Dr. Syama Prasad Mookerjee Research Foundation

EcoAgri Policy Diary

Doubling farmer’s income and agricultural exports will have long terms of impact on the Indian economy. In order to achieve this agricultural industry needs to be flourished by all mean. In this new section of EcoAgri Policy Diary pain points of the Indian agricultural industry have been analyzed and proposed possible policy intervention on it.

Pain points and solutions of Indian Agriculture industry:

  1. Small and fragmented land-holdings: According to the Agriculture Census, average landholding in India is 1.15 hectares per farmer. In India, 85% of farmers are in marginal and small farm categories of less than 2 hectares. Agriculture is not viable in small and fragmented landholdings. Further average landholding in India is decreasing.  The problem of small and fragmented holdings is more serious because it directly impacts on productivity and profitability of agriculture. Irrigation becomes difficult in such small and fragmented fields. Further, a lot of fertile agricultural land is wasted in providing boundaries. Under such circumstances, the farmer cannot concentrate on improvement. However small and fragmented land holding problems can be addressed by the consolidation of holdings (reallocation of holdings which are fragmented), cooperative farming (farmers can pool their resources and share the profit), a product-based cluster where farmers can share land and resources and community farming.
  2. Good agricultural practices:The majority of Indian farmers are not implementing good agricultural practices that seriously impact on quality and quantity of productions. Good agricultural practices include (Use of good seeds, Manures, Fertilizers and Biocides, soil testing, judicious use of pesticides, pre and post-harvest, use of mechanizations, etc.). This problem can be addressed by creating awareness in farmers, promoting good agricultural practices, incentives good agricultural practices and connect the field to the laboratory.
  3. Irrigations: Agricultural productivity and production largely depend on water, irrigation is basic input for agriculture. Indian agriculture is very sensitive to the climate.  Only one-third of the cropped area is under irrigation. This problem can be addressed by promoting a watershed development programme, incentives drip irrigation and bringing small farmers in an irrigation bracket.
  4. Productivity Profitability Statement of Agricultural Exports Economy of India: Productivity levels in Indian agriculture is very low as compared to the productivity levels of other countries. Productivity levels of India in major agricultural export crops are very disappointing. India is one the largest producers of most of the crops (both food grains and no- food grain) but ranks are very low in terms of productivity. The following are the productivity profitability analysis of important agricultural export commodities of India. However, possible remedies to increase productivity are land reforms, awareness, land-water resources, micro-credit and marketing facilities, better irrigation, a supply of quality seeds, intercrop farming, scientific cultivation, good agriculture practices, investment flow, strengthening basic infrastructure and involvement of professional experts in the supply chain.  According to productivity and profitability statements, there is huge potential for India to increase the production of the Indian Agriculture sector.
  5. Access to Small farmers in the international market: The involvementof small and marginal farmers in the export basket is a highly challenging task because they have limited resources. However, without the involvement of 85 million small and marginal farmers in the export business, India’s agriculture export policy will not be successful. Agriculture export significantly influences farmers’ incomes because if there is export it does have an impact on the price of the same product in the domestic market too. A single marginal farmer may not able to export, but with combined resources of a number of farmers, exports can happen.  Therefore, it is very important to have an active export cluster at the district level in order to tap the export potential of small and marginal farmers; through this, they can have the benefits of export business.
  6. Transport and Marketing issues of Agri Products in India:Cost competitiveness is a very essential factor in the international market. In Indian agriculture internal as well as external transportation cost is high which directly impact on agriculture export. It has also impact on the profit margin of the farmers and affordability to consumers. As compared to the other major agricultural exporting countries, India’s transportation and marketing costs are comparatively high. This problem can be addressed by financially supporting farmers in transportation and marketing agricultural goods. The separate scheme may be formed which may include domestic and international transport and marketing issues of agricultural products.
  7. Ease of doing agribusiness index: In India, a new era of agribusiness has just began where agriculture is being seen through the spectacles of business. Agri-business has the potential to change the game and it plays an important role in the eradication of poverty, balancing economic inequality and providing for better rural livelihoods. However some more parameters are required calculating the ease of doing business such as training to farmers and young entrepreneurs, awareness creation of micro-financial management, etc. Entrepreneur skills development among farmers fosters agribusinesses in the respective States. Agribusinesses are micro-businesses which include vegetables and fruits shop, poultry, goat rearing, small processing plants, etc.
  8. Price competitiveness: In international market price competitiveness is the issue for Indian agriculture products. Efforts have made to increase price competitiveness such as increasing productivity, branding, less cost of production, etc.
  9. Lack of market information: Market intelligence in agriculture plays a very important role because it gives adequate market information on a basis in which farmers,  processors, and exports can take the right decisions. Hence it is available that there must be market intelligence cell at every district level.
  10. Lack of processing units: There is a big market for good quality agricultural processed foods however there is a lack of processing units. More processing units can be developed by promoting entrepreneurship in the agricultural sector.
  11. Flow of investment: Considering agro-climatic conditions India has tremendous potential for value-added agricultural products exports.  However, need more investment in this sector. Separate provisions are needed for agricultural value-added products in new foreign trade policy.

Agricultural and aligned industry is the real backbone of Indian economy. Higher economic growth can’t be achieved by not enhancing the contribution of the agricultural industry. Therefore strategic inputs are required to strengthen the agricultural industry. Doing well by the agricultural industry is in the interest of nation.

(The author is a Agricultural and Natural Resources Economist)