Under the Indian Constitution, agriculture is in the concurrent list. The states have a significant say in framing agricultural policy and implementation. This is often not in sync with national policies and requirements. The federal government allocates considerable resources and massive subsidies for food production and consumption. It also has a robust research network through the Department of Agriculture Research and numerous institutions under the Indian Council of Agriculture Research (ICAR). Several of these units have impressive results in expanding crop production.
Potato research by ICAR units, has helped expand potato production from a small base of a couple of million tonnes at the time of independence to over 50 million tonnes of annual production now. Yet there have been difficulties in evolving and implementing policies that are uniform pan India. This is understandable in the light of vast differences in agro-climatic conditions, traditional practices and considerable variations in the cost of cultivation. Thus, we have been witnessing substantial departures in and modifications to Centre’s dictats and states’ implementation. eg. The minimum support price for sugarcane arrived at the Centre after detailed analysis of costs and prices, is not acceptable to several states; several of these announce state-advised prices which are resisted by the sugar producers, resulting in disputes between industry and cane growers and also in prolonged litigation.
Large allocations…
The Centre has massively stepped up allocation for the agriculture sector. The Union budget 2018 provides for Rs 14 lakh crore. There is also the food subsidy of Rs 1.7 lakh crore provided in the budget. Recently to address farm distress, the government has hiked the minimum support price substantially on 15 agriculture commodities including Rs 200 per quintal on paddy and increase up to 52 per cent on several other kharif crops. Yet there has been widespread dissatisfaction among farmers. 201 farmer organisations led by the All India Kisan Sangarsh Coordination Committee led a massive protest delegation to the Parliament on 20 July and passed a no-confidence motion against the government.
Cooperative FederALISM in Agriculture
In this background, the suggestion of Union Minister Arun Jaitley for cooperative federalism in the agriculture sector deserves close attention. Like the GST such an exercise to build consensus on agricultural policies in a coordinated, structured manner will be beneficial to the largest segment of the population. Jaitley, who has built such a consensus for the complicated GST issue that required prolonged discussions and reconciling disparate state interests, is among the fittest persons to take up this more complicated task. The sector is stuck with centuries of tradition and practices that vary from region to region and resist change.
Unviable smallholdings…
Though science and technology for productivity improvements, crop protection techniques, processing, preservation and marketing are available, access to these and affording the costs are not uniform. The sector is dominated by small holdings that have resulted from unrelenting fragmentation of family properties over generations. Production levels continue to be low and average farm incomes modest to poor. There has been widespread poverty among the owners of small landholdings and, more importantly, among the much more significant number of agriculture labourers. These resulted in relentless migration to cities leaving the small holdings fallow or sold at distress prices. The average size of a farm in Tamil Nadu is just two acres and despite the periodical revision of minimum support prices, incomes continue to be low. For most crops including paddy, the annual income per acre net of expenses could be in the region of Rs 40,000 or around Rs 3500 per month. Thus the small landowner is unable to spend on nourishing the soil, expanding irrigation and accessing science and technology for achieving higher yields. Most villages have little or no use for the thousands of agriculture graduates due to the small-sized land holdings and low incomes that deny them the opportunity to engage these.
Cooperative farming advocated in the first few decades of independence failed due to corruption and lack of leadership. The only shining example was in milk thanks to Verghese Kurien. Even here he succeeded mainly in Gujarat and the model failed despite Kurien’s efforts in states like Tamil Nadu.
Farmer Producer Organisations
The recent efforts in forming Farmer Producer Organisations (FPO) are yet to make a significant impact. While this measure is welcome in bringing together a large number of farmers of small holdings to build viable farm sizes the progress is slow. The government has recently announced that NABARD will promote another 5000 FPOs over the next two years.
“Farmers of small and marginal sized land holdings, being unorganiaed, are unable to realise the desired value for their produce. Organising them into FPOs will benefit them from economies of scale in the purchase of inputs, processing, and marketing of their produce,” Jaitley said.
The latest Union Budget has allowed tax exemption to FPOs with a turnover up to Rs 100 crore. The government has committed to extend support to FPOs for their promotion and growth.
NABARD has supported around 4000 FPOs across the country at the end of FY’18 of which over 2000 are registered entities actively doing business in agricultural activities. As many as 507 FPOs are engaged in bulk input procurement and distribution while 223 FPOs are involved in aggregation and marketing of fruits and vegetables. Agro-processing, government procurement scheme, dairy, organic farming, seed production and marketing, fishery and other allied activities are also undertaken by the FPOs.
