This document summarizes the key constraints facing Indian agriculture and proposes solutions to boost agricultural productivity. It identifies market deficit, investment deficit, and research/extension deficit as the major constraints. To address these, it recommends increasing private sector participation in marketing and extension, boosting public and private investment in irrigation, warehouses, and rural infrastructure, encouraging diversification beyond staple crops, and improving access to credit for farmers. Overall the proposals aim to provide farmers stable markets, prices, and access to technology to increase incomes and make agriculture more profitable and resilient.
2. Technological
Dynamics of Agriculture
• Lack of marketing facilities and market linkages at grass root level
• Lack of market linked policy
Market Deficit
• Capital Investment has not increased as required
• Where as subsidy is increasing every year
Investment Deficit
• Since green revolution research have been unable to deliver a game changer
• Where as our extension force has been unable to bring desirable changes
Research and Extension Deficit
• Credit outflow in the agriculture is increasing every year
• Basic infrastructure like road, power are still lacking in many states
Credit and Infrastructure deficit
• Since independence our agriculture policy concentrates only on those crops which
our important for food securityDiversification Deficit
Macro-
Economy
Climatic
Factors
Global
Factors
Policy
Factors
Market
Forces
Performance of the agricultural sector
The performance of the agriculture sector is driven by
several factors but rather than affecting the sector in
isolation they interact with each other and consequently
strengthening or weakening of specific trend
The dynamics for each crop is different in different
geographies due farmer awareness and psych , cost
structure , government infrastructure
So major constraints in the present era for boosting
prosperity will be market deficit, investment deficit and
research & extension deficit
3. Crop specific
programme
Cost of cultivation Contract
Farming
Market Price Availability of credit/
Insurance
Yield
Demand
and supply
regulation
Market
Openness
Economic
Growth
Consumption
Pattern
Procurement
by food
processing
industry
Government
policy on trade
Public &
Private
investment in
R&D
Input usage
(Fertilizer,
Seed etc)
Technology
(Hybrid, GM
crop etc)
Food Retail
Economic
Growth
Urbanization
Policy on
Contract
Farming
Government
policy on
crop focus
Political
Outlook
Demand
and supply
situation
Government
policy on
rural finance
Penetration
of Financial
sector
Penetration
of Media &
IT
Labor Cost
Input Cost
Cost of
fertilizer seed
etc.
Migration
Cost of living
Alternative Occupation
Profitability Irrigation Quality of Land New crop technologies Awareness
Cropping Pattern Cropping Intensity Input usage IntensityChanges in land use
One factor alone – cropping factor is a function of several interrelated drivers and sub
drivers and we need to understand this interrelation to solve the problems
Interrelation among various factors
5. Diversification Deficit
26584
25694
6346
8036
3915
24222 26197 5844 7227
3659
25701 27474
6168 7246 3815
Rice Wheat Total Vegetables Total Oilseeds Total Pulses
2008-09
2009-10
2010-11
2.3
4.1
0.8 0.9
1.1 1.1
1.4
2.1
2.6
0.5 0.6 0.7 0.6
0.9
1992-97 1997-02 2002-03 2003-04 2004-05 2005-06 2006-07
Potential
Created
Potential
Utilised
Over the years rice, wheat sugarcane have received the
focus for irrigation provision, mainly because of the
government ‘s paranoia about achieving self sufficiency in food
and other crops have been neglected
Studies have shown that the income from the per hectare
land is much higher incase of non food grain crops with respect
to the food grains
Overall profitability rises with increase in the size of land
holding but access to credit can raise e profitability up to 50%
With access to credit farmers with smaller land holdings
were found to be more profitable
Profit/acres (Farmers
without credit)
table
Non Food Food Non Food Food
<1 42500 4000 73500 5900
1-2 60000 4500 70000 5675
2-3 62000 5000 65000 5200
>3 65000 5000 62000 5200
Avg 57375 4625 67625 5494
Major and Medium Irrigation Potential Created
Crop wise gross irrigated area
In the latter half of the 90s growth in the irrigation
potential is much lower than past
More importantly the utilization has dipped by more than
30%
6. Deficit in the Research and Extension
In Research
Concerns
Major land mark in the field of agricultural research were
green revolution and white revolution, which happened back
in the 60s and 70s but after that we have not been able to
deliver a landmark
Specially in case of pulses and oilseeds , our present varieties
have been unable to change the production and productivity
scenario
In spite of huge supply and demand gap , higher MSP than of
cereals still does not want to grow t pulses and oilseeds
Availability of timely certified seeds
In Extension
Concerns
Our existing extension forces has not been able to deliver the
desired results
Most of the extension program's fail to achieve the target due
to lack of accountability and transparency
Ressource constraint at lower level and huge population to be
served
Proposed Solutions
To improve the transfer of technology at the grass root level,
more and more private partners should be involved
This could be of to types
a) Extension by Input Companies
e.g. By Monsanto
b) Extension by the procurement companies
e.g. PepsiCo
c) Private extension,
e.g. In Jharkhand
This could be done by the entering into PPP model for
providing subsidized inputs to the farmers and the input
company will provide extension services to farmers
In case of company who are procuring large quantity of
agricultural produce can be asked by making legislation to
provide extension services necessarily
Both of this can be easily formulated and implemented by the
Ministry of Agriculture at state level
Proposed Solution
Better seeds can increase the productivity between 40 to 60%
but it can be much higher
More and more private investment in the field of agricultural
research should be encouraged
States should come with special policies to increase the
productivity of the major crop s eg. State Agricultural Universities
should collaborate with private companies and foreign agricultural
institute to develop new varieties for their state
Focus needs to be shifted from the food grain crops to non food
grain crops to increase the income from agriculture
More competition should be promoted in the seed industry, so
that new product development can be come the basis of success
7. Investment and Infrastructure Deficit
43319
99495
64033 62301 67199
2007-08 2008-09 2009-10 2010-11 2011-12
Subsidies in '000' crore
10805 13019 15947 18755 22107 24197
42737 44830
50118
54530
57530 61367
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Private
Invstement
Public
Investement
Fertilizer subsidy over the years
Investment in agricultural sector over the years
In ‘ooo’ crores
Proposed solutions
There is urgent need to increase the agricultural
investment in new irrigation projects and
improvement of the existing canal system
Warehousing corporation should be provided
with money to increase their capacity across the
country
Huge investment is required to develop cold
storage chain across the country
Studies have shown that investment in the
creation of rural infrastructure such as road and
power have more positive effect on the life of rural
people than the other modest policy of
employment generation
Concerns
Investment in the agriculture sector is much
lower than the subsidy given to the sector
Over the years gross capital formation in the
sector is not encouraging
In the rural areas infrastructure development is
not adequate to carry out the industrial activities
eg. Roads , Power etc
8. • Investment in Marketing infrastructure like warehouses, cold
storage and primary processing for perishable products
Allow Private or Cooperative players for direct marketing at
minimum prices at mandies
Independent regulatory authority at state level for
registration of market functionaries at state level and online
recording of trade and transection (Location, Volume & Price)
Single point levy & payment of market fee for market players
PPP for online management of market information and
market Intelligence and setting up of Market Extension Cell
at mandies
The Contract Farming Sponsor should be registered at
prescribed district level officer with the contract
specifications.
Protect farmers through provisions of Contract Farming at
benchmark market prices
Designing of action plan for decentralized primary processing
of perishable agri-products including setting up of
commodity specific food processing parks with common
facilities
No independent regulatory authority for
agricultural marketing
Private or Cooperative players are not
allowed for direct marketing
Limited access to market information and
marketing opportunities available
Fragmented supply chain, poor cold chain
& high post-harvest losses
Lack of fair price discovery mechanism
Proposed Modification in Agricultural
Marketing System
Market deficit
Problems in Agricultural Marketing System
9. Central
Government
(CACP)
State Govt. State Govt.
District District
Block Block Block
District
State Govt.
• 40% share
• Crop selection for MSP
• State list
• Deciding MSP once in a year
for 4 quarters (depending
upon the growing seasons
for particular states)
• Non conventional short
duration crops including
pulses, oil seeds,
medicinal, aromatic etc.
• After few years
conventional crops can
also be added.
• Crop identify
• Give seasons for crop production
• MSP announcement
• MSP promotion through selected
govt. dept.
• Promotion bodies - ATMA, Zilla Panchayats
• Can go for technological promotions as well.
• Crop mapping
Local promotion – including
package of production, MSP,
harvesting methods, & market
address , organizational details.
MSP will be decided by CACP once in a year depending upon the demand for a particular crop produce & can be
announced at once but it will be state government’s duty to announce it quarterly to the farmers through promotion
bodies during the sowing season of the preceding crop to let them decide the next crop.
Central
Govt.
(40%)
State Govt.
(60%)
Cost Sharing
10. District
Village
Village
Village
Small
Entrepreneurs
Processing
Industries
SHG
Govt.
schemes
New PPP
Venture
FCI/ State
warehousing
corporation
• Cultivation of selected crop
• Information sharing with
block level through a
particular linkage
• Collection of produces from
villages & transfer it to
FCI/SWC
• Crop mapping & storage or
future planning
• Storage/ distribution from
warehouse corporation to
other state
• Employment generation
• Processing industry
growth
• Lessor wastage
• SHG can be helped
for production of
processed products
Supply produce for
mid day meal using
food security/
nutrition policies
Joint schemes/
ventures for better
development of
the remote areas
District
District
Industrial/
institutional
procurement
Through APMC
Government
release
11. Overall impact of the policy on the economy
Central &
State Govt.
Farmers Industries
• Increased overall productivity
• Reduce dependency on imports
• Higher export & higher foreign
exchange
• More industrialization
• Surplus of 1 state fills other’s
shortage
• Self sufficiency in food
• Growth of manufacturing sectors
• Lessor wastage
• Improved rural infrastructure
• Growth of processing industries
• Easy transfer of technology
• High Food Wastage
• Unemployment
• Burden on central Govt.
• Food security
• Increased dependence on imports
• Less productivity & production
• Assured market with stable price
• Positive attitude towards govt.
policies
• Less or no volatile market
• Better extension services by
private players
• Better rural infrastructure – better
life style
• High cropping intensity – high
annual income – better health
status – better future education
• Desired quality of commodity
• In time supply
• Predetermined prices
• Improved rural infrastructure
• Availability of product in bulk
• Increased farm income will
increase the purchasing power n
hence higher growth of investors
• Very volatile market
• No securities
• No marketing facilities & information
• Poor govt. extension
• Timely unavailability of inputs
• Poor rural infrastructure
• Less cropping intensity – low income
• Highly volatile market
• No/ less quality parameters
• Fragmented cultivation areas
• No changing policies
• Poor infrastructure creates more
problems
• No/ less skilled people availanilty
B
e
f
o
r
e
I
M
P
L
E
M
E
N
T
A
T
I
O
N
A
f
t
e
r
12. References:
• Directorate of Economics and Statistics
• Ministry of Agriculture
• World Bank
• Indian Journal of agricultural Economics
• IMA research analysis
• Mid tern appraisal of Planning Commission, 2009
• IBEF Agriculture Sector Report
• International Water Management Institute
• Ministry of Water Resources
• Indiastat
• Agrimarket
• Agmark