
  • Post-Independence, some states have not undertaken a revisional survey and settlement so far.
  • There have been improvements since 2009 and the Department of Land Resources has a Digital India Land Records Modernisation Programme (DILRMP).
  • Punjab and Haryana rank 16th and 18th respectively in Records and Services Index (LRSI).
  • Gujarat, West Bengal and Tripura score high on this Index (over 90 per cent).

Variation across the States

  • If land records are in this condition, some farmers will conceivably be excluded from the farmer definition.
  • With diverse and heterogenous agriculture, all farmers will not have identical views.
  •  2015-16 Agricultural Census tells us that most operational holdings are in UP, Bihar, Maharashtra and MP, in that order.
  • The highest operated areas are in Rajasthan, Maharashtra, UP and MP, in that order.
  • 86.1 per cent of holdings are small and marginal (less than 2 hectares) and only 0.6 per cent are large (more than 10 hectares).


The face of Indian agriculture has changed and is no longer what it was in the Green Revolution days, centred on Punjab, Haryana and western UP. Farmers, and governments, in Bihar and Kerala, don’t want APMCs, nor do UP, MP, Gujarat and Karnataka. There is no evidence that this has made those farmers worse off.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Lessons from Bihar’s abolition of its APMC system for farmers


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Agri marketing and related issue

The article analyses the results of complete abolition of APMC in Bihar in the context of current protest against the agri bills.


  • Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 has been a source of anger among farmers.
  • By allowing unregulated trading areas beyond APMC mandis, the law seeks to remove intermediaries from agricultural trade and raise price realization for farmers.

Excessive politicization of APMCs

  • APMC’s excessive politicization has resulted in cartelization and price-fixing.
  • For this reason, there have been several attempts at reforming their functioning.
  • Easier licensing norms, the removal of entry and exit barriers and computerization and transparency have been introduced in most APMC markets.
  • However, the Bihar government decided to abolish the APMC system altogether in 2006.

Analysing the impact of abolition of APMC in Bihar

  • It was hoped that abolition would ensure better prices for farmers of the state and attract large sums of private investment.
  • Before their abolition, Bihar had 95 market yards, of which 54 had infrastructure such as covered yards, godowns and administrative buildings, weighbridges, and processing as well as grading units.
  •  With no revenue to maintain it, that infrastructure is now in a dilapidated condition.
  •  A study by the National Council for Applied Economic Research reported increased volatility in grain prices after 2006.
  • Most of the farmers surveyed reported high storage costs at private warehouses.
  • Farmers this year in Bihar received lower price for maize compared to the farmers in states with APMC.

Lessons from Bihar

  • The Bihar experiment has important lessons for future marketing reforms in agriculture.
  • The benefits of these reforms will only accrue to farmers if they are accompanied by private investment in creating the physical infrastructure and institutional mechanisms needed to allow for greater participation of farmers.
  • The record of states on attracting private investment isn’t much better.


By only attempting to shift trade away from APMC to non-APMC areas, without a regulatory framework, the new law is unlikely to ensure better price realization for farmers.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Explained: How remunerative is farming in India?


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Debate over profitability of farming in India

The government’s push to reform India’s agriculture sector has divided opinions and triggered a debate about the state of Indian agriculture.

Try this PYQ:

Q.In view of the declining average size of land holdings in India which has made agriculture nonviable for a majority of farmers, should contract farming and land leasing be promoted in agriculture? Critically evaluate the pros and cons. (UPSC 2015)

Features of Indian Agriculture

In the context of this debate, two long-standing characteristics of Indian agriculture are noteworthy:

  1. Indian agriculture is highly unremunerative
  2. It has been heavily regulated by the government and protected from the free play of market forces

Why are the new legislation introduced?

  • According to the government, the new Bills passed by Parliament attempt to make it easier for farmers to sell to and produce for the private sector.
  • The hope is that liberalizing the sector and allowing greater play for market forces will make Indian agriculture more efficient and more remunerative for the farmers.
  • In this context, it is important to understand some of the basics of Indian agriculture.

Basics of Indian agriculture

(1) Workforce engaged

  • At the time of Independence, about 70% of India’s workforce (a little less than 100 million) was employed in the agriculture sector.
  • Even at that time, agriculture and allied activities accounted for around 54% of India’s national income.
  • Over the years, agriculture’s contribution to national output declined sharply. As of 2019-20, it was less than 17% (in gross value added terms).
  • And yet, the proportion of Indians engaged in agriculture has fallen from 70% to just 55% (Chart 1).
  • As the Committee on Doubling Farmers’ Income (2017) observes, “the dependence of the rural workforce on agriculture for employment has not declined in proportion to the falling contribution of agriculture to GDP”.

(2) Land holdings

  • While the number of people dependent on agriculture has been burgeoning over the years, the average size of landholdings has become reduced sharply — even to the extent of being unviable for efficient production.
  • Data shows that 86% of all landholdings in India are small (between 1 and 2 hectares) and marginal (less than 1 hectare — roughly half a football field).
  • The average size among marginal holdings is just 0.37 ha which hardly provides enough income to stay above the poverty line.

(3) Debts

  • The combined result of several such inefficiencies is that most Indian farmers are heavily indebted (Chart 2).
  • The data shows that 40% of the 24 lakh households that operate on landholdings smaller than 0.01 ha are indebted. The average amount is Rs 31,000.
  • A good reason why such a high proportion of farmers is so indebted is that Indian agriculture — for the most part — is unremunerative.
  • Chart 3 provides the monthly income estimates for an agriculture household in four very different states as well as the all-India number.
  • Some of the most populous states like Bihar, West Bengal and Uttar Pradesh have very low levels of income and very high proportions of indebtedness.

(4) Buying & selling

  • Another way of understanding the plight of the farmers relative to the rest of the economy is to look at the Terms of Trade between farmers and non-farmers.
  • Terms of Trade is the ratio between the prices paid by the farmers for their inputs and the prices received by the farmers for their output.
  • As such, 100 is the benchmark. If the ToT is less than 100, it means farmers are worse off.
  • As Chart 4 shows, ToT rapidly improved between 2004-05 and 2010-11 to breach the 100-mark but since then it has worsened for farmers.

(5) MSP

  • A key variable in the debate is the role of minimum support prices. Many protesters fear governments will roll back the system of MSPs.
  • MSPs provide “guaranteed prices” and an “assured market” to farmers, and save them from price fluctuations. This is crucial because most farmers are not adequately informed.
  • But although MSPs are announced for around 23 crops, actual procurement happens for very few crops such as wheat and rice.
  • Moreover, the percentage of procurement varies sharply across states (Chart 5). As a result, actual market prices — what the farmers get — are often below MSPs.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Putting farmers first


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Agri bills related to agri markets and contract farming

The faremers have been protesting against the agri bill. This article explains the rationale behind the bill and how it could help the farmers.

Challenges Indian agriculture face

  • Indian agriculture has been characterised by fragmentation due to small holding sizes, weather dependence, production uncertainties, huge wastage and market unpredictability.
  • This makes agriculture risky and inefficient with respect to both input and output management.

Recent steps to help farmers

  • The  government has taken various steps in this direction, for example-
  • The implementation of the Swaminathan committee’s recommendation regarding fixing MSP at least 50 per cent profits on the cost of production.
  • Increasing the agri budget by more than 11 times in the past 10 years.
  • Establishing e-NAM mandis.
  • An Agriculture Infrastructure Fund of Rs 1 lakh crore under the Atmanirbhar Bharat Package, the scheme for the formation of 10,000 FPOs, etc.

What the agri bills seek to achieve

  • The bills will create an ecosystem where farmers and traders enjoy the freedom of choice of sale and purchase of farming produce.
  • This freedom of choice will help to facilitate remunerative prices to farmers through competitive alternative trading channels.
  • This will promote barrier-free inter-state and intra-state trade and commerce of farming produce outside the physical premises of markets notified under state agricultural produce marketing legislation.
  • The farm bills also lay the ground of a legal framework for fair and transparent farming agreements between farmers and sponsors.
  • This framework will facilitate greater certainty in quality and price, adoption of quality and grading standards, linkage of farming agreements with insurance and credit instruments and also enable the farmer to access modern technology and better inputs.
  • These recommendations have been made by the Swaminathan Committee, which suggested the removal of the mandi tax, creation of a single market and facilitating contract farming.

Safeguard in the bill

  • The bill have several safeguards such as the prohibition of sale, lease or mortgage of farmers’ land and farmers’ land is also protected against any recovery.
  • Farming agreements cannot be entered into, if they are in derogation of the rights of a sharecropper.
  • Farmers will have access to flexible prices subject to a guaranteed price in agreements.
  • The sponsor has to ensure the timely acceptance of delivery and payment of produce to farmers and farmers’ liability is limited to only the advance received and cost of inputs provided by the sponsor.
  • Disputes will be resolved through a Conciliation Board, to be constituted by the sub-divisional magistrate (SDM), failing which an aggrieved party may approach the concerned SDM for the settlement of the dispute.

Consider the question “What are the changes introduced by the two recent bills passed by the government related to agri markets and contract farming how will these changes be helpful to the farmers?”


These farm bills will bring transformative changes in our agricultural sector and reduce wastage, increase efficiency, unlock value for our farmers and increase farmers’ incomes.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Understanding the opposition of farmers to agriculture Bills


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Issues with the agriculture bill

The article analyses the issue of farmers opposition to the three agricultural bills.


  • Farmers have been protesting against the three bills related to agriculture.
  • These three Bills are-
  • 1) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
  • 2) The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.
  • 3) The Essential Commodities (Amendment) Bill, 2020.

What are the aims of the bills?

  • The Bills aim to do away with government interference in agricultural trade by creating trading areas outside the structure of Agricultural Produce Market Committees (APMCs).
  • One of the bills aims at removing restrictions of private stockholding (under Essential Commodities Act 1955) of agricultural produce.
  • One of the bills deals with the regulation of contract farming.

Issues with the Bills

  • The government has failed to hold any discussion with the various stakeholders including farmers and middlemen.
  • The attempt to pass the Bills without proper consultation adds to the mistrust among various stakeholders including State governments.
  • Farmer organisations see these Bills as an attempt to weaken the APMCs and eventual withdrawal of the Minimum Support Prices (MSP).
  • Farmers in Punjab and Haryana have genuine concern about the continuance of the MSP-based public procurement given the large-scale procurement operations in these States.

Understanding the role of APMC

  • APMCs do play an important role of price discovery essential for agricultural trade and production choices.
  • The middlemen are a part of the larger ecosystem of agricultural trade, with deep links between farmers and traders.
  • The preference for corporate interests at the cost of farmers’ interests and a lack of regulation in these non-APMC mandis are cause for concern.
  • To understand the role of APMC, consider the example of Bihar.
  • After Bihar abolished APMCs in 2006, farmers in Bihar on average received lower prices compared to the MSP for most crops.
  • Despite the shortcomings and regional variations, farmers still see the APMC mandis as essential to ensuring the survival of MSP regime.


The protests by farmers are essentially a reflection of the mistrust between farmers and the stated objective of these reforms.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agricultural reform bills introduced in Parliament


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : APMC reforms

Farmers in Punjab and Haryana have been protesting against three ordinances promulgated by the Centre back in June this year.  After the Monsoon Session of Parliament began this week, the government has introduced three Bills to replace these ordinances.

Try this PYQ:

The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus:

(a) Transportation cost only

(b) Interest cost only

(c) Procurement incidentals and distribution cost

(d) Procurement incidentals and charges for godowns

What are these ordinances?

The ordinances included:

  • The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020;
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020; and
  • The Essential Commodities (Amendment) Ordinance, 2020 (It is the Bill replacing the third that has been passed in Lok Sabha)

The cause of discontent

  • While farmers are protesting against all three ordinances, their objections are mostly against the provisions of the first.
  • Their concerns are mainly about sections relating to “trade area”, “trader”, “dispute resolution” and “market fee” in the first ordinance.

What is a ‘trade area’, as mentioned in the Bill?

  • Section 2(m) of The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 defines “trade area” as any area or location, place of production, collection and aggregation.
  • It includes (a) farm gates; (b) factory premises; (c) warehouses; (d) silos; (e) cold storages; or (f) any other structures or places, from where the trade of farmers’ produce may be undertaken in the territory of India.
  • In effect, existing mandis established under APMC Acts have been excluded from the definition of trade area under the new legislation.
  • The government says the creation of an additional trade area outside of mandis will provide farmers with the freedom of choice to conduct trade in their produce.

Why are farmers protesting?

  • The protesters say this provision will confine APMC mandis to their physical boundaries and give a free hand to big corporate buyers.
  • The APMC mandi system has developed very well as every mandi caters to 200-300 villages.
  • But the new ordinance has confined the mandis to their physical boundaries.

What is ‘trader’ and how is it linked to the protests?

  • Section 2(n) of the first ordinance defines a “trader” as “a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof.
  • Thus, it includes processor, exporter, wholesaler, miller, and retailer.
  • According to the Ministry of the Agriculture and Farmers’ Welfare, “Any trader with a PAN card can buy the farmers’ produce in the trade area.”
  • In the present mandi system, arhatiyas (commission agents) have to get a licence to trade in a mandi.
  • The protesters say arhatiyas have credibility as their financial status is verified during the licence approval process.

Why does the provision on ‘market fee’ worry protesters?

  • Section 6 states that no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied in a trade area.
  • Government officials say this provision will reduce the cost of the transaction and will benefit both the farmers and the traders.
  • Under the existing system, such charges in states like Punjab come to around 8.5% — a market fee of 3%, a rural development charge of 3% and the arhatiya’s commission of about 2.5%.
  • By removing the fee on trade, the government is indirectly incentivizing big corporates.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Redefining a farmer


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Defining a farmer

The article analyses the issues of multiple definitions of a farmer. The issues of ownership as a criterion for being a farmer and its impact on tenant farmers in discussed.

Is land ownership right criterion

  • Traditionally, land ownership is a mandatory criterion for availing benefits under various agricultural schemes in India.
  • Laws governing land leasing operate at different levels across India.
  • The Model Agricultural Land Leasing Act, 2016 was introduced to formalise land leasing.
  • However, except a few States, a majority of State governments have not extended the scope of the Act to farmers.
  • According to the 2015-16 agricultural census, about 2.65 million operational holdings are either partially or wholly leased.

How this impact tenants

  • The impact of agrarian distress is felt disproportionately by tenant farmers.
  • The tenant farmer incurs the costs and faces the risks, while the owner receives the rent, subsidies and other support.
  • The lessees do not benefit from loan waivers, moratorium and institutional credit, and are forced to be at the mercy of moneylenders.
  • The distress is reflected in the fact that tenant farmers account for a majority of farmer suicides reported in the NCRB data.

Multiple definitions of farmers

  • There are multiple definitions for a ‘farmer’ in official data published by the Government of India.
  • The population census defines ‘cultivators’ as a person engaged in cultivation of land either ‘owned’ or held in kind or share.
  • The 59th round of the Situation Assessment Survey (SAS) of farmers also stresses on ‘possession of land’ either owned or leased or otherwise possessed for defining ‘farmers’.
  • Delinking of land as the defining criterion for a ‘farmer’ was done in the 70th round of SAS carried out by the NSSO.
  • The 70th Round of NSSO refined the definition of a farmer as one who earns a major part of the income from farming. 


Access to land as a policy instrument in bringing about equitable growth of rural economies needs no further emphasis. However, until the time ‘land to the tiller’ remains just wishful thinking, adopting a broader definition of a ‘farmer’ is a short-term solution to ensure inclusive and sustainable growth.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Making agricultural reforms successful


From UPSC perspective, the following things are important :

Prelims level : e-NAM,PM-KISAN, PM-AASHA

Mains level : Paper 3- Issues with agriculture market reforms.

The article analyses the issues with the reforms in the agricultural marketing policies.

Recent reforms in agricultural marketing

  • The 3 recent reforms in agricultural marketing bring major changes in policy.
  • The removal of restrictions under the Essential Commodities Act (ECA) should help attract private investment in agriculture.
  • The two new ordinances are expected to enable inter-State trade and promote contract farming, thereby providing a large number of options to farmers.

Concerns that need to be addressed

1) Policy credibility problem

  • The first problem is ‘time-inconsistency’ problem or the policy credibility problem.
  • This situation arises when a decision maker’s preferences change over time in such a way that the preferences are inconsistent at different points in time.
  • Because the policy signals are not very clear in the last few years as relates to agricultural marketing, as we will see below.
  • This clarity of clear signal is reflected in rollout of multiple schemes: e-NAM, PM-AASHA, PM-KISAN.
  • In 2016, the electronic national agricultural market (e-NAM) was launched with a lot of fanfare.
  • States needed to amend their respective Agricultural Produce Market Committee (APMC) Acts.
  • Several States could not or did not carry out these amendments and the e-NAM proved to be far less effective than desired.
  • As a result, the government reverted back to public price support by launching an ambitious programme, PM-AASHA, in September 2018.
  • The programme was confined to pulses and oilseeds to limit the fiscal costs.
  • However, the initial budgetary outlay did not match the level of ambition of the programme.
  • In addition to the PM-AASHA programme, two Model Acts were formulated by the Central government in 2017 and 2018 to promote agricultural marketing and contract farming in States.
  • States were required to legislate these Model Acts.
  • However, progress has been tardy and many States have not adopted the Model Acts.
  • This uninspiring performance of PM-AASHA necessitated a more radical and direct approach.
  • Thus evolved the PM-KISAN, a direct cash transfer programme, in the interim Budget of 2019-2020 (February 2019).
  • This programme involved a fixed payment of ₹6,000 per annum to each farm household with a budgetary outlay of ₹75,000 crore.
  • The frequent flip-flops in farm policy — from a market-based e-NAM to a public funded PM-AASHA and now back to market-based measures — may not inspire much confidence in the minds of private investors about the continuance of the present policies.

2) Centre-State and State-State relations

  • Recent Ordinances were passed by the Central Government using the constitutional provisions but the implementation of the same vests with the States.
  • Also, inter-State trade involves movement of goods across the State boundaries.
  • Thus, coordination between the Central and the State governments, and also among various States becomes crucial.
  • Also, the States must have faced several problems in legislating and implementing the earlier Model Acts.
  • Thus, the Centre must engage with the States about these constraints in order to iron out the potential problems in the implementation of the ordinances.

3) Multiple market failures and the resultant inter-linkage of rural markets

  • Absence or failure of credit and insurance markets may lead a farmer to depend upon the local input dealer.
  • This, in turn, may tie him to these intermediaries and constrain his choice of output markets.
  • Similarly, the widespread restrictions on land leasing in many States lead to an inefficient scale of production.
  • Thus, reforms in the output market alone are not sufficient.
  • Reforms in output must be supplemented and complemented with the liberalisation of the lease market and better access to credit and insurance markets.

Consider the question “What are the reform measures taken by the government to deal with the issues in the agricultural marketing by farmers? What are the concerns with such measures?”


In conclusion, consistency in policy, collaborative approach and complementary reforms are necessary for the success of the recent agricultural market reforms.

Back2Basics: Agricultural reform

Read in detail about the 3 reforms form here-

Agri reforms and way forward

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Correcting the agri market


From UPSC perspective, the following things are important :

Prelims level : Agriculture Infrastructure Fund

Mains level : Paper 3- Measures to achieve better price realisation for agri commodities.

The article analyses the highlights the importance of post harvest infrastructure for the better price realisation of agri-commodities. It also suggests the two areal which could help the farmers in this regard.

Purpose of Agriculture Infrastructure Fund

  • Creating post-harvest physical infrastructure is as important as the changes in the legal framework (like the recent ordinances).
  • The recently announced Rs 1 lakh crore Agriculture Infrastructure Fund (AIF) will be used over the next four years.
  • This fund will be used to build post-harvest storage and processing facilities.
  • NABARD will steer this initiative in association with the Ministry of Agriculture and Farmers Welfare, largely anchored at FPOs.
  • The creation of the AIF presumes that there is already large demand for storage facilities and other post harvest infrastructure.

 Reforms in 2 areas which could help farmers get better price realisation

1) Negotiable warehouse receipt

  • More and better storage facilities can help farmers avoid distress sellingimmediately after the harvest.
  • But small farmers cannot hold stocks for long as they have urgent cash needs to meet family expenditures.
  • Therefore, the value of the storage facilities at the FPO level could be enhanced by a negotiable warehouse receipt system.
  • FPOs can give an advance to farmers, say 75-80 per cent of the value of their produce at the current market price.

How NABARD can play an important role

  • Since NABARD is also responsible for the creation of 10,000 more FPOs, it can create a package that will help these outfits realise better prices
  • FPOs will need large working capital to give advances to farmers against their produce as collateral.
  • NABARD can ensure that FPOs get their working capital at interest rates of 4 to 7 per cent.
  • Currently, most FPOs get capital from microfinance institutions at rates ranging from 18-22 per cent per annum which is not economically viable unless the off-season prices are substantially higher than the prices at harvest time.

2)Improving Agri-futures markets

  • A vibrant futures market is a standard way of reducing risks in a market economy.
  • Several countries — be it China or the US — have agri-futures markets that are multiple times the size of those in India.

Way forward

  • 1) NABARD  should devise a compulsory module that trains FPOs to use the negotiable warehouse receipt system and navigate the realm of agri-futures to hedge their market risks.
  • 2) Government agencies dealing in commodity markets — the FCI, NAFED, State Trading Corporation (STC) — should increase their participation in agri-futures.
  • That is how China deepened its agri-futures markets.
  • 3) The banks that give loans to FPOs and traders should also participate in commodity futures as “re-insurers” for the healthy growth of agri-markets.
  • 4)  Government policy has to be more stable and market friendly.
  • In the past, it has been too restrictive and unpredictable.

Consider the question “Creating post-harvest physical infrastructure is as important as the changes in the legal framework. In light of this, highlight the importance of recently announced Agriculture Infrastructure Fund and suggest the measures to increase the price realisation of agri-products by farmers.” 


India needs to not only spatially integrate its agri-markets (one nation, one market) but also integrate them temporally — spot and futures markets have to converge. Only then will Indian farmers realise the best price for their produce and hedge market risks.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agriculture Infrastructure Fund (AIF) Scheme


From UPSC perspective, the following things are important :

Prelims level : AIF

Mains level : Economic stimulus for Agri sector

PM has launched a new financing scheme under the ₹1 lakh crore AIF.

Note the following things about AIF:

1) It is a Central Sector Scheme

2) Duration of the scheme

3)Target beneficiaries

Agriculture Infrastructure Fund (AIF)

  • It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops.
  • It will support farmers, PACS, FPOs, Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.
  • These assets will enable farmers to get greater value for their produce as they will be able to store and sell at higher prices, reduce wastage and increase processing and value addition.

What exactly is the AIF?

  • The AIF is a medium – long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee.
  • The duration of the scheme shall be from FY2020 to FY2029 (10 years).
  • Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum.
  • It will provide credit guarantee coverage under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to Rs. 2 Crore.

Target beneficiaries

The beneficiaries will include farmers:

  • PACS, Marketing Cooperative Societies, FPOs, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] First “Kisan Rail” flagged off


From UPSC perspective, the following things are important :

Prelims level : Kisan Rail

Mains level : Doubling farmers income by 2022

Indian Railways introduced the first “Kisan Rail” from Devlali (Maharashtra) to Danapur (Bihar).

Try this question for mains:

Q.Discuss the role of agricultural marketing and logistics for doubling farmer’s income by 2022.

Kisan Rail

  • From Maharashtra’s Devlali to Bihar’s Danapur, the train will cover the journey of 1,519 kilometres in over 31 hours.
  • It will take stops at Nasik Road, Manmad, Jalgaon, Bhusaval, Burhanpur, Khandwa, Itarsi, Jabalpur, Satna, Katni, Manikpur, Prayagraj Chheoki, Pt. Deendayal Upadhyay Nagar and Buxar.
  • This train will help in bringing perishable agricultural products like vegetables, fruits to the market in a short period of time.
  • The train with frozen containers is expected to build a seamless national cold supply chain for perishables, inclusive of fish, meat and milk.
  • It is a step towards realizing the goal of doubling farmers’ incomes by 2022.

Other facts

  • Indian Railways have earlier run single commodity special trains like Banana Specials etc.
  • But this will be the first-ever multi-commodity trains and will carry fruits like Pomegranate, Banana, Grapes etc and vegetables like Capsicum, Cauliflower, Drumsticks, Cabbage, Onion, Chilies etc.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Private: Agriculture exports in India

The High-Level Group on Agricultural Exports set up by the Fifteenth Finance Commission has submitted its report to the Commission.

Why focus on Agri-exports?

  • India’s agricultural export has the potential to grow from USD 40 billion to USD 70 billion in a few years.
  • The estimated investment in agricultural export could be in the tune to USD 8-10 billion across inputs, infrastructure, and processing and demand enablers.
  • Additional exports are likely to create an estimated 7-10 million jobs.
  • It will lead to higher farm productivity and farmer income.
  • The government has committed to double the farmers’ income by 2022 and promoting agricultural exports will give an impetus to achieving the goal
  • Low share in high-value products: The share of India’s high-value and value-added agriculture produce in its agriculture export basket is less than 15 percent compared to 25 percent in the US and 49 percent in China.

Impediments in growth of agriculture export:

Domestic Reasons:

1.Flawed Policies:

  • A major reason for decline in export is frequent change in government policy for products like rice, pulses, wheat and sugar. Sometimes, export has been banned and at other times, duties have been raised or lowered.
  • Exports of many agricultural commodities, sugar for instance, are regulated by arbitrary quota fixation in India. 
  • Such executive actions make India an unreliable supplier. That in turn leads to low net realisation from export.

2.Role of MSP:

  • Instead of global demand and supply factors, Indian farmers are guided by minimum support and procurement prices fixed arbitrarily by the government.
  • Keeping domestic prices of farm goods artificially high disincentives export. 
  • Minimum support and procurement prices also over-incentivise cultivation of cereals vis-à-vis commercial and horticultural crops. This affects India’s ability to capture export markets.

3.Poor Infrastructure and Quality Issues:

  • Like any other merchandise export, India’s farm produce suffers from poor customs and port infrastructure, and high logistics cost that cut into the exporters’ margins.
  • Then, there are quality related issues with instances of pesticides often being found above permissible limits, leading to rejection of export consignments.

4.GM crops

  1. The cultivation of genetically modified (GM) crops is quite common in the US and Latin American countries like Brazil. India’s hesitation on whether to allow cultivation of GM crops or not affects its ability to capture global market share.

International Reasons:

  1. Commodity Prices and Low Global Demands: Another primary reason for decline in export of agricultural commodities are low commodity prices in the international market, which has made our exports uncompetitive
  2.  Increased shale gas production :in the US has led to lower demand for crude oil. Low priced crude in turn has reduced the demand for biofuel, especially ethanol, thereby reducing the demand for soya, corn, mustard, sunflower, palm, sugarcane and sugar beet.
  3. Non Tariff Barriers and Prohibitive Import Duties: India’s farm exports also face prohibitive import duties in overseas markets. For example, dairy products attract peak import duties of 511 per cent in the EU, 93 per cent in the US, and 692 per cent in Japan. 
  4. India’s farm exports also have to face a series of non-tariff barriers in top consuming markets – for example, a ban on import of mangoes by EU that was lifted in January 2015.
  5. Subsidies of foreign nations: India’s farm exports also have to compete with highly subsidised farm products supplied by other countries.

Highlights of the report

(A) The HLEG has made its recommendations, major among which are:

  • Focus on 22 crop value chains – demand-driven approach.
  • Solve Value Chain Clusters (VCC) holistically with a focus on value addition.
  • Create a State-led export plan with participation from stakeholders.
  • Private Sector should play an anchor role.
  • The centre should be an enabler.
  • The robust institutional mechanism to fund and support implementation.

(B) State-led Agri Exports

The Group has recommended a State-led Export Plan –  a business plan for a crop value chain cluster. It will lay out the opportunity, initiatives and investment required to meet the desired value chain export aspiration.

The Group has also said that for its success, the following factors needed to be considered:-

  • Plans should be collaboratively prepared with private sector players and Commodity Boards.
  • Leveraging of state plan guide and value chain deep dives.
  • The private sector should play an anchor role in driving outcomes and execution.
  • The centre should enable state-led plans.
  • Institutional governance should be promoted across the state and centre.
  • Funding through the convergence of existing schemes, Finance Commission allocation and private sector investment.


Agriculture Export Policy 2018

The Union Cabinet has approved the Agriculture Export Policy, 2018.

Elements of Agriculture Export Policy

The Agriculture Export Policy encompasses Strategic and Operational elements. These are:

Strategic Operational
  • Policy measures
  • Infrastructure and logistics support
  • Holistic approach to boost exports
  • Greater involvement of State Governments in agri exports
  • Focus on Clusters
  • Promoting value-added exports
  • Marketing and promotion of “Brand India
  • Attract private investments into production and processing
  • Establishment of a strong quality regimen
  • Research & Development
  • Miscellaneous

What are the key recommendations?

Infrastructure – The policy stresses on improving the infrastructure, and storage and exit point logistics.

  • It suggested a comprehensive need-gap analysis of existing export-oriented infrastructure across the value chain for this.

R&D – The policy emphasized promoting R&D activities for new product development for the upcoming markets.

  • Increased focus on R&D, new varieties and state of the art lab for effective accreditation and monitoring are called for.
  • This will be part of the efforts towards establishing a strong quality regime.
  • Besides, the policy stressed the need to ensure greater interaction between the various research organizations and industry bodies.

Exports – The policy aims to boost high value and value-added agricultural exports, focusing on perishables.

  • Improving the institutional mechanism for tackling market access barriers is suggested as a measure.
  • Dealing with sanitary and phytosanitary issues are also the priorities.
  • Processed agricultural products and all kinds of organic products will not be brought under any kind of export restriction.

APMC – Monopoly of the Agricultural Produce Market Committee (APMC) is a long existing concern.

  • It prevents private players from setting up markets and investing in market infrastructure.
  • APMC across states have not been able to achieve farmers’ welfare envisaged in these acts.
  • The policy hinted at continuing the efforts with state governments to remove perishables from their APMC Acts.
  • It also suggested better coordination between central ministries that are now working at cross-purposes.

Mandi – State governments would also be urged to standardize/ rationalize mandi taxes for largely exported agricultural products.

  • Simplification or uniformity of mandi/agricultural fee across states will create a transparent supply chain.
  • This will empower the farmers, providing wider access to markets and enabling free trade across the country.

Products – It is proposed that the agricultural export policy must focus on the promotion of value-added, indigenous and tribal products.

  • Development of organic export zones/organic Food park with an integrated approach is suggested to help promote shipments.

Agency – Global bodies like US FDA and the European Food Safety Authority are empowered to frame, regulate and implement policies related to both agricultural production and trade.

  • The draft policy considered working towards bringing in similar agencies in India.

Besides the policy made a case for promoting contract farming as it would help in attracting investments.

  • Some of the other notable recommendations include:
  1. promotion of region-specific clusters for lucrative crops
  2. coordinated branding efforts
  3. a shared database for exporters on market intelligence and export rejects
  4. quality assurance at the farm
  5. wider adoption of land leases



Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

What is Green-Ag Project?


From UPSC perspective, the following things are important :

Prelims level : Green-Ag Project

Mains level : Sustainable agriculture and its significance

The Union government has launched the Green-Ag Project in Mizoram, to reduce emissions from agriculture and ensure sustainable agricultural practices.

Note the following things about Green-Ag Project:

1)Core objective

2)Implementing agencies

3)Regions of Implementation

Green-Ag Project

  • The Green-Ag project is designed to achieve multiple global environmental benefits in at least 1.8 million hectares (ha) of land in five landscapes, with mixed land-use systems.
  • It aims to bring at least 104,070 ha of farms under sustainable land and water management.
  • The project will also ensure 49 million Carbon dioxide equivalent (CO2eq) sequestered or reduced through sustainable land use and agricultural practices.

Implementing agencies

  • The project is funded by the Global Environment Facility, while the Department of Agriculture, Cooperation, and Farmers’ Welfare (DAC&FW) is the national executing agency.
  • Other key players involved in its implementation are the Food and Agriculture Organization (FAO) and the Environment Ministry (MoEF&CC).

Regions of implementation

The project has been launched in high-conservation-value landscapes of five States namely

  • Madhya Pradesh: Chambal Landscape
  • Mizoram: Dampa Landscape
  • Odisha: Similipal Landscape
  • Rajasthan: Desert National Park Landscape
  • Uttarakhand: Corbett-Rajaji Landscape

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

APMC Act is not the main problem


From UPSC perspective, the following things are important :

Prelims level : APMC Act

Mains level : Paper 3- Issues with the APMC Act

The APMC Act, which is often blamed for the woes of the farmers is not the main problem. This article argues that the root of the problems of Indian agriculture lies somewhere else.

Agriculture post-1991

  • The priority post-1991 has been given to industry as well as services.
  • Middle-class consumers have been favoured by at the expense of farmers.
  • This neglect of agriculture resulted in an equally unprecedented gap between the standard of living in the rural and urban parts of the country.
  • As a result, the urban/rural ratio, in terms of monthly per capita expenditures, has jumped from 1.84 to 2.42 between 2012 and 2018.
  • This means that an average urban-dweller today can consume almost 2.5 times more than an average person in a village.

Reforms by the government

  • Government has decided to liberalise India’s agriculture by amending the APMC Act and the Essential Commodities Act.
  • Contract farming will also be introduced in such a way that the buyer can assure a price to the farmer at the time of sowing.

 APMC Act in the context of Shanta Kumar Committee report

  • The argument against the APMC Act is that it does not allow the free market to function due to government intervention.
  •  It denies farmers the opportunity to determine the prices of crops in the marketplace.
  • In theory, this is a valid argument.
  • But, Shanta Kumar Committee observed in 2015 that only 6 per cent of farmers get the Minimum Support Price (MSP).
  • This is because of barriers to access for farmers as only 22 crops are procured under MSP.
  • Infrastructure is also inadequate as there are only an estimated 7,000 APMC mandis across India.
  • Procurement depends on the stocks required by the state.

Why the APMC Act is not the problem

1) Farm Pricing is the problem

  • The living costs of farmers was considered while determining agricultural pricing by the Agricultural Prices Commission (APC).
  • CACP that replaced the APC in 1985 added a 10 per cent mark-up over the MSP to account for entrepreneurial costs.
  • Such practices have been gradually eroded post-1991.
  • The problem, therefore, is not state intervention but the way the government deals with agriculture.

2) APMC Act helped India build up food stocks

  • India managed to weather the 2008 global food crisis only because it had enough food stocks as Indian agriculture was not linked to the international futures market.
  • This was possible due to the procurement done through the APMC Act.

3) APMC Act reformed already by States

  • Since agriculture is a state subject, the Act has been modified in 17 states.
  •  On the contrary, the condition of peasants has often been affected when the APMC Act has been diluted.
  • Bihar is a case in point.
  • The APMC Act was revoked in 2006 with the same rationale that further deregulation will attract private investment in infrastructure.
  • Not only has that not materialised, but the existing APMC market infrastructure was also dismantled.

Reforms that Indian Agriculture needs

1) Subsidy Reforms

  • Indian Agriculture is still too heavily subsidised in favour of the big players.
  • In the Union Budget 2019-20, the allocation for the Ministry of Agriculture was Rs 1,30,485 crore and the fertiliser subsidy alone was estimated at Rs 79,996 crore.
  • But these subsidies are concentrated on a few crops.
  • Agriculture economist Bruno Dorin has shown, only three crops receive more than 60 per cent of the so-called “non-product-specific” support to agriculture — rice, wheat and sugarcane.
  • This has led to environmental degradation like the depletion of groundwater levels and monocultures which are a threat to biodiversity.
  • It has also led to the industrialisation of agriculture, that results in the strengthening of a handful of multinational companies, which supply chemical inputs.
  • Liberalisation would only strengthen the role of large companies — including those in the agri-food sector.

2) Agriculture needs to be ecologically viable

  • Structurally, farming needs to be made economically and ecologically viable in India.
  • State intervention for better pricing, investments in water harvesting and an agroecological transition could ensure a more resilient system to weather shocks like the current one.
  • The government could draw inspiration from the Andhra Pradesh Community Managed Farming model.
  • It promotes agroecological principles with the use of locally-produced, ecologically-sustainable inputs focusing on soil health..
  • Since the agro-ecological system of farming is more biodiverse in nature, it will make the system more resilient overall.
  • It will provide a safety net for farmers in case of crop damage due to various factors such as climate change or droughts.

Consider the question “Though the APMC Act has been blamed for the farmers’ issues, it has historically been part of the solution. Critically analyse.”


By investing again in agriculture and following, at last, the recommendations of the M S Swaminathan Committee, the Government of India would also help bridge the drastic urban-rural divide.

To read more about the issue:

Marketing of Agricultural Produce in India: Definition; Role; APMC Act, Model APMC Act, 2003

Original article:

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Exporting agri-inputs


From UPSC perspective, the following things are important :

Prelims level : Urea import and export by India

Mains level : Paper 3- Self reliance in agri-inputs

Some changes could make India exporter of agri-inputs. The article examines bottlenecks that holds India back and suggests the policy changes in key agri-inputs-seeds, fertilisers and machinery.


In the following 3 key agri-inputs India has the untapped potential. What is needed is policy changes.

1) Seeds

  • India can emerge as an important seed producer and a large exporter of seeds to many developing countries in South and South-east Asia as well as Africa.
  • The country can produce very competitively-priced seeds for hybrid rice, hybrid corn, hybrid Bt HT cotton, and several vegetables including tomato, potato and okra.
  • For this to happen, we have to set our regulatory system right.
  • Let’s use the case of cotton.
  • India’s decision in March 2002 to allow Bt cotton made India the largest producer of cotton in the world and the second-largest exporter of cotton by 2013-14.
  • But due to policy changes since 2014-15 and issues such as trait fees companies stopped the introduction of new generation of seeds
  • Now there is an “illegal” spread of Bt HT cotton in Maharashtra.
  • This is partly because our regulatory system is complex.
  • And more so because the present government has ideological blinkers against modern science.
  • This is the biggest bottleneck holding India back from becoming the seed capital of the developing world.

2) Fertilisers

  • India has been a net importer of fertiliser nutrients (NPK) for almost two decades.
  • In 2019-20, India imported fertilisers worth $6.7 billion, topping the list is urea $2.9 billion.
  • We are totally dependent on imports and likely to remain so in case of MOP and in the case of DAP.
  •  In the case of urea, India wants to be atmanirbhar by opening up five new urea plants in the public sector with a total capacity of 6.35 MMT.
  • Almost 70 per cent of the gas being used in urea plants is imported at a price much higher than the price of domestic gas.
  • The cost is going to be more than $400/tonne when the international price generally hovers between $250-300/tonne.
  • The government should allow existing private sector urea plants to expand and produce at a much lower cost.
  • The best way to achieve self-reliance in fertilisers is to change the system of fertiliser subsidies.

Suggestion on changes in fertiliser subsidies

  • 1) Deposit equivalent cash directly into farmers’ accounts, calculated on a per hectare basis.
  • 2) Free up fertiliser prices.
  • 3) Allow the private sector plants to compete and expand urea production in a cost-competitive manner.

3) Farm machinery

  • Before the Green Revolution, India produced only 880 tractor units.
  • It increased to about 9,00,000 units in 2018-19.
  • So, India is the largest tractor manufacturer in the world.
  • India also exported almost 92,000 tractors, largely to African and ASEAN countries.
  • Though Green Revolution gave tractor production a push, the real break-through came after de-licensing in 1991.
  • The new class of entrepreneurs and start-ups are coming up with special apps for “Uberisation of tractor services”.
  • In an economy of small landholders, owning a tractor is a high-cost proposition as it is not fully utilised.
  • This needs to be made more efficient by creating a market for tractor services.

Consider the question “Despite having the potential to transform itself into the exporter of agri-inputs, India ends up being the importer of some of them. In light of this examine India’s potential to become the exporter of agri-input products and suggest the measures to achieve this.”


The private sector is our strength. The only thing the government has to do is to unshackle them from the chains of controls and webs of unnecessary regulations. They will make an Atmanirbhar Bharat.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] Central Sector Scheme: Agriculture Infrastructure Fund


From UPSC perspective, the following things are important :

Prelims level : CSS-AIF

Mains level : AIF

The Union Cabinet has given its approval to a new pan India Central Sector Scheme-Agriculture Infrastructure Fund (CSS-AIF).

Try this question from CSP 2018:

Q.Increase in absolute and per capita real GNP does not connote a higher level of economic development, if:

(a) Industrial output fails to keep pace with agriculture output.

(b) Agriculture output fails to keep pace with industrial output.

(c) Poverty and unemployment increase.

(d) Imports grow faster than exports.

Agriculture Infrastructure Fund

  • AIF aims to provide a medium – long term debt financing facility for investment in viable projects for post-harvest management Infrastructure and community farming assets through interest subvention and financial support.
  • Under the scheme, Rs. One Lakh Crore will be provided by banks and financial institutions as loans.
  • The beneficiaries will include Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Farmer Producers Organizations (FPOs), SHGs, Farmers etc among others.
  • The moratorium for repayment under this financing facility may vary subject to a minimum of 6 months and maximum of 2 years.

Management of AIF

  • Agri Infra fund will be managed and monitored through an online Management Information System (MIS) platform.
  • The National, State and District level Monitoring Committees will be set up to ensure real-time monitoring and effective feedback.
  • The duration of the Scheme shall be from FY2020 to FY2029 (10 years).

Benefits of the scheme

  • The Project by way of facilitating formal credit to farm and farm processing-based activities is expected to create numerous job opportunities in rural areas.
  • It will enable all the qualified entities to apply for a loan under the fund.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Aatamnirbhar in Agriculture


From UPSC perspective, the following things are important :

Prelims level : Export of India's agricultural products

Mains level : Paper 3- Increasing India's net agri-exports

India has been the net exporter of agricultural commodities since 1991, however, there is scope for increasing its net export. This article suggests the strategy to achieve this.

Foreign exchange reserve: then and now in terms of grains

  • In the mid-1960s the country had about $400 million.
  • If India had spent all its foreign currency reserves just on wheat imports, it could have imported about seven million tonnes (mt) of wheat.
  • Today, India has foreign exchange reserves of more than $500 billion.
  • Even if the country has to buy 20 mt of wheat at a landed cost of $250/tonne, it will spend just $5 billion it is just one per cent of its foreign exchange reserves.
  • In that sense, the biggest reform in the last three decades that has led to “aatma nirbharta” in food is the correction of the exchange rate.
  • Another factor is coupling and the gradual integration of India with the world economy.
  • This has helped India increase its foreign exchange reserves from $1.1 billion in 1991 to more than $500 billion today.

India: Net exporter of agricultural products

  • India has been the net exporter of agricultural products ever since the economic reforms began in 1991.
  • The golden year of agri-trade was 2013-14 when net agricultural trade surplus was $24.7 billion.
  • In 2019-20, agri-exports were just $36 billion, and the net agri-trade surplus at $11.2 billion.
  • With this dull performance doubling agri-exports by 2022 looks almost impossible.

Let’s look at what India exports

  • Marine products with $6.7 billion exports top the list.
  • The second is rice at $6.4 billion of which basmati is at $4.6 billion and common rice at $2.0 billion.
  • Next is spices at $3.6 billion.
  • Other items are buffalo meat at $3.2 billion, sugar at $2.0 billion, tea and coffee at $1.5 billion, fresh fruits and vegetables at $1.4 billion, and cotton at $1 billion.

Strategy to increase export

  • If one chalks out a strategy we would need to keep in mind the principle of “comparative advantage”.
  • That means exporting more where we have a competitive edge, and importing where we lack competitiveness.
  • Together power and fertiliser subsidies account for about 10-15 per cent of the value of rice and sugar produced on a per hectare basis.
  • So, we should offer similar incentives for exports of high-value agri-produce like fruits and vegetables, spices, tea and coffee, or even cotton, as we do for rice and sugar?

Decreasing the edible oil imports

  • On the agri-imports front, the biggest item is edible oils — worth about $10 billion i.e. more than 15 MT.
  • India needs to decrease imports through augmenting productivity and increasing the recovery ratio of oil from oilseeds and in case of palm oil, from fresh fruit bunches.
  • The maximum potential of increasing production lies in oil palm.
  • This is the only plant that can give about four tonnes of oil on a per hectare basis.
  • India has about 2 million hectares that are suitable for oil palm cultivation — this can yield 8 mt of palm oil.
  • But it needs a long term vision and strategy.

Issue of subsidy to rice and sugar

  • Rice and sugar cultivation are subsidised through free power and highly subsidised fertilisers, especially urea.
  • It is leading to the virtual export of water because of their high water requirements.
  • One kg of rice requires 3,500-5,000 litres of water for irrigation, and one kg of sugar consumes about 2,000 litres of water.
  • This leads to increased pressure on scarce water and highly inefficient use of fertilisers.
  • It may be worth noting that almost 75 per cent of the nitrogen in urea is not absorbed by plants.
  • It either evaporates into the environment or leaches into groundwater making it unfit for drinking.

Consider the question “While India has been the net exporter of agricultural products ever since the economic reforms of 1991, it is far from realising its potential to become the leading agri-produce exporter. In light of this, suggest the strategy that India should follow to increase India’s net agri-exports.”


The government must focus on augmenting export and decrease import dependence in agricultural products which will further its goal of aatmanirbharta and doubling the farmers’ income.

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Agri reforms and way forward


From UPSC perspective, the following things are important :

Prelims level : Buffer stock limits

Mains level : Paper 3-PDS, food subsidy

At a time when the economy is going through the crisis, anything that could provide revenue to the government will be a real godsend. This article suggests two such areas to tap into. It also examines the effects of recently issued 3 ordinances related to agriculture.

Rs. 1,50,000 crore: Value of excessive grain stock

  • There is one area which the government can tap to raise more than Rs 1,00,000 crore.
  • As on June 1, FCI had unprecedented grain stocks of 97 million metric tonnes (MMT) in the Central Pool (see Figure).
  • Even on July 1, when the procurement of rabi ends, FCI is likely to have grain stocks of about 91-92 MMT.
  • This will be against a buffer stock norm of 41.12 MMT that are required for the Public Distribution system (PDS), and some strategic reserves.
  • So, compared to this norm, on July 1, FCI will have “excess stocks” of at least 50 MMT.
  • Even if one takes a conservative and lower ballpark figure of Rs 30,000/tonne  as the combined economic cost of rice and wheat, the value of this “excessive stock”, beyond the buffer norm, is Rs 1,50,000 crore.
  • This is unproductive capital locked-up in the Central pool of FCI.
  • Unlock this by liquidating “excess stocks” through open market operations.
  • It will not recover its full economic cost, as they are much higher than the prevailing market prices, but by not liquidating it.
  • But FCI will keep incurring unnecessary interest costs of about Rs 8,000-10,000 crore per annum.
  • This is simply not a good food policy.

How will amendment to ECA 1955 will help

  •  Amendment of the Essential Commodities Act, via the ordinance route, can instil confidence in the private sector for building large scale storage.
  • Now, stocking limits will not be imposed on the private sector, except under exceptional circumstances.
  • The government, however, delete the clause of “extraordinary price rise”.
  • Removing it will lead to private sector building large and modern storage facilities (silos).
  • It will propel investments in building more efficient food supply lines.
  • The only condition could be to register large storage facilities under the Warehousing Development and Regulatory Authority (WDRA) to know how much stock is there with the private sector, and where.

How will amendment to APMC Act will help

  • The ordinance on APMC creates multiple channels for farmers to sell their produce outside the APMC mandi system.
  • It also helps towards an unrestricted all India market for agri-produce.
  • Of course, it will be resisted by many states that are taking undue advantage of the APMC mandis’ virtual monopoly power.
  • But if the central ordinance is implemented in its true spirit, it will be a game-changer.

How will the ordinance on contract farming will help

  • It aims to encourage contract farming.
  • The basic idea behind this is that farmers’ sowing decisions should be made in view of the expected prices of those crops at the time of harvest.
  • It is forward looking and more aligned to the likely demand and supply