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Subject: Agriculture

  • Farmers produce organisations (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).

    Challenges

    • 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?”

    Conclusion

    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.

  • Enabling the Business of Agriculture (EBA) 2019,

    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?”

    Conclusion

    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.

  • [pib] Glycemic Index in Rice

    The Union Minister of Agriculture and Farmers Welfare has provided some useful information about some indigenous varieties of rice.

    Try this PYQ from CSP 2018:

    Q.With reference to the Genetically Modified mustard (GM mustard) developed in India, consider the following statements:

    1. GM mustard has the genes of a soil bacterium that give the plant the property of pest-resistance to a wide variety of pests.
    2. GM mustard has the genes that allow the plant cross-pollination and hybridization.
    3. GM mustard has been developed jointly by the IARI and Punjab Agricultural University.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

    Indigenous varieties of rice

    • Indigenous varieties of rice are being promoted through varieties of programmes.
    • 574 indigenous varieties of rice have been propagated and tested at more than 10,000 farmers’ fields.
    • Nutritional profiling of 300 selected rice varieties has been done for market linkage and better price to the farmers.
    • Farmers are also being trained on conservation, improvement and use of traditional/ indigenous varieties through participatory variety selection.
    • Further, for access to seeds of these indigenous varieties, community seed banks have been established.

    Key varieties

    • Lalat and Improved Lalat (GI value: 54) as Low GI
    • Swarna, Sambha Mahsuri and Shaktiman (GI value <60) as intermediate GI have been identified

    There is no certification for GI (Glycemic Index) in rice in India.

    What is Glycemic Index (GI)?

    • GI is a number from 0 to 100 assigned to food, with pure glucose arbitrarily given the value of 100, which represents the relative rise in the blood glucose level two hours after consuming that food.
    • The GI of a specific food depends primarily on the quantity and type of carbohydrate it contains.
    • But it is also affected by the amount of entrapment of the carbohydrate molecules within the food, the fat and protein content of the food, the number of organic acids (or their salts) in the food, and whether it is cooked and, if so, how it is cooked.
    • A food is considered to have a low GI if it is 55 or less; high GI if 70 or more, and mid-range GI if 56 to 69.

  • Minimum Selling Price for Sugar

    The Indian Sugar Mills’ Association (ISMA) has asked for an increase in the Minimum Selling Price of Sugar.

    Try this PYQ:

    Q.The Fair and Remunerative Price (FRP) of sugarcane is approved by the:

    (a) Cabinet Committee on Economic Affairs

    (b) Commission for Agricultural Costs and Prices

    (c) Directorate of Marketing and Inspection, Ministry of Agriculture

    (d) Agricultural Produce Market Committee

    Minimum Selling Price (MSP) for Sugar

    • The price of sugar is market-driven & depends on the demand & supply of sugar.
    • However, with a view to protecting the interests of farmers, the concept of MSP of sugar has been introduced since 2018.
    • MSP of sugar has been fixed taking into account the components of Fair & Remunerative Price (FRP) of sugarcane and minimum conversion cost of the most efficient mills.

    How is the pricing of Sugarcane done?

    • With the amendment of the Sugarcane (Control) Order, 1966, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the Fair and Remunerative Price (FRP)’ of sugarcane in 2009-10.
    • The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • This is done in consultation with the State Governments and after taking feedback from associations of the sugar industry.

  • [pib] ‘Red Rice’ exports from Assam to the US

    In a major boost to India’s rice exports potential, the first consignment of ‘red rice’ was flagged off today to the USA.

    Try this PYQ from CSP 2019

    Q.Among the following, which one is the largest exporter of rice in the world in the last five years?

    (a) China

    (b) India

    (c) Myanmar

    (d) Vietnam

    Red Rice

    • Iron rich ‘red rice’ is grown in the Brahmaputra valley of Assam, without the use of any chemical fertilizer.
    • The rice variety is referred to as ‘Bao-dhaan’, which is an integral part of Assamese food.
    • Much like brown rice and white rice, red rice also comes with many incredible health benefits.
    • Due to the presence of a component called anthocyanin, this rice is usually consumed either partially hulled or unhulled.
    • Red rice derives this eye-grabbing colour from this component and has much more nutrient value as compared to other varieties of rice.

  • 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?”

    Conclusion

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

  • [pib] PM-KISAN Scheme Completes Two Years

    The PM-Kisan scheme, launched with an aim to ensure a life of dignity and prosperity for farmers has completed two years of successful implementation.

    PM-KISAN

    • Under this programme, vulnerable landholding farmer families, having cultivable land upto 2 hectares, will be provided direct income support at the rate of Rs. 6,000 per year.
    • This income support will be transferred directly into the bank accounts of beneficiary farmers, in three equal instalments of Rs. 2,000 each.
    • This programme will be entirely funded by the Government of India.

    Note: Aadhaar was made optional for availing the first instalment (December 2018 – March 2019). But now it is mandatory.

    Exclusion categories

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

    1. All Institutional Landholders
    2. Farmer families in which one or more of its members belong to the following categories
    • Former and present holders of constitutional posts
    • Former and present Ministers/ MP/MLAs/Mayors /Chairpersons of District Panchayats
    • All serving or retired officers and employees of Central/ State Government Ministries (Excluding Multi Tasking Staff /Class IV/Group D employees)
    • All superannuated/retired pensioners whose monthly pension is ₹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.

    Do you know?

    West Bengal is yet to implement the PM-KISAN scheme while the farmers have completed their registrations!

  • Animal Husbandry Infrastructure Development Fund (AHIDF)

    Importance of animal husbandary and dairy sector

    • As an allied industry of agriculture, the animal husbandry and dairy sector collectively employs more than 100 million people.
    • Since the bulk of establishments in this sector is concentrated in rural India, the socio-economic relevance of this sector cannot be overstated.
    • the Central government unveiled a string of measures to cushion the economy, as a part of which the Animal Husbandry Infrastructure Development Fund (AHIDF) was announced.

    More about AHIDF

    • The AHIDF has been set up with an outlay of ₹15,000 crore.
    • As per the provisions of AHIDF, a project will be eligible for a loan amount that covers up to 90% of the estimated cost –
    • There will be interest subvention of 3% for all eligible entities.
    • Applicants can submit the proposal with a complete Detailed Project Report through the Udyami Mitra Portal.
    • The fund includes a diverse set of stakeholders such as FPOs, private dairy players, individual entrepreneurs, and non-profits within its ambit.

    Strengthening dairy value chain

    • There is a pressing need to enhance chilling infrastructure at collection centres by setting up bulk milk coolers.
    • If the infrastructure needs for milk processing and distribution are included, then the overall potential investment opportunity is to the tune of ₹1,40,000 crore across the dairy value chain.
    • There is also considerable potential to increase the productivity of cattle, especially by enhancing the quality of animal feed.
    • With this in mind, the AHIDF has been designed to support the establishment of animal feed plants of varying capacities.
    • The infrastructure gap of 10-18 MMT in the production and supply of affordable compound cattle feed translates into an investment potential of around ₹5,000 crore.

    Boosting the poultry industry

    • There are not only economic but nutritional benefits to boosting the poultry segment’s output, efficiency and quality.
    • India is the fourth largest chicken meat producer and the second largest egg producer in the world.
    • India is well-positioned to help mitigate rampant malnutrition given that chicken meat provides the cheapest source of protein per unit.
    • With eggs being introduced as part of the mid-day meal within several anganwadis in the country, an upgradation in poultry infrastructure would be closely intertwined with social justice outcomes too.
    • Macro benefits regarding climate change and employment are linked to this sector.
    • Enhanced infrastructure can make processing units more energy-efficient and help mitigate their carbon footprint.

    Consider the question ” As an allied industry of agriculture, the animal husbandry and dairy sector are important for rural area and the socio-economic relevance of this sector cannot be overstated. In light of this, examine the role Animal Husbandry Infrastructure Development Fund (AHIDF) could play in transforming rural economy.”

    Conclusion

    The AHIDF also has the potential to create over 30 lakh jobs, even as it overhauls domestic infrastructure towards giving greater prominence to India’s dairy and livestock products in the global value chain.

     

  • Farm laws must reflect regional and crop diversities

    The article argues for consideration of the regional variation in the conditions of farmers and their concerns in the context of recently introduced farm laws.

    Argument against diversification

    • In Punjab, Haryana and western UP, minimum support price (MSP)-based agriculture has a logic.
    • Not all regions must diversify.
    • The region has great alluvial soil, good irrigation and almost a century-long tradition of the application of science to agriculture.
    • In south Punjab, with less irrigation, and parts of Haryana not covered by the Indira Gandhi Canal, some diversification to pulses, cotton etc. could work but the solid specialisation in this region remains.

    Issue of middlemen

    • Arhtiyas (middlemen) are important in Indian agricultural markets.
    • They are a part of the supply chain in north-west India.
    • Here they are not like the middlemen elsewhere.
    • They function simply as agents of the procurement agencies.
    • This was done by the past government to reduce overhead costs of procurement.

    Steps need to be taken

    • The e-markets, forwards and farmer-managed companies are not the dominant mode of rural organisations.
    • Agriculture is the one good sector in otherwise dismal year.
    • So, we need to strengthen it, not feed off on its glory, even outside north-west India.
    • We have the largest spread of agricultural markets in the world according to spatial maps.
    • But they are not APMCs.
    • With weak markets (outside of grains) and without first-stage processing and other infrastructure, the farmer knows he is at the mercy of the trader and comes out on the streets when that is not understood.

    Evolution of MSP

    • The MSP played a crucial role in the days of compulsory procurement and zonal restrictions.
    • Each crop had its own report then.
    • Later separate reports were replaced by two reports, one for kharif and another one for rabi, apart from one for sugarcane (an annual crop).
    • The 1982 rabi report stated that relative prices and, in that context, MSP had the role of an intervention mechanism when markets failed, outside the compulsory procurement area.
    • Later, the concept of transport costs and managerial costs became important.

    Way forward

    • The Essential Commodities Act should be ditched.
    • Good laws are good because progress starts with them, but not all laws are good everywhere.
    • A modified version of the laws with a roadmap can be on the agenda — not everywhere, but most places outside the lands of the five rivers.

    Conclusion

    The amended laws should be considered in the context of regional variation in the country and necessary changes should be made to address the concerns of the farmers.

  • Farm lessons from China, Israel

    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.”

    Conclusion

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