Grid Pin, Opinions

Agriculture sector: Scale up your farms & pool in

by Naveen P Singh

Like in any other annual Budget, GoI is expected to unveil key measures to address rural agrarian distress in tomorrow’s interim Budget announcement. This is especially anticipated, considering the Lok Sabha elections are around the bend.

Past measures have largely focused on market, irrigation infrastructure and various other policy provisions — research inputs, input subsidies, marketing support, loan write-offs, etc. However, such measures provide only a temporary redressal rather than any sustainable solution.

Smallholder farming is the most common variety in India. Smallholders suffer from high cost of cultivation and minimum resources. If the proposed Farmer Producer Organisation (FPO) model of pooling lands and joint cultivation to overcome farm size limitations is enabled, it will enhance the scope for mechanisation and bring in the benefits of economy of scale to India’s farming sector.

In addition, a well-developed futures market, nurtured with real-time crop and weather information using mobile technology, will enable farmers to reap better profits. Farmers would have to be alerted using mobile technology to make profits using data from market intelligence network.

FPOs aside, there is a dire need for an intermediary channel for better coordination between farmers and existing institutions. A sovereign body needs to be solely promoted for the redressal of issues pertaining to rural distress. The Agricultural Produce Market Committee (APMC) Act, Gramin Agriculture Markets (GrAM), National Agriculture Market (eNAM) and raising the minimum support price (MSP) substantially at more than one-and-a-half times of production cost are great initiatives towards the plan to double farmers’ income by 2022. But much more thrust in implementation has to be carried out to achieve the desired objectives.

Aggregating farmers through FPOs and providing a range of assistance to them — collective farming, technology dissemination, imparting better farm practices, aggregation of input purchases, transportation, market intelligence, linkage with markets, credit and finance arrangement, better price realisation — means enhancing farmers’ income. There should be public-private partnerships (PPPs) for fiscal incentives to open warehouses near farming areas, reducing transaction costs.

Incentives and awareness should be provided for farmers to adopt crop insurance. The success of farmer organisations is critical to ensure the success of smallholder agriculture and the availability of end-to-end services to their members. GoI has realised the FPOs’ role in alleviating farmer’s income and has already exempted FPOs with tax deduction with an annual turnover of up to .`100 crore. Incentives may also be provided to encourage small farmers to pool their natural resources and micro-irrigation systems to grow suitable crops.

Crop productivity still remains lower than global standards. This calls for ahigher agricultural R&D spending, translational research and outreach in bridging yield gaps, as most small and marginal farmers are yet to reap the benefits of research outputs and subsidies provided.

The sovereign institution should have nodal centres covering all talukas, solely catering to the well-being of the rural economy and extending technology to farmers. Weather forecasts need to be made timely and accessible across locations, so that farmers can also have contingency plans as per advisories.

Scattered weather and crop data should be brought together, and comprehensive and predictive analytical tools should be developed for small farmers. Regular weather forecasts at the granular level (short- and midterm) should also be made easily accessible to them.

The overseeing body should also fosterthe growth of Gramin Suvidha Kendra (GSKs) — the PPP between the MultiCommodity Exchange (MCX) and the Indian postal department to empower Indian farmers and cater to their needs — based on trust and credibility, and bring in transparent markets to farmers’ doorsteps. Private sector companies having rural exposure may be encouraged to spend part of their corporate social responsibility (CSR) funds for the uplift of GSKs.

Involving farmers and FPOs in the commodity derivatives market may offer a more pragmatic approach in ameliorating farm distress. A beginning has been made and a few FPOs have successfully delivered their produce on exchange platforms, especially cotton in Gujarat. The sovereign body should also use the services of the derivative markets. Transparency and price discovery are the most sought-after services in Indian agriculture markets, and these flow from the commodity derivatives markets. The market empowers farmers by suggesting the most likely remunerative crop for the coming season based on the forecasts and future prices.

The unveiling of such a nodal institution connecting farmers can lead to centralisation of structural reforms plugging implementation gaps. The end result: the farmer gets into truly sustainable agriculture.

The writer is principal scientist, Indian Council of Agricultural Research-National Institute of Agricultural Economics and Policy Research, New Delhi