Agriculture & Rural Development TISS

RSD/TISS-Hyd/24-09-13 1

Agriculture & Rural development: Towards

Next Phase

Prof R S DeshpandeNational Fellow

Institute for Social and Economic ChangeBangalore 560072

E-mail: [email protected]

mailto:[email protected]


Overview of the Presentation

Process of Agri & Rural Development

Importance and What it Involves Review of Research and

Development Process Major Issues Confronting the

Sector Society and Agriculture Future Focus


PhasePeriod Specific Characteristics and Farmer’s

Focus

First Phase

Pre-independence up to 1947

Problems inherited from the Colonial RuleConsolidating control on the economy through the creation of non-cultivating farmer intermediaries

Second Phase

1947 to 1966Food Insecurity and Community DevelopmentChanging the cropping pattern in favour of food crops Equity in the size of holdingLand reforms (i) favouring the peasant cultivator through tenancy reforms and abolition of intermediaries, and(ii) bringing equity in access to land and other resources.

Phases in Agricultural Growth


Third Phase 1967-79 Making the farmer technology adopter and attending the constraints of technology from farmers’ perspective. Ensuring farmer friendly technology. Farmers’ participation in the overall growth calculus.Period heralding the technological change (Green Revolution)

Fourth Phase

1980-90 Preparing the farmer for participation in the trade-oriented economy. Domestic market reforms to reduce market margins. Initiating the farmer to the WTO regime.Two distinct phases marking the fall-outs of technological change and environmental debate.

Fifth Phase 1990-2000

WTO & Liberalisation process and its interaction with the agricultural sector.

Sixth Phase 2001-13 Down turn, Lack of Investment, RKVY and Research and Development

Phases in Agricultural Growth -contd


Crop Groups

Area Productivity

Production

Food Grains

0.31 -0.18 0.11

Non Food

Grains

0.42 0.86 1.31

All Crops 1.40 0.01 0.37

Growth During British India 1891-1947


Quotation from Paddock and Paddock (1968) FAMINE 1975, (p.278)

“America will have to apply classical triage method- like doctors on the

battlefield trying to make the best out of minimum resources. She will

have to decide which countries to save and which countries to

sacrifice. Today India absorbs like a blotter 25% of the entire wheat

crop, no matter how one may adjust the present statistics and allows

for future increase in the American wheat crop ... It will be beyond US to

keep famine out of India during 1970. The reason ... of all the national

leadership, the Indian leadership comes close to being the most

childish and inefficient, perversely determined to cut the country’s

economic throat. THE MORAL: If other more deserving countries are to

be saved, India must be sacrificed.”


Crops 1949-50 to 1964-65 1967-68 to 2001-02 Area Prod Yield Area Prod Yield Rice 1.21 3.50 2.25 0.62 2.78 2.20

Wheat 2.69 3.98 1.27 1.38 4.34 2.92

Coarse Cereals

0.90 2.25 1.23 -1.44 0.54 1.90

Cereals 1.25 3.21 1.77 -0.02 2.77 2.32

Pulses 1.72 1.41 -0.18 0.30 0.81 0.74

Food Grains 1.35 2.82 1.36 0.01 2.51 2.12

Oilseeds 2.07 3.20 0.30 1.31 3.32 1.60 Non FoodGrains

2.44 3.74 0.89 1.36 3.20 1.68

All Crops 1.58 3.15 1.21 0.34 2.78 1.90

Growth Performance 1949 to 2002


Crops 1990-91 to 1999-2000 2000-01 to 2011-12 Area Prod Yield Area Prod Yield Rice 0.68 2.02 1.34 Neg 1.78 1.78

Wheat 1.72 3.57 1.83 1.35 2.61 1.24

Coarse Cereals

-2.12 -0.02 1.82 -0.80 3.00 4.44

Cereals 0.04 -0.02 1.59 0.14 2.33 3.33

Pulses -0.60 0.59 0.93 1.60 3.45 2.00

Fd Grains -0.07 2.02 1.52 0.41 2.43 3.03

Oilseeds 0.86 1.63 1.15 2.13 3.75 2.65 Nn FdGrains 1.18 2.69 1.09 2.26 3.83 2.39 All Crops 0.27 2.29 1.33 0.97 2.76 3.27


Annual Growth Rate of GDP at Factor Cost in Agriculture

-15

-10

-5

0

5

10

15

20

1951

-52

1953

-54

1955

-56

1957

-58

1959

-60

1961

-62

1963

-64

1965

-66

1967

-68

1969

-70

1971

-72

1973

-74

1975

-76

1977

-78

1979

-80

1981

-82

1983

-84

1985

-86

1987

-88

1989

-90

1991

-92

1993

-94

1995

-96

1997

-98

1999

-00

2001

-02

Per

Cen

tGrowth Rates in GDP from Agri


Whither Agricultural Reforms

1. How Liberalised Agricultural Sector Is?

2. Performance & Lacunae


First Phase of Reforms

Structural Adjustments Trade Policy, Industrial Policy Relaxation in licensing Fertiliser Policy Removal of

Control on Non-Nitro Fertilisers Targetting of PDS Credit Policy – Financial Sector


Annual Growth Rate of GDP at Factor Cost in Agriculture

-15

-10

-5

0

5

10

15

20

1951

-52

1953

-54

1955

-56

1957

-58

1959

-60

1961

-62

1963

-64

1965

-66

1967

-68

1969

-70

1971

-72

1973

-74

1975

-76

1977

-78

1979

-80

1981

-82

1983

-84

1985

-86

1987

-88

1989

-90

1991

-92

1993

-94

1995

-96

1997

-98

1999

-00

2001

-02

Per

Cen

tGrowth Rates in GDP from Agri


0

20

40

60

80

100

120

140

160

180

Growth in Index of Food Productivity


Index of Yield of Non-Foodgrains

0

20

40

60

80

100

120

140

160


Growth in Index of Total Crop Productivity

0

20

40

60

80

100

120

140

160




19RSD/TISS-Hyd/24-09-13


Importance and What it Involves

Production, State Policy Interventions,Factor Markets,

Institutions; Marketing,Extension, R &

D,Price PolicyISSUES


Issues Confronting the Production Sector

Productivity is fast reaching the achievable optima during the decade.

Changes in Crop Composition are quite visible and the policy also favours diversification

New technological Breakthrough is needed

Relative price trends, distorting the quality of growth

Terms of Trade Trade Centered Growth Value Addition to the Product


Issues Confronting the Factor Markets

Land Use Pattern: Declining Land Productivity, and Dependence on External Nutrients

Land Reforms and the Differential Impact and New Phase

Contributions to Total Factor Productivity

Sectoral Imbalances due to uneven increases in Cost and Returns

Imperfections in the Input Markets


Contd…

Increasing Trends in Inefficient Use of lands

Marginalisation of the Size of Holding

Trends in Capital Formation Imbalances in Fertiliser Use Inefficiency in Water Use Increasing Cost of Cultivation Labour Shortages and Wage Trends


Cross classification

Naturally Well Endowed Regions

Naturally Constrained Regions

Regions with Significant Impact

Punjab; Har; West UP; TN; Kerala; W Mah.; S WB; MP

Gujarat; N Raj;

Regions that remained bypassed

Assam; Bihar; Orissa;N WB; Chhat;

N Kar; APRayal; Mar-Vid Mah;


Trends in Capital FormationGross Capital Formation in Agriculture and Allied Sector

0

5000

10000

15000

20000

25000

Rs.

in

Cro

res

Public Sector Private SectorTotal

Total

Private

Public


Causes of Farm Distress Distress due to Climatic factors Loss of Crop due to inferior quality of

input and timely non availability Adoption of New technology with

inadequate knowledge and expertise Sudden attack of pests and diseases

and associated economic cost for meeting this exigency

Yield or productivity loss due to the above reasons or any other reason

Market prices crash due to bulk arrivals in the market or other extraneous factors


Contd...

Non-availability of proper marketing infrastructure and imperfections in the existing markets

Mounting credit burden, dept trap and consequent financial non-viability

Exploitative interlocking of input-credit-product markets

Failure of extension services to advise at proper time about farm technologies and immediate steps to be taken

Counseling failure by the institutions and breaking off traditional village institutions


Agriculture and Globallisation


Trade Sector : Issues and Challenges

Agricultural Sector with Positive and Increasing Trade Balance

+ ive Growing Exports of Commodities have changed from 47 % to 72 % ; (-) ive changed 52% – 28%

Trade Sensitive Commodities and the State wise list


Export Performance:1995-2013

Positively Growing Marine products; Cashew; Tea Basmati Rice; Spices; Castor

oil Guar gum meal; Tobacco ;

Pulses Processed fruits and juices Sesame and Dairy products Tobacco manufactured Poultry and Dairy products Floriculture products Fruits/Vegetables seeds Cashew nut shell liquid

Negatively Growing Oil Meals; Non-Basmati Rice Coffee; Groundnuts Meat and preparations Fresh vegetables Fresh fruits Misc.processed items Processed vegetables Cotton raw including wastes Spirit and beverages Sugar and Molasses Wheat


Imports with Percent Share: 0.50 to 2.00 per cent (Average of 1990s)

Wheat, Jute and Blast Fibres, Wheat and Meslin, Sugar total raw;

Imports with Percent Share: Above 2.00 per cent: Pulses, Soya bean Oil, Silk, Rice, Natural Rubber and Gum,

Rapeseed Mustard Oil, Cotton lint, Milk and Cream dry, Cereals;

Exports with Percent Share: 0.50 to 2.00 per cent:Soya bean Cake and Meal, Sesame Seed, Coffee Green, Pulses,

Sunflower Seed Cake

Exports with Percent Share: Above 2.00 per cent :Tea, Rice, Cotton lint, Tobacco, Unmanufactured, Castor Oil,

Pepper, Rapeseed and Cake, Onions, Cereals, Oilseed Cake and Meal, Groundnuts.


Trade Reforms

Stepping up of trade in selected agricultural commodities

Encouraging trade in commodities with comparative advantages for the country

New trade avenues for non-traditional agricultural exports/regions

Info on Quality and SPS requirements for different commodities

International market information and market margins


Trends in Agricultural Trade:1990-2003

0

10000

20000

30000

40000

50000

60000

Imports(Rs Cr) Exports(Rs Cr)


Is Agri Suffering


40 % farmers reported that they did not like farming. 27 % reported that their dislike was because farming was not profitable.

60 % Liking Farming

27 % Not Profitable

5 % Risky

8 % Oth. Reasons

Like or Dislike of farming


Awareness of Farmers percentage of farmer households

percentage of farmer households

aware of aware of

State bio- fertilisers

MSP WTO State bio- fertilisers

MSP WTO

Andhra Pr. 11 29 6 Kerala 55 61 44

Assam 26 22 11 Madhya Pr. 10 29 3

Bihar 19 8 Maharashtra

24 28 6

Chhattisgar 11 35 1 Orissa 15 12 2

Gujarat 11 25 6 Punjab 7 63 23

Haryana 9 62 12 Rajasthan 10 11 2

J & K 28 27 7 Tamil Nadu 48 48 12

Jharkhand 23 12 11 Uttar Pradesh

15 33 5

Karnataka 22 29 7 West Bengal 22 30 12

All-India 18 29 8


19 %

10 %

71%

knowing procurementAgency

aware of MSP but notknowing agency

unaware of MSP

Knowledge of Minimum Support Price% of farmer Households


Membership of farmers’ organisations

State % of farmer households with at least one personbelonging to

State % of farmer households with at least one person belonging to

A Regd Farmer’s Org

A Self Help Group

A Regd Farmer’s Org

A Self Help Group

A P 2.4 17.7 Kerala 10.5 19.9

Assam 7.0 8.2 M P 0.8 2.7

Bihar 0.3 0.8 Maharash 2.2 4.9

Chhattis 2.4 6.5 Orissa 0.2 2.8

Gujarat 5.9 3.2 Punjab 0.3 1.5

Haryana 0.0 1.0 Rajasthan 0.4 0.6

J & K 0.6 0.2 T N 3.4 12.9

Jharkha 0.2 2.8 U P 1.0 1.5

Karnata 5.2 8.1 W B 4.0 1.9

All-India 2.2 4.8


State % of households kind of service most commonly availed*(% of households)

State % of households kind of services most commonly availed* (% of households)

not members of co-ops

members but did not avail of services

not members of co-ops

members but did not avail of services

A P 69 12 CR (17%) Ker 40 21 CR (27%)

Ass 83 5 CON (10%) M P. 57 14 SF (23%)

Biha 93 5 CR (2%) Mah 46 18 CR (27%)

Chh 50 9 SF (28%) Oris 78 7 CR (12%)

Gujt 51 11 SF (22%) Punj 58 9 CR (20%)

Hary 62 9 CR (17%) Raja 79 7 SF (7%)

J& K 75 2 SF(16%) T N 57 15 CR (18%)

Jhar 98 2 - U P 80 7 SF (12%)

Karn 64 14 CR (13%) W B 79 10 CR (9%)

India 71 10 CR & S F(9%)

Services of co-operatives


10 %Mem No Serv1 % Con

Goods

9 % Seeds Fer

9 % Credit

71 % Not Members

Services By Co-operatives


0

20

40

60

80

Percent of farmer households using specific resources for farming


Fertiliser

Org Manure

Imp Seeds

Pestides

Vet Ser

Within Village

27 68 18 20 24

< 2 Km 11 4 9 10 11

2-5 Km 26 8 24 26 29

5-10 Km

20 8 24 24 22

10-20Km

12 6 17 16 11

> 20 Km

4 7 7 5 3

Not Rep

.01 .04 .03 .03 .01

Distribution of farmer households by distance from some farming resources used for cultivation


57 %Unaw are

3 %can’t pay premium

24 %facility absent

16 %not interested

Reasons for Non-Insurance


Future Focus


• Rainfed Regions and Bypassed Groups and Crops

• Product Factor Market Imperfections

• Value Additions and Market Margin Reduction

• Safety Net Programmes and Specially Devised Programmes for Rainfed Agriculture

• Proactive Entry into the new phase of growth

• Issue of Subsidies in Agriculture

Major Problems


Reform Platform

Withdrawal of the State (intervention not protection) from the factor as well as Product market intervention and allowing agricultural sector to perform.

Identifying the commodities with competitive advantage in international trade and creating institutional incentive structures for such commodities for boosting up the growth in trade.

Creating an institutional setup to help agricultural sector in order to negotiate with the new policy regimes.


Contd….

Disseminating information about the forthcoming changes in the sector to the farmers in the language understandable to them.

To identify and enlist the natural resource degradation process and create forces with proper incentives to internalize the negative externalities.

Address Land Market,Labour – Factor Market imperfections With First Priority

A proactive price policy, Procurement as a Commercial Operation


Domestic Market Reforms

State Interventions Low Density of Markets Movement of Commodities across

regions Within Market Infrastructure Market Information Process of Marketing and existing

Imperfections Market intervention schemes


Policy

Proactive and not Responsive role. Play with partners. Sensitive commodities & Regions

Food Security, Vulnerable Section and Regions; Sustainable living standards as main arguments

Bring out Hidden subsidies and file disputes

Involvement of Stakeholders Technical R & D back up

institutions.


Education

Agriculture & Rural Development TISS