India’s Agriculture: From Abundance to Scarcity

by Indra

June 7, 2007

As one with the experiences of the years of food scarcity in India as a kid in 50s and a young man in 60s, I was happy and proud when India became self sufficient about food grains. I was excited, when India started exporting grains, wheat and rice in particular. However, there are inklings of India slipping behind in food security trap. India is fast getting into food importing from food exporting.

The contribution of agriculture to the GDP has declined from 38 per cent in 1975 to around 19 per cent now. But 68 per cent of India’s workforce still depends on agriculture as a means of livelihood. Can the productivity of farming be increased to bring in prosperity? Can a major percentage of the rural population be diverted to some more lucrative non-farming employment? Perhaps the answer still seems to be in negative.

The annual per capita food grain production had declined from a high 207 kg in 1995 to 186 kg last year (a level reached in 1975). And that is the critical concern, though people are shifting to high-end food consumption. But the average annual rate of growth of agriculture in the last five years has been 1.87 per cent, while it was 5-per cent in the mid-1980s.

Even in Punjab, the yield from one hectare has dropped from 4,700 to 4,000 kg a hectare in two decades. And as a result, the country’s wheat production has stagnated at around 70 million tonne. The yield of rice is around 1,900 kg per hectare. Yields of pulses have reached a plateau at around 600 kg per hectare and the total production has not exceeded 15 million tonne, while the demand is around 18 million tones. India imports pulses today in large quantity. In oilseeds, India has doubled its production in the past two decades to 26 million tonnes, but still oils fall short by 3 million tones because of increased consumption.

The incomes of the farmers across the country rose by a measly 0.28 per cent as compared to 4 per cent in other sectors. A recent national sample survey showed that 40 per cent of the farmers want to opt out of their current profession. And over 20,000 farmers commit suicide out of despair over failing crops and high debt every year. Farming is no more a superior engagement, as we knew from our traditional sayings.

Why has the farming lost its ground and luster?

Overall land under food grain cultivation has remained static at 120 million hectares, rather it is dropping further steadily. In the past decade or so, there has been a major diversion of land meant for wheat and rice cultivation into commercial crops such as oilseeds and cotton. Further, as per one estimate, 7.5 lakh hectare of agricultural land are being diverted to other uses for urbanization and industrialization such as real estates, roads, SEZs, industrial parks every year. A revitalization process for wasteland available in plenty in the country is necessary, but it has not yet started in a big way.

Fragmented holdings: As estimated, 78% of the farming population owns only 32% of the land. Even 15 years ago, over 60 per cent of the rural households owned less than one hectare. The average size of holdings declined from 2.63 hectare in 1960-61 to 1.06 in 2002-03. As per one estimate, the average landholding is only 0.37 hectare today. Farming is increasingly becoming an unviable activity. Is it not a high time for a change in policy in favour of consolidating the land holdings for genuine farmers? Why can’t the land ceiling acts of the states be modified or dropped?

Public investment in agriculture as a percentage of GDP has dropped from 3 per cent to around 1.7 per cent. Irrigation didn’t get the desired priority. In India, 47 million hectares (Mha) of irrigated land produces 56% of food grains, while the rain-dependent 95 Mha land yields just 44%. Another estimate indicates that only 40% of the sown area of 142.8 million hectares having assured irrigation. Even 60 years after Independence, 60 per cent of the farmlands are still dependent on good monsoons for reasonable crop productions.

Between 1981 and 1991 the annual growth of land being brought under irrigation was 2.27 per cent. But between 1991 and 2004, that figure dropped to 1.15 per cent. In real terms, between 1985 and 1995, 14-lakh hectare were brought under irrigation. But between 1995 and 2005 that figure fell to 6.85-lakh hectare.

Strangely for the 10th Plan, while the target of spending Rs 90,000 crore towards investment in irrigation was met, the potential added was only half of the stated figure of 16 million hectare.

The performance of the government has been dismal. According to the ministry of water resources, 388 irrigation projects spread all over the country still remain incomplete: 340 were started before 1992, and 40 before 1974. Till 2003, Rs 78,449.63 crore had already been spent on them, and an additional Rs 89,872.72 crore was additionally needed to complete. Had these projects been completed on time, over 20 Mha of land would have come under irrigation. However, only about 7 Mha worth of irrigation facility has actually been created. Why can’t an effective central government agency such as NHAI be created for irrigation projects? Why can’t private companies be involved? Why can’t some accountability be built into the system? Who will ensure the timely completion of 240 new irrigation projects proposed?

Over 58% of irrigation is from groundwater using an estimated 6.5 million diesel pumps and 11 million electric pumps. Costly diesel required makes farming virtually unviable for small farmers. Wherever the pumps are on electric power, that is either free or wrongly tapped, the farmers are overusing and wasting it. Groundwater tables have dropped rapidly. Over 15% blocks in the country are now groundwater deficient. Surprisingly, Punjab has lower land productivity despite intensive use of largely subsidized water and fertilisers. While Moga’s fertiliser consumption was 243 tonnes per ha in 2005-06, Wayanad in Kerala used 49 tonnes per ha, Chatra in Jharkhand only 67 tonnes per ha and Tuensang in Nagaland just 0.07 tonnes per ha.

A recent report of the Punjab Farmers Commission found that the water table had reached the critical depth of more than 10 meter in as much as 85 per cent areas in central Punjab. And now the Punjab Government is shifting at least one million hectare under paddy to other less water-consuming crops. In Karnataka, ground water levels are depleting at an alarming rate of 70 cm a year. Noone for certain can say anything about the finance minister’s pet projects of the renovations of the thousands of heritage water bodies of the country.

In other countries, the farmers can realize one-third of the market prices of the commodities. Indian farmers manage to get only one-fifth of the prices, as the balance goes to financially strong middlemen. May be the contract farming can be the answer.

Poor financing policy has slowed mechanization. Unfortunately, the financial institutes and banks have never been farmer-friendly. The National Bank for Agriculture and Rural Development's (Nabard) guidelines for financing of farm machinery requires farmers to offer not only the underlying asset (tractor) but also land as collateral security. Moreover, this land pertains to a minimum holding of eight acres, that too "perennially irrigated". Given that this kind of land nowadays fetches no less than Rs 5 lakh, it means pledging an asset worth Rs 40 lakh for a loan of Rs 1-3 lakh. This is one reason that tractor sales have been stuck at around 2.5 lakh.

And the way out:

Contract farming may be one way to improve the earning of farmers as it may exclude the intermediaries who grab the maximum advantages. In contract farming, the farmer provides a commitment to deliver a specific quantity of a commodity at quality standards agreed upon by the purchaser. The sponsor on its part pledges to support the farmer’s crop with all possible inputs and to purchase the commodity. The Government also plans to set a target of involving 10 per cent of the farmers in contract farming in the next four years. However, a simple and transparent dispute resolution mechanism must come out for safeguarding unscrupulous ones.

The decline of wheat is largely attributed to an “ageing” wheat variety WL 343, which has been in use since mid-’90s. The scientists must come out with some new breakthroughs with some high yielding varieties. As reported, a new high-yielding variety of pulse is being introduced.

Can the PM’s mega Rs 25,000-crore assistance plan to states give a push to agricultural productivity? Can the resolution to boost the growth rate of the sector to 4 per cent be realized? I suggest few steps:

1. Ministries need restructuring. Water resources, fertilizers, agricultural universities and laboratories, extension centers, and rural development must get integrated under one ministry.

2. Agricultural universities and laboratories must move to farmers both physically and digitally, and make a breakthrough with some real high yielding seeds.

3. Panchayats must be made responsible for the building and maintenance of waterbodies, canals, and check bunds.

4. Holdings for the real farmers must be allowed to increase up to at least 50 acres.

5. All retailers in organized sector must buy straight from the farmers under transparent contract system offering the best price, as perhaps ITC is doing that.

6. With fast improvement of rural connectivity, the entrepreneurs must move the manufacturing to the rural homes as much as possible.

7. Agriculture and farming must remain attractive enough to keep the younger generation of the farmer family attached to it.

8. Financial institutes must not treat farmers with suspicion, and provide credit with some practical and flexible product design.
 

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