An Agricultural Roadmap For A $5 Trillion Economy: Part 2

Agricultural Roadmap For A $5 Trillion Economy

In the first part of this two-part series, we covered how enhanced cost efficiencies and farm productivity can boost the agricultural sector’s contribution to India becoming a $5 trillion economy by 2025.

In this concluding part, we will cover three additional measures that should be adopted to spurt agricultural growth in the country.

Let’s continue!

3. Enhanced Realizations

While the government’s Price Support Scheme (PSS) for select crops like Wheat, Paddy, Pulses and Oilseeds guarantee a ‘Minimum Support Price (MSP)’ based on giving a significant increase over the minimum cost of production, the coverage of PSS is limited to a small section of farmers, leaving most others uncovered. It is estimated that in a normal year when the market price is lesser than the MSP, 7%-15% of farmers growing Pulses and Oilseeds are covered while less than 30% of farmers growing Wheat are covered under the program. More needs to be done to expand the coverage of farmers under this scheme.

PM-KISAN for direct transfer of Rs. 6000/ year to farmers is another scheme that adds to the income of farmers.

Leveraging open markets as a tool to enhance the income of Smallholder Farmer (SHF) has proven to be an effective strategy. This has been successfully demonstrated by State Agricultural Markets (SAMs) like Karnataka, leveraging its ‘Unified Market Platform’ through Rashtriya e-Market Services Ltd. (ReMS), a PPP vehicle to reform regulated agricultural markets. Central Government has also launched e-National Agriculture Markets (eNAM) to enhance the competitiveness of agricultural markets.

Government policies like encouraging farmers to install solar panels in their farms and selling the excess solar energy to power companies will further pave the way to enhance realizations. It is estimated that an acre of solar panels can give a farmer an amount as high as Rs. One Lakh.

Providing credit at concessional rates has been a good policy measure that has helped farmers immensely. Penetration of Kisaan Credit Cards (KCC), priority sector lending on harvested and stored crops through warehouse receipts are some of the measures that would help farmers provide regular and timely inputs to the crops thus helping enhance the income of the farmers.

Helping farmers hedge their price risk on Commodity Exchanges leveraging Farmer Producer Organizations (FPOs) could be another critical tool to be used to enhance farmers’ income. The Outreach Programs by exchanges like National Commodity and Derivatives Exchange (NCDEX) to train farmers in farm gate quality improvement techniques have proved to fetch 12%-40% incremental prices compared to non-graded agri-commodities.

4. Mobility and Internet: Disintermediating Information

With the penetration of internet and mobile smartphones, it is time to use these tools to provide information like prices and other relevant information to the farmers. This would help farmers in taking critical decisions like taking the produce to a market immediately or holding it back temporarily and storing it for selling it at a later date. Timely and effective dissemination of both price and non-price information is critical for farmers to grow.

Price-information include the relevant crop prices in its primary agricultural market (regulated or non-regulated), markets in vicinity and price-setting markets (could be near or far away), prices offered by government entities through Price Support Scheme (PSS), future prices on Commodity Exchanges, the price paid by processors and ultimately, the prevalent retail prices.

Non-price critical information includes accurate information on weather parameters like rainfall, wind-speed, sunshine, temperature, soil parameters (pH), Crop Insurance prices, prices of critical crop inputs like fertilizers and crop nutrients, pesticides and chemicals, mechanized equipment costs and rentals, local dispatch data to markets, arrival data in relevant markets at production and consumption markets, etc.

Today, there is no single entity that provides reliable data to farmers and a concerted effort led by the government and supported by corporates, including government enterprises, is required to provide such information at affordable rates leveraging the mobile phone network.

5. Improved Basic Rural Infrastructure

Improved basic rural infrastructure like paved roads, regular electricity supply to rural areas in itself is a big achievement of the Government of India over the last five years. This has already started breaking the silo of agricultural commodities going first to consumption markets in large cities and then being re-routed to smaller city destinations. Coupled with favorable government policies for the free movement of agricultural commodities within and outside the state, reliable critical information on prices, arrivals and dispatches of the commodities, farmers’ income can be significantly enhanced.

We would like to know your views on what other measures should be adopted to boost the agricultural sector in India.

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