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Subject: Agriculture

  • Changes in Crop Insurance Scheme

    The Centre has decided to restrict its premium subsidy in its flagship crop insurance schemes to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited), and to make enrolment of farmers in the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) voluntary from the 2020 Kharif season.

     Other changes in crop insurance schemes

    • The government has given flexibility to states/UTs to implement PMFBY and RWBCIS, and given them the option to select any number of additional risk covers/features like prevented sowing, localised calamity, mid-season adversity, and post-harvest losses.
    • Earlier, these risk covers were mandatory.

    Why such a move?

    By capping the subsidy for premium rates up to 30%, the Centre wants to dis-incentivize certain crops in such areas where growing these crops involve high risks in terms of crop insurance premiums.

    What were the schemes?

    • At present, under PMFBY and RWBCIS, farmers pay a premium of 2% of the sum insured for all foodgrains and oilseeds crops of Kharif; 1.5% for all foodgrains and oilseeds crops of Rabi; and 5% for all horticultural crops.
    • The difference between actual premium rate and the rate of insurance premium payable by farmers, which is called the Rate of Normal Premium Subsidy, is shared equally between the Centre and the states.
    • However, states and UTs are free to extend additional subsidy over and above the normal subsidy from their budgets.
    • Until now, there was no upper limit for the central subsidy.
    • The Cabinet decided to cap the Centre’s premium subsidy under these schemes for premium rates up to 30% for unirrigated areas/crops and 25% for irrigated areas/crops.

    How many farmers are covered under these two schemes?

    • During 2018-19, about 5.64 crore farmers are enrolled with PMFBY for an insured sum of Rs 2,35,277 crore, and 30% of the gross cropped is insured.
    • When the government approved PMFBY four years ago, it was described as a path-breaking scheme for farmers’ welfare” under which there was no upper limit on government subsidy.
    • Even if balance premium was 90%, it was to be borne by the Government
    • While PMFBY is based on yield, RWBCIS is based on proxies and farmers are provided insurance protection against adverse weather conditions such as excess rainfall, wind and temperature.
    • The number of insured farmers under RWBCIS is relatively low.

    Impact of the move

    This change will have two main implications.

    • First, it may bring down the rates of overall premium as the state governments now will not be required to invite bids factoring these risks.
    • Second, it will make these schemes less attractive for farmers.
    • However, states/UTs can offer specific single peril risk/insurance covers like hailstorm etc under PMFBY.

    Burden of premium

    • One interpretation of this decision is that the burden of premium subsidy will go up for the states.
    • Example: In the old regime, if a farmer’s Kharif crop was insured for Rs 1,00,000 and the rate of actuarial premium was 40%, then the premium paid by the farmer was 2% (Rs 2,000), and the remaining premium was shared by the Centre and the state equally (19% or Rs 19,000).
    • In the new regime, for the same sum insured (Rs 1,00,000) and the same rate of premium (40%), the Centre will give subsidy for premium rates up to 30%.
    • This means that from the Kharif 2020 season , the Centre will have to pay premium at the rate of 14% (out of 30%, the farmer’s share is 2%, and the Centre’s and state’s 14% each).
    • The state has to bear the entire burden of the premium subsidy in cases where the rate of premium goes beyond the threshold of 30%.

    No insurance of certain crops

    • Another interpretation is that the Centre may stop supporting insurance of certain crops in certain areas where the rate of premium is more than 30%.
    • The Department of Agriculture, Cooperation and Farmers Welfare in consultation with other stakeholders/agencies will have to prepare State specific, alternative risk mitigation programme for crops/areas having high rate of premium.
    • While the average premium rate under PMFBY and RWBCIS at the national level was 12.32% for 2018-19, for some crops in certain districts, the rate of premium has been higher than 30% in recent years.
    • For instance, the rate of premium for Kharif groundnut has reached 49% in Rajkot of Gujarat, and the rate for Rabi paddy crop Ramnathapuram (Tamil Nadu) has reached 42%.

    Impact on states

    • The states are already defaulting on their share, and the Centre’s new cap will put an additional financial burden on them.
    • Madhya Pradesh has not paid its share of premium even for Kharif 2018, which comes to Rs 1,500 crore. As a result, farmers have not got their claims.
    • In fact, most states have delayed the payment of their share of premium.
    • Sources said that in some states, the expenditure on premium of PMFBY is more than 50% of their budget for agriculture.

    Immediate implications

    • That move will lead to a rise in the rates of premium, as the area covered under insurance and the number of enrolled farmers is expected to come down significantly.
    • As of now the schemes are compulsory for all loanee farmers and optional for other farmers.
    • Non-loanee farmers under the crop insurance schemes are much fewer than loanee farmers.
    • If the latter opt out of the schemes, the number of insured farmers will drastically come down.
    • In such a scenario the rate of premium of certain crops in some areas may go beyond 30%.

    Back2Basics

    Pradhan Mantri Fasal Bima Yojana – Min Premium, Max Insurance

  • Buddah Nullah

    The Punjab govt. has approved ₹650 crore in the first phase for rejuvenation of the highly polluting Buddah Nullah — a seasonal tributary of Sutlej in Ludhiana.

    Buddah Nullah

    • Buddah Nullah or Budha Nala is a seasonal water stream that runs through the Malwa region of Punjab.
    • It passes through highly populated Ludhiana and drains into Sutlej River, a tributary of the Indus river.
    • It has also become a major source of pollution in the region as well the main Sutlej river, as it gets polluted after entering the highly populated and industrialized Ludhiana city, turning it into an open drain.
    • Also, since a large area in south-western Punjab solely depend on the canal water for irrigation, and water from Buddha Nullah enters various canals after Harike waterworks.

    Why such move?

    • The pollution in the Buddah Nullah is a major threat to public health and environment and the main sources of pollution in the nullah are direct flow of pollutants by industries and dairies.
    • Also, treated effluents from existing STPs, based on UASB technology, does not meet the required quality and overflow from sewer lines add to the problem.
    • The NGT has already directed the government to take proactive steps to immediately address the problem.

  • [pib] Scheme for formation and promotion of Farmer Producer Organizations (FPOs)

    The Cabinet Committee has given its approval for 10,000 FPOs to be formed in five years period from 2019-20 to 2023-24 to ensure economies of scale for farmers.

    What are Farmer Producer Organizations?

    • A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen.
    • A PO can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.
    • In some forms like producer companies, institutions of primary producers can also become member of PO.
    • FPO is one type of PO where the members are farmers. Small Farmers’ Agribusiness Consortium (SFAC) is providing support forthe promotion of FPOs.

    About the Scheme

    • It would be a new Central Sector Scheme titled “Formation and Promotion of Farmer Produce Organizations (FPOs)” to form and promote 10,000 new FPOs.
    • Initially there will be three implementing Agencies to form and promote FPOs, namely Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).
    • States may also, if so desire, nominate their Implementing Agency in consultation with DAC&FW.
    • DAC&FW will allocate Cluster/States to Implementing Agencies which in turn will form the Cluster-Based Business Organization in the States.

    Modes for promotion

    • FPOs will be promoted under “One District One Product” cluster to promote specialization and better processing, marketing, branding & export by FPOs.
    • There will be a provision of Equity Grant for strengthening equity base of FPOs.
    • There will be a Credit Guarantee Fund of up to Rs. 1,000.00 crore in NABARD.

    Benefits

    • Small and marginal farmers do not have the economic strength to apply production technology, services and marketing including value addition.
    • Through the formation of FPOs, farmers will have better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realization of income.

  • USTR takes India off Developing Country List

    Context

    The United States’s annual exercise of designating developing, and least developed countries has assumed importance for India this year: it has been dropped from the list of developing countries.

     ‘Developing’ or ‘developed’ country designation by the US

    • Last week, the United States officially designated developing and least-developed countries for the purposes of implementing the countervailing measures.
      • The division is provided by the Agreement on Subsidies and Countervailing Measures (ASCM) of the World Trade Organisation (WTO).
    • Why the designation matters?
      • The higher level of subsidies allowed: According to the ASCM, developing countries are allowed to grant higher levels of subsidies as compared to the developed countries before countervailing duties (CVD) can be imposed.
      • What are the limits? The maximum limit of the subsidy is-
      • For developed country: Limit is maximum 1% of the import value of the investigated product.
      • For developing country: Limit is a maximum 2% of the import value of the investigated product.
      • If the limit is breached the importing country can impose a countervailing duty on the product.

    India as a target by the US

    • Provision of self-designation: Under the WTO rules, any country can “self-designate” itself as a developing country.
    • No criteria specified by the WTO: The WTO does not lay down any specific criteria for making a distinction between a developed and a developing country member, unlike in the World Bank where per capita incomes are used to classify countries.
    • Arbitrary criteria used to designate India: Despite this clearly laid down criterion in the WTO rules, the United States Trade Representative (USTR) employed an arbitrary methodology that took into consideration-
      • “Economic, trade, and other factors, including the level of economic development of a country (based on a review of the country’s per capita GNI) and a country’s share of world trade” to exclude India from list of designated developing countries.
    • Second such instance after denying GSP: Excluding India from the lists of developing countries for the purposes of using countervailing measures or denying benefits of GSP are but two of the more recent initiatives that the U.S. has taken to challenge India’s status as a developing country in the WTO.

    What would the impact on India?

    • Loss of Special and Differential Treatment (S&DT): India would lose the ability to use the special and differential treatment (S&DT) to which every developing country member of the WTO has a right.
      • What is S&DT? In short, S&DT lessens the burden of adjustment that developing countries have to make while acceding to the various agreements under the WTO.
      • How S&DT benefited India?S&DT has been particularly beneficial for India in two critical areas: one, implementation of the disciplines on agricultural subsidies and, two, opening up the markets for both agricultural and non-agricultural products.
    • Limits on subsidies: The WTO Agreement on Agriculture(AoA) provides an elaborate discipline on subsidies.
      • Subsidies are classified into three categories, but two of these are virtually outside the discipline since the WTO does not limit spending on these categories of subsidies.
      • Limits on price support measures: The discipline exists in case of price support measures (minimum support price) and input subsidies which is the more common form of subsidies for most developing countries, including in India.
      • Limits on spending on prices support measures: For developing countries, spending on price support measures and input subsidies taken together cannot exceed 10% of the total value of agricultural production.
      • In contrast, developed countries are allowed to spend only 5% of their value of agricultural production.

    Shifting to DBT

    • Why shifting to DBT necessary? India is a major user of price support measures and input subsidies.
      • And given the constraints imposed by the AoA, the government has spoken about its intention to move into the system of direct benefit transfer (DBT) for supporting farmers.
      • No limit on spending through DBT: A shift to DBT is attractive for India since there are no limits on spending, unlike in case of price support measures and input subsidies.
      • Rework subsidies’ programme: Faced with on-going farm distress, the government has had to rework its subsidies’ programme in order to extend greater benefits, especially to small and marginal farmers.
    • Challenges in the implementation of DBT
      • Implementation of DBT in agriculture has several insurmountable problems.
      • Difficulty in identifying the beneficiary: Targeting potential beneficiaries of DBT seems difficult at this juncture for a number of reasons, including inadequate records of ownership of agricultural land on the one hand, and the presence of agricultural labour and tenants on the other.
      • This implies that in the foreseeable future, India would continue to depend on price support measures and input subsidies.
      • How it matters: Given this scenario, the government needs the policy space to provide adequate levels of subsidies to a crisis-ridden agricultural sector.
      • And therefore it is imperative that continues to enjoy the benefits as a developing country member of the WTO.

    Issue of tariffs

    • The issue of market access, or the use of import tariffs, is one of the important trade policy instruments.
    • Provision of no reciprocal tariff cuts: It has some key provisions on S&DT, which the developing countries can benefit from. The most important among these is the undertaking from the developed countries that they would not demand reciprocal tariff cuts.
      • Over the past two years, the government of India has been extensively using import tariffs for protecting Indian businesses from import competition.
      • With the increasing use of tariffs, almost across the board, India’s average tariffs have increased from about 13% in 2017-18 to above 17% at present.
    • Why it matters? Developed country members of the WTO have generally maintained very low levels of tariffs, and, therefore, India’s interests of maintaining a reasonable level of tariff protection would be well served through its continued access to S&DT, by remaining as a developing country member of the WTO.

    Conclusion

    With the changing stance of the US towards India, the government must ensure its international trade and agriculture at home is not adversely impacted.

     

  • SUTRA PIC India Programme

     

    The government has unveiled SUTRA PIC programme to research on ‘indigenous’ cows.

    SUTRA PIC

    • SUTRA PIC stands for Scientific Utilization Through Research Augmentation-Prime Products from Indigenous Cows.
    • To be funded by multiple scientific ministries, the initiative, SUTRA PIC, is led by the Department of Science and Technology (DST).
    • It has the Department of Biotechnology, the CSIR, the Ministry for AYUSH (Ayurveda, Unani, Siddha, Homoeopathy) among others and the Indian Council of Medical Research as partners.
    • It has five themes:
    1. Uniqueness of Indigenous Cows,
    2. Prime-products from Indigenous Cows for Medicine and Health,
    3. Prime-products from Indigenous Cows for Agricultural Applications,
    4. Prime-products from Indigenous Cows for Food and Nutrition,
    5. Prime-products from indigenous cows-based utility items

    Aims and objectives

    The proposals under this theme aim to:

    • perform scientific research on the complete characterization of milk and milk products derived from Indian indigenous cows;
    • scientific research on nutritional and therapeutic properties of curd and ghee prepared from indigenous breeds of cows by traditional methods;
    • development of standards for traditionally processed dairy products of Indian-origin cow

    Other facts

    • In 2017, SEED constituted a National Steering Committee (NSC) for ‘Scientific Validation and Research on Panchgavya (SVAROP)’.
    • Panchgavya is an Ayurvedic panacea and is a mixture of five (pancha) products of the cow (gavya) — milk, curd, ghee, dung and urine.
    • Its proponents believe it can cure, or treat a wide range of ailments.

  • [pib] Soil Health Card Scheme

     

    The Soil Health Card Scheme has completed 5 years since its launch.

    Soil Health Card Scheme

    • Soil Health Card (SHC) is a Government of India’s scheme promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture and Farmers’ Welfare.
    • It is being implemented through the Department of Agriculture of all the State and Union Territory Governments.
    • A SHC is meant to give each farmer soil nutrient status of his/her holding and advice him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run.
    • The scheme was launched by PM on 19.02.2015 at Suratgarh, Rajasthan.

    Details on the SHC

    • SHC is a printed report that a farmer will be handed over for each of his holdings.
    • It contains the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro – nutrients) ; and pH, EC, OC (Physical parameters).
    • Based on this, the SHC also indicate fertilizer recommendations and soil amendment required for the farm.
    • It provides two sets of fertilizer recommendations for six crops including recommendations of organic manures. Farmers can also get recommendations for additional crops on demand.

    Other details

    • The State Government will collect samples through the staff of their Department of Agriculture or through the staff of an outsourced agency.
    • The State Government may also involve the students of local Agriculture / Science Colleges.
    • It will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period.
    • The SHC given in the next cycle of 3 years will be able to record the changes in the soil health for that subsequent period.
    • Soil samples will be drawn in a grid of 2.5 ha in irrigated area and 10 ha in rain- fed area with the help of GPS tools and revenue maps.

     Why needed such scheme?

    • Soil testing is developed to promote soil test based on nutrient management.
    • Soil testing reduces cultivation cost by application of right quantity of fertilizer.
    • It ensures additional income to farmers by increase in yields and it also promotes sustainable farming.

  • National Groundwater Management Improvement Programme

    The Government of India and the World Bank have signed a $450 million loan agreement to support the national programme to arrest the country’s depleting groundwater levels and strengthen groundwater institutions.

    About the Programme

    • The World Bank-supported programme will be implemented in the states of Gujarat, Maharashtra, Haryana, Karnataka, Rajasthan, Madhya Pradesh, and Uttar Pradesh and cover 78 districts.
    • These states span both the hard rock aquifers of peninsular India and the alluvial aquifers of the Indo-Gangetic plains.
    • They were selected based on several criteria, including degree of groundwater exploitation and degradation, established legal and regulatory instruments, institutional readiness, and experience in implementing initiatives related to groundwater management.
    • This programme will contribute to rural livelihoods and in the context of climatic shifts, build resilience of the rural economy.

    Objectives

    The programme will, among others, enhance the recharge of aquifers and introduce water conservation practices; promote activities related to water harvesting, water management, and crop alignment; create an institutional structure for sustainable groundwater management; and equip communities and stakeholders to sustainably manage groundwater.

    Particulars of the programme

    • The programme will introduce a bottom-up planning process for community-driven development of water budgets and Water Security Plans (WSPs).
    • Water budgets will assess surface and groundwater conditions (both quantity and quality) and identify current and future needs.
    • The WSP, on the other hand, will focus on improving groundwater quantity and incentivize selected states to implement the actions proposed.
    • Such community-led management measures will make users aware of consumption patterns and pave the way for economic measures that reduce groundwater consumption.
    • Crop management and diversification will be the other focus areas.

  • A crisis deferred

    Context

    Union budget missed the opportunity to undertake reforms in the grain management system and food security act.

    The massive reduction in food subsidy and its implications

    • Subsidy slashed by 75,552 crores: The revised estimates (RE) for food subsidy for 2019-20 have been slashed by a whopping Rs 75,552 crore -from the budgeted estimate (BE) of Rs 1,84,220 crore to Rs 1,08,668 crore (RE).
      • For the next fiscal year, the budget estimate has been kept at Rs 1,15,570 crore.
    • No major reforms in grain management system: One wonders whether any major reforms have been undertaken in the grain management system or in the National Food Security Act such that this massive reduction in budget estimates is feasible. But no such reforms are undertaken.
      • The Food Corporation of India (FCI) has been asked to borrow more from myriad sources, but most importantly from the National Small Savings Fund (NSSF).
      • An item that should have been in the budget, is now getting reflected as outstanding dues of FCI.
    • Implications of the move–postponing of the crisis:  In order to gauge how much is the effective food subsidy in the country, the budget numbers are becoming totally irrelevant.
      • One needs to add the actual subsidy numbers reflected in the budget to the outstanding dues of FCI.
      • Effective food subsidy: If one adds the due, the effective food subsidy turns out to be Rs 3,57,688 crore.
      • By not provisioning for it fully in the budget, and not undertaking any reforms in the foodgrain management system or the NFSA, the government is only postponing the crisis.

    Need to bring down the coverage: The Economic Survey

    • Bringing down the coverage at 20 %: While the Economic Survey clearly states that the coverage under NFSA needs to be revisited, and brought down to say 20 per cent of the population.
      • The budget did not bite this bullet.
      • Cost of procurement to go up: The expected cost of rice to FCI in 2020-21 is going to be about Rs 37/kg, and for wheat it will be Rs 27/kg.
      • The issue price, that covers 67 per cent of the population, is just Rs 3/kg and Rs 2/kg respectively.

    Excessive stock with the FCI

    • Actual stock in excess of buffer stocks: Compared to a buffer stock norm of 4 million tonnes, actual stocks with FCI (including unmilled paddy) were 3.5 times higher.
      • It speaks of a colossal waste of scarce resources, especially when tax revenues have been sluggish.
    • Stocks likely to increase further: Given that Skymet has predicted that the coming wheat crop is going to be one of the best in many years-the stocks is likely to touch 113 million tonnes.
      • With procurement prices being above global prices, the chances of wheat exports are bleak unless there is a subsidy for exports.
      • And that will be challenged in the WTO.
      • The FCI may run out of stock capacity: So, one should expect a piling up of grains stocks with a record procurement of wheat.
      • FCI may run out of storage capacity. Stock levels may touch 85-90 million tonnes, or even more, by July 1, 2020.

    Fundamental questions

    • First: Is the government ignorant of the impending crisis of plenty?
    • Second: Does it realise that the policy of procurement prices (50 per cent above cost A2+FL), without looking at the demand side, is likely to create more troubles for the government?
    • Third: Does the government have any plan to reform the public distribution system under NFSA?

    Way forward

    • Reforms in foodgrain management: Reforms in foodgrain management have to start with reforming the PDS system.
      • With moving gradually moving away from grains to cash transfers.
      • Think over implementing the Shanta Kumar Committee reports recommendations.
    • Stop open-ended procurement in Punjab-Haryana belt: The policy of procurement prices, with open-ended procurement in the Punjab-Haryana belt, is doing more damage by depleting the water table and not letting crop diversification take place.
      • This is very unfortunate as the “dead loss” in grain management runs to more than Rs 1,00,000 crore.
    • Rationalise the fertiliser subsidy: The other part related to this is the fertiliser subsidy, which is largely used in wheat and rice.
      • The budget estimates for 2020-21 show a reduction in the subsidy, while dues of the fertiliser industry keep on piling.
      • The fertiliser industry estimates that by April 2020, the dues will be roughly Rs 60,000 crore.
      • Demoralised fertiliser industry: While FCI has been asked to borrow, the fertiliser industry does not have that type of window.
      • It is feeling totally demoralised.
      • No private player wants to come and invest in this sector.

    Conclusion

    Instead of postponing the crisis by compelling the FCI to borrow, the government need to reform the foodgrain management system, rationalise the fertiliser subsidy and limit the coverage under the NFSA.

  • [pib] Nagpur Orange

     

    The first consignment of Nagpur oranges was flagged off to Dubai from Vashi, Navi Mumbai.

    Nagpur Orange

    • Nagpur orange is rustic and pockmarked exterior which is sweet and has juicy pulp.
    • It gives the city of Nagpur its pseudonym Orange City.
    • It oranges blossom during the Monsoon season and are ready to be harvested from the month of December.
    • The Geographical Indication was accorded to the Nagpur Orange by the registrar of GIs in India and is effective as of April 2014.

    The best breed

    • Nagpur mandarin in one of the best mandarins in the world. Production of this fruit crop in the central and western part of India is increasing every year.
    • Mrig crop (monsoon blossom), which matures in February – March, has great potential for export since arrivals of mandarin fruit in international market are less during this period.
    • In the whole region only one variety of Nagpur Mandarin is grown.

  • [pib] ‘Apiary on Wheels’ Initiative


    ‘Apiary on Wheels’ was recently flagged off today by the Union Minister of MSME.

    ‘Apiary on Wheels’

    • It is a unique concept designed by KVIC for the easy upkeep and migration of Bee Boxes having live Bee colonies.
    • It is a platform which can carry 20 Bee Boxes from one place to another without any difficulty.
    • It is like an attachment which can be easily connected with a Tractor or a Trolley and may be pulled to any suitable destination.
    • Specially, in summers, the beekeepers usually adopted crude methods to feed the bees and many bees used to die in the process.
    • This concept of migration, cooling with the help of solar panels and sugar drips with zero risk to the lives of bees, will prevent any damages to the bee boxes or bee colonies and help produce quality honey.

    How it works?

    • Two large wheels on either side of the Apiary and 4 separate compartments with independent doors, having 5 bee boxes each help the platform to remain intact without disturbing the live bee colonies.
    • It is also connected with a solar panel system which automatically triggers a fan inside the compartment as soon as the temperature reaches 35 degree centigrade or above.