Prospects for the Convergence of the Lagging Regions with more Progressive Regions of India

P K Joshi and Anjani KumarSouth Asia Regional Office

International Food Policy Research InstituteE-mail: p.joshi@cigar.org; Web: www.ifpri-org

Outline

Key characteristics of lagging regions

Opportunities in lagging regions

The way forward for converging lagging

regions with prosperous regions

I

Key Characteristics of Lagging Regions

Key characteristics of lagging areas

Abundant water; abundant sun shine; abundant labour

Agriculture is still subsistence and laggard

Concurrent twin problems of drought and flood Increase risk in agriculture

High poverty and acute under-nourishment

Lagging regions: crowded and risky (e.g. Bihar and Odisha)

Most backward states with high poverty (43% Bihar and 46% in Odisha) Low urbanization (11% in Bihar and 17% in Odisha)

97% holdings in Bihar and 92% holdings in Odisha are smallholders Occupy 76% area in Bihar and 70% in Odisha

Average size of smallholders is 0.3 ha in Bihar and 0.8 ha in Odisha

Crop sector contributes 58% in Bihar and 70% in Odisha Yield gaps are very high (131 to 300% of rice in Bihar)

Low cropping intensity 1/3 of total 13 million ha rice-fallow lands

Meager investment in agricultural research and extension < Rs 10 per thousand population

5

Smallholding and rural poverty

PovertyLow (<30%) High (>30%)

Smal

lho

lde

rs

Lo

w (

<85%

Gujarat, Haryana, Karnataka,

Meghalaya, Maharashtra, Nagaland,

Punjab, Rajasthan, Sikkim

(22% smallholders & 21% poverty)

Arunachal Pradesh, Jharkhand, Madhya Pradesh,

Manipur, Chhattisgarh

(10% smallholders and 17% poverty)

Hig

h (

>85%

) Andhra Pradesh, Goa, Himachal

Pradesh, Jammu & Kashmir, Mizoram,

Tamil Nadu, Tripura and Uttaranchal

(25% smallholders and 11% poverty)

Assam, Bihar, Odisha, Uttar Pradesh, West

Bengal

(43% smallholders and 51% poverty)

• Low income generating opportunities, high dependency in agriculture and low agricultural productivity• Poor infrastructure and weak institutional arrangements• Poor Social development Indicators (Rural literacy, toilets, urbanization, HDI)

6

Climate change and vulnerability: place of lagging states

Vulnerable to climate change Very high and high category of vulnerability

Rajasthan, Uttar Pradesh, Madhya Pradesh, Bihar, Gujarat, Karnataka, Maharashtra

Rise in temperature, decrease in July rainfall, increase in drought years

Madhya Pradesh, Karnataka

Decrease in July rainfall and rise in minimum temperature and drought year

Bihar and Maharashtra

Vulnerability compounded by poverty in Bihar

Vulnerability increases and adaptation capacity decreases from west to east Highest adaptive capacity in Punjab and Haryana

High adaptation due to irrigation, ability to use inputs, electrification and better road network

7

Climate change: implications on production and prices

0

5

10

15

20

25 23

16

13 13

10

5 5

Rise in prices due to 10% drought

Rise in prices

Climate change affects food production and raise their prices and make people more poor Most affected laggard areas and smallholders

Prices of major rainy season crops will increase due to drought

Demand will go down due to rise in prices

Rice by 5.5%; and 2-4% for other commodities

India might import 15 million tons of rice due to 20% drought in 2020 Affect global prices significantly

Adverse effects on poverty

8

Source: Kumar, et al 2013

II

Opportunities in Lagging Regions

Bridge yield gaps (kg/ha)

Crop / YearBihar Odisha

TE 2000/01 TE 2010/11 TE 2000/01 TE 2010/11

Paddy Average yield 1,495 1,290 1,130 1,600

Potential yield 2,748 2,960 2,142 2,448

CV (%) 31.1 32.4 24.4 20.4

Wheat Average yield 2,147 2,197 1,351 1,346

Potential yield 2,957 3,389 2,000 2,000

CV (%) 16.4 19.1 25.7 24.0

Maize Average yield 2,201 2,758 1,182 1,124

Potential yield 3,861 5,354 2,123 2,800

CV (%) 26.3 34.1 30.2 45.8

Pulses

Average yield 882 873 399 479

Potential yield 1,514 1,543 673 721

CV (%) 21.5 24.1 24.9 17.8

Connect invention to innovation: potential of hybrid rice

Yield range, t/ha

Average yield, t/ha

Districts

< 5.00 4.67 West Singhbhun (4.81); Dumka (4.29); Chatra(4.92)

5.0 – 6.0 5.75 Ranchi (5.72); Godde (5.64); Koderne (5.90)

6.0 – 7.0 6.33 Lohardaga (6.03); Shibganj (6.89); Palamau (6.06)

> 7.00 7.43 Bokaro (7.54); Gharwa (7.06); Dhanbad (7.98); Pakur (7.07); East Singhbhum (7.54)

Emerging hybrid maize in Bihar, yields (t/ha)

1.7

2.41

2.63

3.18

5.66

6.66

0 1 2 3 4 5 6 7

Rainy

Winter

Local Composite Hybrids

Promote climate smart agriculture: farmers’ preferences to various technology interventions

Bihar 1. Laser land Levelling

2. Rain water conservation

3. Systems of Rice Intensification

4. Green manuring

5. Crop Diversification

6. Crop Insurance

Investment and its impact on crop sector

Item Unit Current 20% Investment

% Change

Production m t 10.89 17.11 57.00

Income b Rs 107.00 135.30 26.00

Employment m days 403 435 8.00

Water use 000 m c m 33.45 22.43 -33.00

Income LS b Rs 35.00 53.86 53.00

Emission M t CO2 eq 14.80 13.26 -10.00

5. Harness potential of rice-fallow

Extent of rabi-fallow area

1.2

1.72.2

4.4

9.5

11.6

0

2

4

6

8

10

12R

ice-

fallo

w a

rea, m

ha

Ori

ssa

W B

engal

Bih

ar

MP

4 St

ates

Ind

ia

31

37 37

78

47

38

0

20

40

60

80

Rab

i fa

llo

w a

s o

f

kh

arif

ric

e. %

Ori

ssa

W B

eng

al

Bih

ar

MP

4 St

ates

Ind

ia

18 1015

1938

Orissa W Bengal Bihar MP Other

Agricultural diversification: Share of food commodities in value of agricultural output, %

1990/

91

2000/

01

2009

/10

Paddy 20 13 11

Wheat 14 11 9

Maize 3 3 2

Pulses 7 3 2

F & Veg 14 36 24

L’stock 30 25 42

Others 12 9 10

Diversification towards livestock

sector

F & V and L’stock shares 66% in

Value of Agricultural Output

Declining size of holdings

Rising demands

COMFED (dairy) Membership up

17.282 m in 1999/00

48.96 m in 2010/11

Milk collection up 281.08 th kg/day in 1999/00

608.38 th kg/day in 2006-07

Number of markets per million cultivators across districts in India

Markets per million cultivars

Category % districts

< 1.0 50

1.0 - 2.0 28

2.0 - 3.0 10

3.0 - 4.0 3

> 4.0 9

Markets (per million cultivators) and rice yields across districts in India

Options to link farmers with markets: develop value chains

Farmers’ markets

Self-help groups

Farmers’ cooperative

Contracting farming

Farmer Producer Organization

Warehouse receipts

Role of financing institutions

Role of private sector

Commodity markets

Hedging

Physical transactions

Virtual transactions

Foreign direct investment (FDI)

Agro-processing 100 percent in equity

Seed development and production

Single brand retail 100%

Multi-brand retail

51%

Conditions for FDI in multi-brand retail:

50 % in backend

30% procurement from SMEs

Food sector received only 3.3% of the gross FDI flow in India between 2000 and 2010

Seed sector: Cargill, Syngenta, Monsanto

Processing sector Britannia; Nestle; Kellogg; PepsiCo., Perry

Major players in back-end Wal-Mart cash & carry

Metro cash & carry

Food service restaurants (single brand) KFC; Pizza Hut; Dominoes; McDonald’s etc

III

The Way Forward

The way forward

Land reform

Change ceiling laws; land lease system

Market linkages, post-harvest reforms and agro-processing

Develop markets and institutions; minimize risk, promote agro-processing

Minimize agricultural risks and adapt climate change

Climate smart agriculture, agriculture insurance

Pro-smallholder agricultural research agenda

Farm mechanization, energy, and climate smart agriculture

Convergent innovation

Converse policies, programs, technologies, markets, social mobilization

Non-farm employment opportunities

Reduce dependency in agriculture by generating off-farm employment opportunities22

Special programs for lagging states to bridge gap with prosperous regions

Thank you