Agriculture today: Problems, potential and perspectives

Dr B K Mukhopadhyay

(The author is a Professor of Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

India's agriculture is composed of many crops, with the foremost food staples being rice and wheat. Indian farmers also grow pulses, potatoes, sugarcane, oilseeds and such non-food items as cotton, tea, coffee, rubber, and jute (a glossy fibre used to make burlap and twine). In addition, India is a fisheries giant as well. A total catch of about 3 million metric tonnes annually ranks India among the world's top to fishing nations. Despite the overwhelming size of the agricultural sector, however, yields per hectare of crops in India are generally low compared to international standards. Improper water management is one of the major problems affecting India's agriculture. At a time of increasing water shortages and environmental crises, for example, the rice crop in India is allocated disproportionately high amounts of water. One result of the inefficient use of water is that water tables in regions of rice cultivation, such as Punjab, are on the rise, while soil fertility is on the decline. Aggravating the agricultural situation was an ongoing Asian drought and inclement weather. Recent good monsoon has been extended prospects of agricultural production. This has partially been hit due to relatively unfavourable distribution of rainfall, leading to floods in certain parts of the country.

While recognising the very fact that agriculture accounts for as much as around one-fifth of the Indian economy and employs an estimated 60 per cent of the labour force, it is considered highly inefficient, wasteful, and incapable of solving the hunger and malnutrition problems. Despite progress in this area, these problems have continued to stubbornly frustrate India for decades. It is estimated that as much as one-fifth of the total agricultural output is lost due to inefficiencies in harvesting, transport, and storage of government-subsidized crops.

The bad, the good, and the unaddressed areas.

Although the yield per hectare of food grains has shown some improvements in recent years it is not significant enough to cater to the needs of the rising population particularly when income levels are also rising. Since farm productivity is not showing desirable growth there is an urgent need to focus on research as well as better agricultural practices to ensure that productivity levels are increased in the shortest time possible. Special attention may be required for States with relatively low productivity.

Statistics show that the production and productivity in pulses and oilseeds are of growing concern. A sizeable proportion of these items is met through imports. The scope for import of pulses is limited due to the limited number of countries producing it. Due to this supply-demand gap, domestic prices fluctuate with availability and prices in the international market apart from the impact of domestic production trends.

The consistent decline in the share of private- sector investment in the agriculture sector is a matter of concern. This trend needs to be reversed through the creation of a favourable policy environment and availability of credit at reasonable rates on time for the private sector to invest in agriculture.

There has been substantial increase in MSPs of various crops over the last few years. This is considered necessary to incentivize farmers to increase production and productivity. At the same time, the MSP signals the floor price for the produce which, in turn, has the potential of increasing the prices. Addressing the welfare of agricultural producers and consumers simultaneously poses a challenge. Further, the inability of a large number of small and marginal farmers to directly access the agri-market puts a question mark on increases in MSP actually benefiting such farmers.

A record procurement of rice and wheat in the last few years has helped to build up the buffer stock and strategic reserve of wheat and rice. There is, however, a huge cost involved in the process which is met through budgetary sources in the form of food subsidy. This puts a lot of stress on the fiscal system. The issue of efficient food stocks management and offloading of stocks in time calls for urgent attention.

A series of studies continues to indicate and explain the adverse impact of climate change on agriculture. Crop improvement and research to develop drought-resistant, high-yielding varieties of seeds assumes the importance with a view to combating the adverse impact of drought on food production and to ensure food security.

Allied agri-activities and their market potential.

Floriculture, in particular, bears tremendous prospects when explored in a planned manner.

The Exim Bank study on floriculture industry observed that the global economic crisis has considerably impacted the growth potential of the industry. Nevertheless, the global exports of floriculture products have been growing at an annual average growth rate of 10.3 per cent.

Reviewing the performance of the Indian floriculture industry, the study observed that besides the negative impact of the global economic recession, the growth of the industry is increasingly affected due to growing competition in the international arena with the entry of new African countries in global floriculture trade. Further, a number of Asian neighbours, such as China, Nepal, Sri Lanka and Pakistan are also emerging as competitors in India's export markets.

Europe continues to be the largest destination for Indian floriculture exports. However, India's floriculture exports have been diversifying, from traditional markets, such as EU and USA, to new markets in the Asia Pacific, such as Japan, and Australia. Against such a scenario, the study viewed that the potential for expansion of commercial floriculture in India, including production for domestic and export sales of cut flowers and plants in unlimited provided the country expands the production of existing products as well as the product range.

A recent world bank and OECD report identified some of the areas in which market opportunities exist for Indian floriculture industry, viz. hi-tech cultivation and product diversification; tapping the global landscaping opportunities; floral arts/floral designing market; and catering to the global demand for custom-made products, dry flowers, foliage, flower seed production, flower extracts and essential oil, and natural dye.

Cut to credits, we need to address the challenges of the agriculture sector through comprehensive and coordinated efforts. Renewed attention needs to be paid to improving farm production and productivity, better utilization of agricultural inputs, proper marketing infrastructure and support, stepping up investment in agriculture with due emphasis on environmental concerns and efficient food management.