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Wednesday, July 06, 2016

Reforming Indian Agriculture

Agriculture reform is one of the big successes of Gujarat Model the foundation of Narendra Modi's political success. Yet, national agricultural reform is still lagging. In a recent article, Ashok Gulati points this out with reference to fertiliser reform. That gave me some food for thought. So here are my set of key ideas for reforms for Agri-dependant population.

Farmers' problems can be summarised easily. Farmers are not sure of what to sow, the technology and funds to improve productivity are difficult to source and they do not have mechanism to maximise the cash flow from what they reap.

Improve Crop Selection: Use soil health card to determine effective crops for that land. Suggest crop selection every sowing season based on available stock of the crop, area already under cultivation and alternatives. Commodity demand and supply can be managed before sowing stage itself. It allows for less farmer/crop failures. 
  1. Give the farmer data on national area under cultivation for current year and past 5/10 years. (say area under paddy cultivation)
  2. Also give total stocks of various commodities (available stock of rice with FCI and national rice stock)
  3. Give rice national price trends for past 5/10 years. (say rice prices)
  4. Also give comparable import prices for that commodity. Create databank for allowing informed decision on grow v/s import for various crops at various land quality levels.
  5. Give suggestions of alternate crops 
  6. Using these data points let the farmer make an informed decision as to what to plant. 

Land and Asset Reforms: Clear land title implies that farmers can get easy benefits of land ownership and clear share of benefits arising from land. It allows farmers to create collateral for investing into farms. Allow clearer ownership of assets such as vehicles, animals and other agricultural implements. 

Farmer productivity support: Farm productivity improvement techniques are available at various price points. It is not necessary that most technologically advanced solutions are the best. A database of techniques and corresponding funding agencies should be made available to farmers. This is more information dissemination strategy rather than anything else.

Farmer Produce Income Maximisation:
  1. Improve farmer availability by focusing on farmer health. This improve farm-labour availability and thus improves earning potential. It also prevents crops failures because of on-availability of labour.
  2. A national farm produce market without middlemen should improve incomes for farmers. But it requires produce classification and grading mechanism. It can be done using kits.
  3. Make food processing units investment allowing the produce to be processed for easy transportation across distance and time. Thus, pulping, pickling etc. can be one type of produce revenue maximisation. Other could be farm-side cutting and packaging into easy to consume items - say pre-packaged salads made at farm itself. The whole value-chain from consumers to influencers like dieticians and  master-chefs to food factories to farmers should be leveraged.
  4. India can leap-frog the agri-produce canning/packaging style processing to directly ready to cook packaging.
  5. This activity is more valuable for non-staples like vegetables, fruits etc.

Farmer Income diversification:
  1. Augment agricultural income with horticulture, floriculture and other allied agricultural activities. Considering the necessity of creating seepage reservoirs to allow replenishment of land-water, fresh-water based fish, crops etc can be considered. 
  2. Involve farmers in agri-support transportation services, food processing services etc. 
Farmer Savings support: Improve reach of banking to rural areas. Problem for farmers is that loan availability is at high cost and savings benefits are at low rates. Even if loans are not made available a secure savings infrastructure needs to be developed for farmers. Jan Dhan is a good first step.

With these, farming should be gaining traction and agriculture can add at least 2 percentage points to India's GDP growth.