Thanks to the
Annual Budget 2015–16, agriculture is once again on the agenda of every
discussion about required policy interventions. The signals are clear – the government
wants better returns for farmers by linking them to the market and by providing
them with better infrastructure. Subsidies, in current form, are likely to go.
The shift from subsistence farming to commercial farming is slowly becoming a reality
and being considered as the major way out for improving the state of
agriculture and farmers in country. The ‘Make in India’ philosophy of the
government is encouraging the processing and marketing of agricultural products
rather than direct consumption. Increasing marketability is the focus rather
than increasing production. However, we, in India still face the challenges of numerical
dominance of small and marginal farmers, and access of organized market to
those small farmers.
According to an
estimate, more than 99% of the raw materials for industries are being produced
by smaller farmers, and 90% of the marketed surplus is being handled by the private
sector which, again, is dominated by the not so organized players. Lack of
infrastructure, both for scientific production and for marketing of agricultural
produce is a well known and well discussed issue. And only 7% of agricultural produce are
processed for further value addition. Now what options do we have by which most,
if not all of the existing players in agriculture production and marketing are benefited?
The first answer
has been tried in different parts of the country – contract farming. By
definition contract farming is forward contract wherein the producer farmer
agrees to produce and sell their produce having specified quality at agreed
upon price to the processor/middle men/industry. Unfortunately, in spite of many successful
case studies it has failed to meet the market expectations. There could be
different reasons however, small size of farms and large number of such farmers
have been among the major factors considered responsible for not turning
contract farming into a revolution. If successful, it has the potential of
removing many limitations of Indian agriculture.
Second, which is
being encouraged by successive governments, is commercialization of
agriculture. Commercialization makes agriculture production, processing and
marketing riskier. Seventy five percent
of total contribution by agriculture in our GDP comes from the high value
products. Higher costs of inputs mixed with lack of skills of using high valued
inputs, inefficient processing because of inconsistent supply uniform raw
materials, fluctuating prices of raw materials, comparatively less usage of
improvised technologies in production and packaging, and challenges in
marketing these perishable products with changing customers tastes make it too
risky for everyone involved in the process. It can, however, be argued that
this is not something specific to India and there have been similar conditions
in many other countries. They however, have succeeded. Why can’t India overcome
these issues? Unfortunately, assumption that as farmers’ paying capacity
increases other supporting services like, information and advisory services,
credits and banking, and insurance will cope and meet the farmers’ requirements
is misleading one. Sadly, failure of
these services along with all ready dilapidated extension services resulted in
series of many unwanted events like, crop failures, demand and price crash of
many products, and ultimately farmer suicide. Small and marginal farmers who
constitute the majority were the worst sufferers.
Lack of
strategic investment in agriculture has been another concern. Although, overall
expenditure including subsidies has been continuously rising but the money has
not reached where it should reach: where it will have maximum impact.
Expenditure because of subsidy on fertilizers, warehouses, cold storages,
agriculture implements, are required and welcome but this cannot give us
appropriate return on investment unless our farmers’ capacity is built to
produce and market their produce efficiently. In spite of the ever spreading
network of banks and increasing emphasis on financial inclusion in the country,
only 15% of small and marginal farmers have their accounts in banks. Access to
credit in most parts of the country is still a problem and dependence on money-lenders
or trade middlemen makes agriculture a non-profit venture for most of the small
farmers.
Till now the major
focus of removing rural poverty has been on agriculture. However, the country
is witnessing changes in consumption patterns both in urban and rural areas.
The demand is shifting towards protein based food like, milk and milk products,
meat, poultry, vegetables and fruits from that of cereals. These rich food
products have better production efficiency, return is higher than that from growing
traditional cereals or millet based crops after investing the same amount of resources
(manpower and economic). We have a successful cooperative model of Amul, which
is not only inclusive but also provides access to market to individual
livestock owners. Regrettably, we are not able to replicate the success of Amul
for other products.
Till the time,
both, policy makers and the market stop looking at the small and marginal farmers
as consumers, and start considering them as the partners, growth in agriculture
will remain skewed in favor of large farmers. Although numerically stronger,
small and marginal farmers lack negotiating power. Lack of information,
resources, and negotiating power render them weaker in agriculture production,
processing and marketing system. If
farmers and rural India has to be empowered and a “Make in India” campaign has
to be successful, we just cannot then afford to ignore the small and marginal
farmers who constitute 80% of total farming population.
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