Taking Indian agriculture beyond MSP & APMC

March 17, 2021 6:15 AM

There has to be a focus on developing secondary agriculture and unlocking the growth potential from India’s agri-tech spurt

The government’s procurement operations result in private procurement on or above the MSP for various notified crops, he added.The government’s procurement operations result in private procurement on or above the MSP for various notified crops, he added.

By Niraj Kumar

No political intent, but I shall start by saying Indian agriculture is at a crucial juncture. Covid-19 pandemic has tested the resilience of our economy. Unfortunately, the coverage and impact of the pandemic were so colossal that every segment of our economy bore its brunt. It was the farmers of India, in particular, who could not only resist the blitz of the pandemic but also proved that agriculture can remain the most dependable segment of the Indian economy.

The pandemic, however, has also opened up new opportunities in agriculture, which, if tapped early, can not only make our economy more buoyant but also can contribute to doubling the farmers’ income. Sensing the immense potential of Indian agriculture, investors pumped in $500 million to Indian agri-tech concerns in 2020, even as the entire world was in recession. It is expected that the agritech segment will get an investment of $10 billion over the next 10 years.

These estimates seem possible considering India has 159.7 million hectares of arable land (second-largest after the US), experiences all the 15 prominent climates existing across continents, and has 46 out of 60 soil-types that are there in the world. With food-grain production expected to cross the 300-million-tonne mark, our country has been among the largest producers of milk & milk products, wheat, rice, fish, fruits, vegetables, and meat.

Further, according to a report by PWC and FICCI, every ninth agri-tech start-up in the world is from India, and over 25 Indian agri-tech companies have expanded their presence beyond the Indian territory. Experts opine that the Indian economy recovery would be V-shaped and agriculture would be one of the major reasons for it.

Unfortunately, the ongoing farmers’ stir seems to have dampened the spirit of farmers, agro-industries, government, and other stakeholders. Agriculture development and farmers’ welfare do not deserve to be stifled because of political reasons. Unfortunately, lately, the farmers’ stir has become political, and this is not, in any way, good for the country.

Though we are on a fast-growth trajectory and the future seems bright, we still have challenges that need to be addressed urgently. We must accept that our typical farmer is not as educated and as resourceful as those are from the countries with which our farmers compete. Our land-holdings, at an average of 1.18 ha, are much smaller and more fragmented than the world average of 179.68 ha. But, we need to move forward.

Though we have become self-dependent, there remains considerable headspace to increase the productivity of our major crops. For example, the productivity of maize, rice, groundnut, and pulses are 54%, 40%, 31%, and 33% lower than the respective global averages. Can we work on increasing our productivity?

Most of the farmers are still using traditional farming practices, which are not only unscientific but lead to higher cost of cultivation as well. Unavailability of the right agri-inputs at the right time, under- or over-utilisation of agro-chemicals, and limited availability of technical advisory services are making our agriculture costly and non-remunerative. The UN estimates that more than 3.2 billion people around the world are at risk from the effects of land-degradation, many of whom live in the world’s poorest regions, including India. Can we direct our energy to find solutions to these problems which are making our farmers poorer and weaker?

Intermediaries who do not add value in the agriculture supply-chain not only add to the cost of final produce to the consumers, but also reduce the farmer’s share in the consumer’s spending. Indian farmers, on average, get only 28-78% of the consumers’ rupee, with a lower share for perishables (like fruit & vegetables) and a higher share in case of non-perishables like edible oilseeds and spices, though this is still much lower than the global average.

This is the time when we have to focus on secondary agriculture. Logistics like storage, transportation, credit, and market information are crucial for transforming subsistence-agriculture into sustainable, profitable agriculture. Indian farmers incur Rs 92,651 crore per year in post-harvest losses, the primary causes of which are poor storage and transportation facilities. While India’s annual food-grain production is expected to cross 300 million tonnes, the present storage capacity is around a mere 100 million tonnes.

Non-availability of formal credit, lack of crop-insurance, and indebtedness have been some of the major reasons for farmers’ suicide. Unfortunately, the discussion today, because of the farmers’ ongoing stir, has got stuck on, or around, the agricultural produce market committee (APMC) yard and minimum support price (MSP). MSP is important, but the country needs many more policies and infrastructural support to make agriculture more remunerative. Can we give the requisite time and energy to strengthen our secondary agriculture?

The digital revolution has opened new windows for Indian farmers. Technology like precision agriculture, e-extension, drone-led agrichemical spraying, smart tractors and agribots, smart warehousing and transport optimisation, real-time yield estimation and price information, fintech-led credit and insurance management and e-marketing have proven their applicability in making agriculture easier, predictable, and profitable.

Young, talented desi entrepreneurs are ready with technology-driven solutions to address many of the long-pending issues of Indian agriculture. Indian agri-tech start-ups are today valued at $204 million, which is estimated to be just 1% of current market potential. Are we planning to talk to those agri-preneurs, give them space and opportunity to contribute and grow?

The government seems serious, with a huge financial outlay to the agriculture sector under Atmanirbhar Bharat. Apart from higher MSP for many crops and increased procurement by government agencies, the government seems to be moving forward with many farmers-oriented policies. Shouldn’t we allow Indian agriculture to move beyond MSP and APMC, and take the benefits of pacy growth without losing the edge that the corona pandemic has provided it?


Professor (rural management) Xavier University, Bhubaneswar

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