With disaggregated farm holdings, there exists a great deal of heterogeneity in a single product produced by different farmers. This indicates the need for developing effective pre-harvest linkages to boost exports.
By Ranveer Nagaich/Young Professional, office of vice-chairman, NITI Aayog
Significant progress can be made towards the goal of doubling farmers’ income by 2022 with a mission-mode focus on agricultural and food processing exports. Boosting exports from the agriculture and food processing sector will provide a much needed fillip to jobs as well. The recently released Agriculture Export Policy 2018 is a huge step in this direction. It will bring much needed stability to the agriculture export market.
There is a need for agricultural reforms that many experts have spoken of in the past. Briefly, recommendations have been submitted in regard to land leasing, contract farming, the APMC Act and the Essential Commodities Act. Apart from the export policy, several other enablers are needed to make the goal of doubling agriculture exports a reality.
As NITI Aayog’s Strategy for New India @ 75 Document (Strategy Document) points out, countries across the world have stringent guidelines when it comes to the import of agricultural and food processing produce. Rejections of consignments owing to non-compliance with sanitary and phytosanitary (SPS) issues are a significant bottleneck.
A working paper published by ICRIER highlighted that Indian consignments were issued more notifications and more rejections by the European Union (EU) when compared to other countries such as Turkey, Brazil, China and Vietnam. In the past, the EU banned the import of mangoes from India, with the ban being lifted after investments were made in the mango export system. Similarly, there have been reports of EU banning Indian shrimp due to presence of antibiotics. The Agriculture Export Policy 2018 provides for establishing a strong quality regimen.
Interventions at the farm or producer level are needed to meet such standards. However, with disaggregated farm holdings, there exists a great deal of heterogeneity in a single product produced by different farmers. This indicates the need for developing effective pre-harvest linkages to boost exports. Therefore, extension services will be critical to realising our agriculture export targets.
NITI Aayog’s Strategy Document contains several recommendations to strengthening extension systems. Public private partnerships (PPP) in extension delivery through Krishi Vigyan Kendras (KVKs) need to be promoted. KVKs may incubate initiatives in extension delivery by the private sector. These private sector initiatives in extension delivery should prioritise market-led extension and value-added extension. The focus should be on providing farmers with information regarding demand and supply conditions, expected prices and infrastructure availability. Likewise, value-added extension services should focus on reducing post-harvest losses and food processing activities. The National Institute of Agriculture Extension Management’s (MANAGE) dealer training programme needs to be scaled up and replicated across state agriculture universities, enabling diploma holders to conduct extension activities.
The Ashok Dalwai committee on doubling farmers’ income championed the concept of ‘farming as a service’ (FaaS) as well. At its core, FaaS would allow farmers to convert their fixed costs into variable costs, according to a report released by Bain & Company. For example, consider tractors. Many of our small and marginal farmers may not find it economically feasible to purchase a tractor. FaaS would enable ‘on-demand’ availability of agriculture machineries on rent. FaaS provides a great avenue for PPP in extension delivery as mentioned above.
Whilst providing a single service may not be economically feasible, a bouquet of services should be promoted, including, for example, soil testing, extension, grading and assaying, amongst others. This is the idea behind NITI Aayog’s block level resource centre recommendation.
Post production, it is essential that perishable produce be properly packed, stored and transported. This is where pack houses, ripening chambers, cold storage and refrigerated (reefer) vehicles come in. As NITI Aayog’s Strategy Document shows, there exists a large gap in India’s cold-chain infrastructure. A majority of cold storages in India are single commodity storages, which leads to them remaining idle for up to 6 months. Cold-chain infrastructure is also unevenly distributed amongst states as well. However, significant progress has been made under schemes such as SAMPADA, for example.
According infrastructure status to agriculture value chains will provide a much needed fillip to this sector, enabling cheaper access to finance. Similarly, the government, working with the private sector, should endeavour to set up village level procurement centres, reducing the cost of transporting produce for farmers. Private market yards should be encouraged. Processing units that wish to establish backward linkages should partner with the government in organising sourcing through rural periodic markets.
Agriculture reforms have to be supported with interventions in cold chain infrastructure and extension services. Without efficient logistics, India will still grapple with the problems of high wastage and low export potential. Significant investment is needed in this sector over the next five years. The private sector needs to be made an active partner to bridge this gap. We now have a conducive policy environment for private investment in agriculture. The Agriculture Export Policy is a major step in this direction.