24439861 Project Report on the Revival of Indian Agriculture

8/2/2019 24439861 Project Report on the Revival of Indian Agriculture

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Secondary data will be collected from the books, internet, agri-

business journals and magazines.

Overview of Indian Agriculture along with its Marketing

and Financial aspects:

Agriculture is the backbone of Indian Economy. About 65% of Indianpopulation depends directly on agriculture and it accounts for around 22%of GDP. Agriculture derives its importance from the fact that it has vitalsupply and demand links with the manufacturing sector. During the pastfive years agriculture sector has witnessed spectacular advances in theproduction and productivity of food grains, oilseeds, commercial crops,fruits, vegetables, food grains, poultry and dairy. India has emerged asthe second largest producer of fruits and vegetables in the world in

addition to being the largest overseas exporter of cashews and spices.Further, India is the highest producer of milk in the world.

BROAD CHARACTERISTICS OF AGRICULTURE:Agriculture in India is in the hands of millions of peasant households, abulk of which comprise tiny land holdings with preponderance of ownercultivation. There is hardly any direct government intervention in theproduction and investment decisions of the farmers but the governmentdoes influence the legal, material and economic environment in whichfarmers operate (Vaidyanathan 1996). Though tremendous progress hasbeen made to exploit irrigation potential in the country still two third ofarea under cultivation is unirrigated and there is thus heavy dependenceof production on vagaries of nature i.e. rainfall. Irrigated areas haveexperienced sharp increase in productivity level and large part of outputat such farms is for market. On the other hand, productivity in unirrigatedareas has remained either stagnant or experienced very small growth andmost of the farmers in such areas produce for subsistence purpose.At overall level, agricultural growth remained slow (below 3 percent) intheCountry. Apart from that, agricultural growth remained confined to a few

well endowed pockets which has created regional disparities.

STRUCTURE OF INDIAN AGRICULRURE:

Indias agricultural area is vast with total arable and permanent croplandof 170 million hectares in 2003- 2005. It has the second largest arablearea in the world after the United States. OECD in its 2007 agriculturalpolicy monitoring report notes that Indian agriculture is dominated by alarge number of small scale holdings that are predominantly owner

occupied.


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The average size of holding in the late nineties was about 1.4 hectaresand continues to decline, as farms are usually divided on inheritance. Outof Indias 116 million farmers, around 60% have less than 1 hectare andtogether they farm 17% of the land. The share of medium to large farms(above 4 hectares) is very small at just over 7% of all holdings, but these

farms account for around 40% of the land. The implication is that many ofthe very small farms are subsistence holdings, with low investment andlittle productivity growth.

PHASES IN AGRICULTURAL POLICY:

The period from 1950/51 to mid 1960s which is also called pre green?Revolution period witnessed tremendous agrarian reforms, institutional

changes and development of major irrigation projects. The intermediarylandlordism was abolished; tenant operations were given security of


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farming and ownership of land. Land ceiling acts were imposed by all thestates to eliminate large sized holdings and cooperative credit institutionswere strengthened to minimize exploitation of cultivators by privatemoney lenders and traders (Radhakrishna 1993). Land consolidation wasalso affected to reduce the number of land fragments. The biggest

achievement of New Agricultural Strategy, also known as greenrevolution technology, has been attainment of self sufficiency in foodgrains. Since the green revolution technology involved use of modernfarm inputs, its spread led tofast growth in agro input industry. Agrarian reforms during this periodtook back seat while research, extension, input supply, credit, marketing,price support and spread of technology were the prime concern of policymakers (Rao 1996). Two very important institutions, namely FoodCorporation of India and Agricultural Prices Commission, were created inthis period in the beginning of green revolution period, to ensureremunerative prices to producers, maintain reasonable prices forconsumers, and to maintain buffer stock to guard against adverse impactof year to year fluctuations in output on price stability. These twoinstitutions have mainly benefited rice and wheat crops which are themajor cereals and staple food for the country.

The next phase in Indian agriculture began in early 1980s. Whilethere was clear change in economic policy towards delicensing andderegulation in Industry sector, agriculture policy lacked direction and wasmarked by confusion. Agricultural growth accompanied by increase in realfarm incomes led to emergence of interest groups and lobbies which

started influencing farm policy in the country. There has been aconsiderable increase in subsidies and support to agriculture sector duringthis period while public sector spending in agriculture for infrastructuredevelopment started showing decline in real term but investments byfarmers kept onMoving on a rising trend (Mishra and Chand 1995, Chand 2001). Theoutput growth, which was concentrated in very narrow pockets, becamebroad- based and got momentum. The rural economy started witnessingprocess of diversification which resulted into fast growth in non foodgrainoutput like milk, fishery, poultry, vegetables; fruits etc which acceleratedgrowth in agricultural GDP during the 1980s.This growth seems largely

market driven.

RECENT TRENDS IN INDIAN AGRICULTURE:Though green revolution has been widely diffused in irrigated areasThroughout the country, the dry land areas have not seen benefit oftechnological breakthrough as witnessed through green revolutiontechnology. Of late, improved varieties of oilseeds and course cerealshave provided some opportunities for productivity growth in dry landareas. A new phase was started in Indias economic policy in 1991 that

marked significant departure from the past. Government initiated processof economic reforms in 1991, which involved deregulation, reduced


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government participation in economic activities, and liberalization.Though much of the reforms were not initiated to directly affectagriculture sector, the sector was affected indirectly by devaluation ofexchange rate, liberalization of external trade and disprotection toindustry. Then came new international trade accord and WTO, requiring

opening up of domestic market. Initially there were strong apprehensionsabout the impact of trade liberalization on Indian agriculture which lateron turned out to be real threat for several commodities produced in thecountry. All these changes raised new challenges and provided newopportunities that required appropriate policy response. Besides, last twodecades had witnessed mainly price intervention that had a very limitedcoverage, and there was a sort of policy vacuum. Because of this, therewas a strong pressure on the government to come out with a formalstatement of agriculture policy to provide new direction to agriculture inthe new and emerging scenario. In response to this, government of Indiaannounced New Agricultural Policy in July 2000.


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Climate:

India has Monsoon climate in which a year has been divided into twodistinct seasons of summer and winter. Rainfall occurs mainly in summer.

Weather Forecasting System:

India has a strong weather forecasting system developed and maintainedby Indian Meteorological Department (IMD). Apart from weatherforecasting and severe weather warning, it also gives agro meteorologicalservices to farmers in India.

Agro Climatic Zones:

India has diverse agro-climatic zones from north to south and from east towest. It has been divided into fifteen different agro-climatic zones, whichsignifies its diversified agricultural production from tropical to temperate

crops.

Major Crops:

Rice, Wheat, Sugarcane, Oilseeds, Pulses, Cotton, Jowar, Bajra, Ragi, Tea,Coffee, Coconut, Cashew, Rubber, Spices, Cauliflower, Onion, Cabbage,Mango, Banana, Sapota, Acid lime.

Farm Size:

Indian Agriculture is characterized by small and marginal operationalholdings. About 85% of total cultivated land has been fragmented into less


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than 10-hectare land. About 60% of farmland is less than 4 hectare insize.

Extent of Mechanization:

Mechanization in Indian agriculture is still at rudimentary stage showingregional variation. But it is increasing over the years. Power availability forcarrying out various agricultural operations, which is one of the indicatorsof mechanization, has been increased.

Plantation:

Tea, Coffee, and Natural rubber are the main plantation crops in India thatcontribute in Indian export to a considerable extent. India is the largestproducer and consumer of tea in the world. It contributes 4% to global

coffee production and enjoys a niche market by producing both arabicaand robusta coffee. In rubber also, it ranks third in production and fourthin consumption of natural rubber in the world.

Horticulture:

India has a great potential in the production of horticultural crops, whichincludes fruits, vegetables, spices, floriculture, and plantations. Acreageunder horticulture is around 20 million hectares. India is the secondlargest producer of both fruits and vegetables in the world. It occupiesfirst position in the production of cauliflower, second in onion, and third in

cabbage.

Dairy:

India ranks first in the world in milk production, which was around 100million tones in 2006-07.Strong networks of Milk Cooperatives, have beeninstrumental in this phenomenal performance of dairy sector in India.Presently, 1.13 lakh village level cooperative societies spread over 265districts in the country form part of the national Milk Grid. This Grid linksmilk producers throughout India and consumers in 700 towns and cities.

De-licensing of dairy sector in 1991 has directed considerable amount ofprivate funds both from inside and outside country in this sector especiallyin manufacturing facilities while investment in cooperative sector areconcentrated largely in procurement and processing of milk. Livestock:Livestock sector contributes about 27% of the G.D.P. from agriculture andallied activities. This sector has excellent forward and backward linkages,which p-promote many industries and increase the incomes of vulnerablegroups of the society such as agricultural labourers and small andmarginal farmers. India possesses the second largest livestock populationin the world.

Fishery:


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Fishing, aquaculture and a host of allied activities are a source oflivelihood to over 14 million people and a major source of foreignexchange earner. In 2005-06, this sector contributed about 1% of G.D.P.and 5.3% of G.D.P from agricultural sector.8, 118 k.m. of coastline givesgeographical basis for the development of marine fishery sector and

cultural factor boosts the inland fishery sector in India.

Agricultural Finance:

Credit: Availability of adequate credit is vital for every sector andagriculture is not an exception. In India, Commercial Banks, CooperativeBanks, and Regional Rural Banks (RRBs) are responsible for smooth flowof credit to agricultural sector. But a huge unorganized market exists forcredit to agricultural sector in India, which provide timely fund to thissector but at the exorbitant rate of interest. Among organized credit

disbursement to agriculture commercial banks play a vital role with ashare of about 70% where as cooperative sector and RRBs contribute 20%and 10 % respectively.Kisan Credit Card (KCC) scheme was introduced toprovide adequate and timely support from the banking system to thefarmers for their cultivation needs. This scheme has made rapid progressand more than645 lakh cards issued up to October 2006. The 'Farm CreditPackage' announced by the Government of India in June 2004 stipulateddoubling the flow of institutional credit for agriculture in ensuing threeyears.

Insurance:


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Insurance is a prime necessity to mitigate uncertainty that persists inAgriculture. In India, agriculture is still affected by such factors, which arebeyond control of human being. So, there is a great need for agriculturalinsurance in India. Keeping this in mind, Government of India incoordination with the General Insurance Corporation of India (GIC) had

introduced National Agricultural Insurance Scheme (NAIS) from Rabi 1999-2000 seasons. The main objective of this scheme is to protect the farmersagainst losses suffered by them due to crop failure on account of naturalcalamities. Agricultural Insurance Company of India (AICIL) which wasincorporated in December 2002 took over the implementation of NAIS.AICIL introduced Rainfall Insurance Scheme called 'Varsha Bima' during2004 southwest monsoon period. Varsha Bima provided for five differentoptions suiting varied requirements of farming community:

1. Seasonal rainfall insurance based on aggregate rainfall fromJune to September.2. Sowing failure insurance based on rainfall between June 15 andAugust 15.3. Rainfall distribution insurance with the weight assigned todifferent weeks June and September.4. Agronomic index constructed on the basis of waterrequirements of crops.5. A catastrophe option covering extremely adverse deviation of50% and above in rainfall during the season.

Marketing of Agricultural Products:

Form of Markets exists in India:

Agricultural markets in India are dominated by the existence ofunorganized and unregulated agricultural mandies with the presence of alarge number of middlemen and widespread prevalence of malpractices.Absence of proper warehousing facilities in the villages, lack of propertransportation facilitiesand infrastructure such as rails and good quality all weather roads andignorance about the market prices of their products are some of theimportant factors for exploitation of farmers from middle men. They areforced to sell their products to these middlemen at the farm gate atthrowaway prices.

Agricultural Market Reforms in India:

Ministry of Agriculture had formulated a model law on agriculturalmarketing in consultation with State/Union territory Governments to bringabout marketing reforms in line with emerging trends. This model actenables establishment of private markets/yards, direct purchase centers,consumers/farmers markets for direct sale, and promotion of public-

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Partnership (PPP) in the management and development of agriculturalmarkets in the country. It also provides for exclusive markets for onion,fruits, vegetables, and flowers. Regulation and promotion of contractfarming arrangement has also been made a part of this legislation. Aprovision has also been made for constitution of State Agricultural

Produce Standard Bureau for promotion of grading, standardization, andquality certification of agricultural produce. So far, 15 States and 5 UnionTerritories have amended their Agricultural Produce Marketing Committee(APMC) Act to derive the benefits of market reforms.

E-Chaupal:

E-Chaupal is a business platform consisting of a set of organizationalSubsystems and interfaces connecting farmers to global markets. It hasbeen initiated by International Tobacco Company (ITC) who are quiteactive in agricultural sector in India. This e-chaupal business platformconsists of three layers each of different level of geographic aggregation.Each of the three layers is characterized by three key elements:

1. The infrastructure (physical or organizational) through whichtransaction takes place.2. The entity (person or organization) orchestrating thetransactions, and3. The geographical coverage of the layer.

The first layer consists of the village level kiosks with internet access (e-

chaupals), managed by an ITC trained local farmer and within walkingdistance (I-5 kilometers) of each target farmer. Each cluster of fivevillages gets an e-chaupal, which is justified by sparse population in ruralIndia. The second layer consists of a brick and mortar infrastructure calledhubs managed by the traditional intermediary who has localknowledge/skills called a Samayojak and within tractorable distance (25-30 kilometer) of then target farmer.

Agricultural Commodities Exchanges:

To introduce future trading in agricultural commodities in India, twocommodity exchanges have been introduced in 2003 for future trading.They are, National Commodity & Derivatives Exchange Limited (NCDEX)and Multi Commodity Exchange of India Limited (MCX). These exchangesare majorly dealing in agricultural commodities. They are involved inforward trading to mitigate price risks of the farmers.


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International Trade & Indian Agriculture:

Agricultural Export: India's total exports of agricultural and allied productsat $10.5 billion in 2005-06 constitute 10.2% of its export share. Developedcountry markets account for nearly 35% of India's agri-exports. Inagricultural exports there are varied performances across commodities.Contribution of various agricultural commodities in world exports has beenlisted below.*Source: NCTI based on UN-ITC Trade Map Data.

Export of Marine products, which after a decline in 2003-04 had picked upin subsequent years, grew by 6.3% in April- October-2006.In terms ofexport earnings, among marine products, frozen shrimp contributed to bethe largest export item, followed by frozen fish, Product Percentage sharein World Export :Lac, gums, resins, vegetable products 10 Vegetableplanting materials, vegetable products 4.9 Coffee, tea, mate & spices 3.7Marine products 2.3 Residues, waste of food industry, animal fodder 2.1Cereals 1.3Fruits & nuts 1.1 cuttlefish, squid, and dried items. European Union

accounted for the largest share of India's export of marine products,followed by US and Japan. This sector, however, faced a number of


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hurdles in the major export destinations. Indian shrimp imports to USAhave been subject to anti dumping duty of 10.17% from August 2004. InEuropean markets, India's marine products have been facing problem dueto multiplicity of standards-in addition to the EU's own standards, thestandards of each of the own member states.

Agricultural Imports and Exports:


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Agricultural import contributes about 3% in total merchandise import toIndia. Major imports during April-October 2005 included vegetable oils(US$ 1237.3 million), raw cashew nut (US$ 287.8 million), pulses (US$281.8 million) and sugar (US$ 138.7 million).Vegetable oils and pulses arelargely imported to augment domestic supplies and raw cashew is

imported for processing and re-exports, as domestic production is notadequate to meet the demand of processing capacity installed in thecountry. L Agri Export Zones: In the Export Import (EXIM) Policy 2001-02,the Government of India announced the proposal to set up Agri-ExportZones for the purpose of developing and sourcing raw materials and theirprocessing/packaging leading to final exports. The concept essentiallyembodies a cluster approach of identifying the potential products and thegeographical region in which such products are grown and adoption of anend to end approach of integration of the entire process, right from thestage of production to consumption.1. Removal of distorting subsidies and protection by developedcountries to level thePlaying field, and2. Appropriate provisions designed to safeguard food and/orlivelihood security, and to meet the rural development needs indeveloping countries.

Indian Council of Agricultural research (ICAR) is an apex body inIndia at the national level, which promotes science and technologyprogrammes in the area of agricultural research, education, and extensioneducation. Agriculture and Employment: bout 65% of Indian population is

dependent on agriculture for their livelihood. This sector has strong


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forward and backward linkages and its performance affects each andevery sector of the country.Sustainable Agriculture: Organic Farming:

In the recent decades, there is an increasing demand of organic foods in

the developed world. Organic farming is an important pillar of sustainableagriculture, which is beneficial for producers and consumers both. Indiahas a great potential for organic farming using traditional wisdomsprevailing in the villages of India. In fact, a large section of Indianagriculture uses more or less organic method of farming using minimumlevel of chemical inputs. Promotion of organic farming in India could provebeneficial to increase share of Indian agricultural export in the worldexport.

INDIAN AGRICULRURE: ITS ISSUES AND CHALLENGES

Although agriculture contributes only 22% of Indias GDP, its importancein the countrys economic, social, and political fabric goes well beyond thisindicator. The rural areas are still home to some 72 percent of the Indias1.1 billion people, a large number of whom are poor. Most of the ruralpoor depend on rain-fed agriculture and fragile forests for theirlivelihoods.

The sharp rise in food grain production during Indias Green Revolution ofthe 1970s enabled the country to achieve self-sufficiency in food grains

and stave off the threat of famine. Agricultural intensification in the 1970sto 1980s saw an increased demand for rural labor that raised rural wagesand, together with declining food prices, reduced rural poverty.

Sustained, although much slower, agricultural growth in the 1990sreduced rural poverty to 26.3 percent by 1999/00. Since then, however,the slowdown in agricultural growth has become a major cause forconcern. Indias rice yields are one-third of Chinas and about half of thosein Vietnam and Indonesia. With the exception of sugarcane, potato andtea, the same is true for most other agricultural commodities.

The Government of India places high priority on reducing poverty byraising agricultural productivity. However, bold action from policymakerswill be required to shift away from the existing subsidy-based regime thatis no longer sustainable, to build a solid foundation for a highly productive,internationally competitive, and diversified agricultural sector.

ISSUES AND CHALLENGES:

NEW AGRICULTURAL POLICY AND CHALLENGES IN INDIANAGRICULTURE:

The challenges facing Indian agriculture can be grouped in four categories


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relating to:(1) Growth(2) Sustainability(3) Efficiency and(4) Equity.

There are also other important concerns like food security, livelihood,employment, improvement in standard of living of agricultural population.Addressing these challenges requires efforts on several fronts likeincentive structure, infrastructure, technology, market development,extension, regulations, input supply, tenancy etc. New agriculture policyshould address above challenges through efforts in abovementioned areasand also provide direction to the future of agriculture in the country. TheNational Agricultural Policy (NAP) document aims to attain output growthrate in excess of 4 percent per annum in agriculture sector based onefficient use of resources. It seeks to achieve this growth in a sustainablemanner and with equity. The Policy resolution than describe in detail thestrategy and policy alternatives which are grouped under the followingheads:1. Sustainable agriculture2. Food and nutrition security3. Generation and transfer of technology4. Inputs management5. Incentive for agriculture6. Investment in agriculture7. Institutional structure8. Risk management


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Slow Down in Agricultural and Rural Non-Farm Growth: Both the poorestas well as the more prosperous Green Revolution states of Punjab,Haryana and Uttar Pradesh have recently witnessed a slow-down inagricultural growth. Some of the factors hampering the revival ofgrowth are:

Poor composition of public expenditures: Public spending onagricultural subsidies is crowding out productivity-enhancinginvestments such as agricultural research and extension, as well asinvestments in rural infrastructure, and the health and education ofthe rural people. In 1999/2000, agricultural subsidies amounted to 3percent of GDP and were over 7 times the public investments in the

sector.

Over-regulation of domestic agricultural trade: Whileeconomic and trade reforms in the 1990s helped to improve theincentive framework, over-regulation of domestic trade hasincreased costs, price risks and uncertainty, undermining thesectors competitiveness.

Government interventions in labor, land, and creditmarkets: More rapid growth of the rural non-farm sector isconstrained by government interventions in factor markets -- labor,

land, and credit -- and in output markets, such as the small-scalereservation of enterprises.


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Inadequate infrastructure and services in rural areas.


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Weak Framework for Sustainable WaterManagement and Irrigation:

Inequitable allocation of water:Many states lack theincentives, policy, regulatory, and institutional framework for theefficient, sustainable, and equitable allocation of water.

Deteriorating irrigation infrastructure:Public spending inirrigation is spread over many uncompleted projects. In addition,existing infrastructure has rapidly deteriorated as operations andmaintenance is given lower priority.

Inadequate Access to Land and Finance: Stringent land regulations discourage rural

investments:While land distribution has become less skewed, landpolicy and regulations to increase security of tenure (includingrestrictions or bans on renting land or converting it to other uses)have had the unintended effect of reducing access by the landlessand discouraging rural investments.

Computerization of land records has brought to lightinstitutional weaknesses: State government initiativesto computerize land records have reduced transaction costs andincreased transparency, but also brought to light institutionalweaknesses.

Rural poor have little access to credit:While India has a widenetwork of rural finance institutions, many of the rural poor remainexcluded, due to inefficiencies in the formal finance institutions, theweak regulatory framework, high transaction costs, and risksassociated with lending to agriculture.

Weak Natural Resources Management:One quarter of Indiaspopulation depends on forests for at least part of their livelihoods.

A purely conservation approach to forests isineffective: Experience in India shows that a purely conservationapproach to natural resources management does not workeffectively and does little to reduce poverty.

Weak resource rights for forest communities: The forest sectoris also faced with weak resource rights and economic incentives forcommunities, an inefficient legal framework and participatorymanagement, and poor access to markets.

Weak delivery of basic services in rural areas:

Low bureaucratic accountability and inefficient use of public

funds: Despite large expenditures in rural development, a highlycentralized bureaucracy with low accountability.


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PRIORITY AREAS FOR INDIAN AGRICULTURE ANDPROBABLE SOLUTIONS:

Growth prospects:

Agricultural growth is essential for the sectors progress and for overallgrowth of Indian economy. This growth rate is also a sort of essentialcondition for improving living standard of those who are dependent on

agriculture. The main goal of National Agricultural Policy to achievegrowth rate higher than four percent seems to be formidable taskparticularly when we look at historical rate of growth in Indian agriculture.As can be seen that growth rate in Indian agriculture in the postIndependence period is found to be 2.55 percent per annum. This growthrate includes contribution of technological breakthrough of greenrevolution and major expansion in irrigation and in area under cultivation.Out of these three sources of output growth the scope for expansion ofcultivated area is much more limited in future compared to thatexperienced in the past. Net cultivated area (NCA) has become stagnantat 142 million hectares (Table 2) and unless serious efforts are launched

to bring wastelands under cultivation there would be no scope to expandNCA. However cultivated area as such can be expanded by raising more


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number of crops on the same piece of land i.e. by raising crop intensity.This expansion dependsheavily on provision of irrigation.

Source of data: National accounts Statistics, various issues.

Ultimate Irrigation potential:

This shows that tremendous efforts are needed in development ofirrigation in the country to help attain growth rate stipulated in Nationalagricultural Policy. This would require very sharp increase in publicinvestments in agriculture, which has remained either stagnant orfollowed decline during the last two decades. It would not be anexaggeration to say that for creating such a magnitude of irrigationpotential would require trebling of public investments in real terms.

Second, expansion of irrigation through conventional means like majorirrigation projects is likely to face resistance from various environmentalgroups. Growth rate results presented in Table 1 indicate that among allthe five decades in post independence India, highest growth rate isrealized during the decade of 1990s. This is the result of three factors.Main factor underlying high growth during the last decade isdiversification towa rds horticultural crops. Horticultural crops showedtrend growth rate close to 6 percent, which helped agriculture sector toattain growth rate of 3.28 percent. Second, the decade of 1990s haswitnessed highest expansion in gross irrigated area. Third, favourableterms of trade for agriculture are considered as another

factor for favourable growth during 1990s.It would also be seen fromTable 1, that, after area expansion effect of 1950s, non horticultural cropsnever showed growth rate exceeding 2.5 pe rcent. In contrast to this,horticultural crops, livestock and fishery have shown the potential to growat the rate of 4-5 percent for a long time. A simple exercise done by usreveal that due to large difference in productivity per unit of land a onepercent shift in area from nonhorticultural crops to horticultural cropsraises overall output of crop sector by 4 percent.. A slight acceleration ingrowth rate for the whole decade of 1990s should not be taken as asustainable achievement as there are worrying signs of slowdown ingrowth rate of almost all the sub sectors of agriculture during the secondhalf of decade of 1990s.

Sustainable agriculture:

The policy aims to promote technically sound, economically viable,Environmentally non degrading and socially acceptable use of countrysnatural resources land, water and genetic endowments. This indeed is atall order.

Land Resources:


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Status of land resources of India is presented in Table 3. Out of 304.9million hectare area for which land use information is available item 1 and2 cannot be considered for biotic production. This leaves 264 millionhectare area that can be considered for some sort of biotic production.Out of this 142.2 million hectare area is under cultivation. The challenge

relating to this land area is to maintain its fertility status and protectagainst degradation due to soil erosion, chemicalisation, waterlogging andsalinisation and alike problems. In the remaining area, sum of items 6 to10 can be taken to represent maximum wasteland area, assuming forestwith poor cover and permanent pasture and grazing grounds are more orless bereft of vegetative cover. This comes to 79.5 million hectare which ismore than half of the size of area under cultivation. NAP proposes to putthis so called wasteland to use for agriculture and afforestation, but itdoes not elaborate any strategy to do so. Most of this land requires heavycapital investments to make it productive. Such investments can eithercome from corporate sector or from government but seriousapprehensions have been expressed to allow corporate sector to controlthese lands. Enough care is also needed to ensure that some proportion ofcommon property waste lands remains around all habitation to serve thecommunity needs and needs of resource poor rural populace. Someinnovative mechanisms like leasing such lands to local households needsto be evolved to make productive use of wastelands.Land Use pattern in India:

Category Area:1. Area under non agricultural uses2. Barren and uncultivable land

3. Net sown area4. Forest land under good tree cover5. Misc. tree crops and groves6. Forest lands under poor tree cover7. Cultivable wastelands8. Current fallows9. Old fallows10. Permanent pastures and grazing lands11. Total of aboveIt needs to be noted that wastelands in India are not confined only toitems 6 to 10 in Table 3. According to the information provided by the

Department of Land Resources in the Ministry of Agriculture, GOI, 175mha area suffers from degradation.

Water Resources:

Water resources are becoming extremely scarce as demand for water forAgricultural, industrial and household uses are increasing rapidly. It isoften quoted that future wars would be fought over water and waterwould be the source of maximum local conflicts. As India has only 4percent of world water resources and 16 percent 11 share in population

(Iyer 2001) water scarcity is more acute in the country compared to worldaverage. The pressure on water resources is increasing with population


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growth, Urbanization and improvement in living standard. According tosome scholars availability of ground water for irrigation would emerge asa critical bottleneck for self sufficiency in food grain by the year 2020 asdemand for irrigation would exceed its availability by nearly 30 percent(Chopra and Golder 2000). Similarly, National Commission for Integrated

Water Resource Development Plan has projected that requirement forirrigation water in India would grow by more than 50 percent by 2050.Evidence is accumulating that water table in several states is gettingdepleted at a fast rate. Based on various assessments it is concluded thateven after fully exploiting available water resources water supply canmatch the demand only if there is a big improvement in efficiency ofirrigation

Plant and Animal Genetic Resources:

NAP expresses concern about the narrowing and erosion of Indias plantandgenetic resources in the last few decades. Here two important concernsare missing.One; NAP does not stress quality improvement in livestockthrough use of better quality indigenous germplasm. There is strongfascination in the country for exotic germplasm, particularly of cattle, atthe cost of ignoring rich germplasm of domestic Breeds for improvingproductivity and quality of livestock. Experience of cross 12 breeding withexotic stocks of cattle is showing its own hazards in some areas whereinfertility among cross bred is leading to hordes of stray cattle in thecountryside. Two, there is not enough awareness about breeding aspects

in the country. Often same bull continues to be used in one locality forlifetime which results in inbreeding and genetic decline. There needs to besome guidelines with Panchayati Raj institutions for taking care of healthybreeding practices.

Food and nutrition security:

Food and nutritional security has remained central to Indias agriculturaland development policy since Independence. However, importance beingaccorded to food and nutrition security has receded during 1990s because

of two reasons. One, there was accumulation of very large stock of grainsin government stock after April 1998 which had posed very seriousproblem of disposal in domestic and international market. This has alsocaused serious burden on state exchequer. If India had not experiencedvery severe drought during the year 2002, which caused 14 percent (30million tonne) decline in food grain production, then country was going tohave tough time to clearExcessive stock of grains. Two, all kind of reduction in cereal consumptionis being wrongly attributed to phenomenon of dietary diversification whichinvolves structural shifts in demand from cereal to horticultural andlivestock feed, without distinguishing between diversification by choice or

diversification under distress. A closer look at the household consumptiondata and macro data on availability of cereals for consumption reveals


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very disturbing trend in food and nutrition security during 1990s. It isfound that per capita energy and protein intake declined very sharplyduring 1990s and percent of population getting energy and protein belowthe minimum threshold level has increased. Main implication of thesefindings is that growth in food production should not be accompanied by

increase in per unit costs. Thus, sustaining nutrition and food securityrequire reduction in average cost of food grain production in real terms.

Generation and transfer of Technology and InputManagement:

Use of new Technologies can play a very big role in therevival of Indian Agriculture:

NAP calls for according very high priority to evolving location specific andEconomically viable improved varieties of agricultural and horticulturalcrops, livestock species and aquaculture. There is added emphasis onregionalization of agricultural research based on identified agro climaticzones. These priorities and emphasis are important in a country like India,which has continental diversity and where technology is the main driver

for output growth. But this itself may not be enough. This is evident Fromexperience of technology generated during last three decades and its


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adoption at farmers fields. National Agricultural Research System (NARS)has a very wide network of research and technology network and there ishardly any agro ecological pocket which does not have NARS institute orresearch station. Similarly, annual reports of ICAR and State AgriculturalUniversities are replete with achievements in terms of new varieties in

almost all regions. But this has not helped in bridging huge gap betweenwhat is attainable through these technologies and what is actuallyattainedat farmers field in most of the crops and states. This is evident from theinformation presented in Table 5 on yield gap. The yield gap wasmeasured by taking the percent by which gap between attainable yieldand actual yield exceeds actual yield.

Measures of Impact of science and technology in India:Agriculture and Rural Development

The M.S. Swaminathan Research Foundation undertook a studyon the Measures of Impact of Science and Technology:Agriculture and Rural Development with the principal objectiveof analyzing significant technologies that have been developed inthe public research system pertaining to the major sectors of therural economy of India over the post-independence period. Crophusbandry, animal husbandry, fisheries, forestry, irrigation,health, drinking water and energy have been the areas ofconcern.

IN the context of economic reforms under way in India since 1991, itwould be of interest to explore the role played by the Indian state in thedevelopment of significant technologies pertaining to the major sectors ofrural economy during the post-independence period. Such a studybecomesespecially relevant in the context of assessments made by the HumanDevelopment Report of 2001 of the United Nations DevelopmentProgramme (UNDP) concerning the technological achievement of variouscountries, including India.

The UNDP Report:

The UNDP Report set forth a methodology to calculate what it called aTechnology Achievement Index (TAI) on a global scale, intended toserve as an indicator of the progress made by different member states ofthe United Nations in the area of technology achievement. The indicatorsUsed for developing TAI were based on the following components:

1.Technology creation Patents granted to residents Receipts of royalties and license fees

2. Diffusion of recent innovations Internet hosts


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High and medium technology exports3. Diffusion of old innovations Telephones Electricity consumption4. Human skills

Mean years of schooling Gross tertiary science enrolment ratio.Using the above measures of technology achievement,India was ranked63rd among the 72 countries considered.The indicators chosen to reflecttechnological achievement were largely related to profit-driven research,while the dominant sector of research in India has been in the publicdomain, carried out in institutions and universities supported throughpublic funds. The significant role played by public-domain research inachieving progress across various sectors of the rural economy of Indiaduring the post-independence period has not been taken into account bythe UNDP while assessing the countrys performance.

The MSSRF study:

Shortly after the publication of the UNDP Report, and possibly in part inthe light of the report, the Office of the Principal Scientific Adviser to theGovernment of India supported a series of studies under the umbrella titleMeasures of Progress of Science and Technology in India, to examine theprogress made in various sectors in India during the post-independenceperiod. The study whose findings are discussed in this article, was a partof this series. This study was carried out at the M.S. Swaminathan

Research Foundation (MSSRF), Chennai (The MSSRF study was carried outby a team of researchers comprising Drs R. Rukmani, Indumathi M.Nambi, S. John Joseph, M. Prabhu, K. N. Sevakumar, K. Susheela, Mr V.Senthilkumar,Mr Karuna Krishnaswamy and Ms N. Thenmathi). The principal objective ofthe study has been to analyse significant technologies developed sinceindependence in the public research system in the areas of crophusbandry,animal husbandry, fisheries, forestry, irrigation, health, drinking water andenergy as well as to examine the impact triggered by these technologies.Let us now turn to a brief discussion of key technological

interventions in each major sector and their impacts.

Crop husbandry:

The MSSRF report discusses developments in the crop husbandry sector,where the varietal improvement programme has been identified as thecatalytic technology. The ICAR system, with its elaborate network ofresearch activities, has developed and released more than 3300high yielding varieties and hybrids pertaining to various crops1. A detailedanalysis of the nature and extent of development of the varietal

improvement programme has been undertaken with regard to someselected crops: rice and wheat among major cereals, maize and sorghum


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among nutritious millets, soybean and sunflower among oil seeds, potatoamong vegetables and sugarcane and cotton among non-food crops. Themost important aspect of the varietal improvement programme in India isthat the germplasm received from international research institutions hasbeen used to develop varieties suitable for Indian conditions.

Irrigation:

The study has provided an overview of irrigation development since the1950s and examined the role of technology in irrigation development.Expansion of irrigation in the country is in part related to a consciouspolicy decision of the government to invest in irrigation works and in partto development of technologies. Several technologies, major and minor,have played a crucial role in the development of irrigation in the countrywith regard to harnessing, distributing and managing water resources aswell as in conserving and quantifying available water. The design andconstruction of dams in India have undergone several modifications basedon new scientific inputs and experience over the years. Technology hasenabled construction of large dams even in areas susceptible to seismicactivity, which is a major breakthrough, particularly with regard to theflood-prone northeastern states. As regards sub-surface irrigation,highspeed drilling technology has replaced traditional, shallow dug wellsby modern, deep borewells in hard-rock areas.

This discussion shows that either the technologies having higher yield

potentialare not actually suitable at farmers field or enough effort is notmade to take the technologies from labs and experimental station tofarmers field. Technology policy needs to address the issue whethertechnologies being generated are less appropriate or there is weakness intechnology transferring extension system. Strategy for technologygeneration and transfer should be of two types. A lot can beachieved by effective dissemination of already existing improvedtechnologies. Generating more technologies of same potential as existingones have would not be of any help. There should be accurate assessmentof existing technologies. Then, reasons for these technologies notreaching intended users need to be identified. New technologies need to

be developed in frontier areas. Similarly, because of growing competitiondue to globalization, technological up gradation assumes greatersignificance. This should be done through application of modern sciencetaking advantage of advances in molecular biology and other sciences.Over the years, interactions of NARS scientists with science institutions inthe western world have weakened. This needs to be reversed to enableour scientists to benefit from advance knowledge originating in westerninstitutes. Harnessing benefit of technology generation requires welldeveloped system for sales and distribution of seeds and plantpropagation material. Till now public sector dominates multiplication and

supply of seed and plant propagation material but it is highly inadequateto meet the emerging and growing needs and demand. There are also


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reports of some decay in public system distribution of seeds etc. onaccount of several reasons. The advantage of this is being taken byunscrupulous private trade. There is a need to promote competition inseed sector by encouraging large scale private sector participation inseeds business.

SATELLITE REMOTE SENSING AND GIS APPLICATIONS INAGRICULTURAL METEOROLOGY AND WMO SATELLITE ACTIVITIES:

M.V.K. Sivakumar and Donald E. HinsmanAgricultural Meteorology Division and Satellite Activities OfficeWorld Meteorological Organization (WMO), 7bis Avenue de la Paix,1211 Geneva 2, Switzerland

Agricultural planning and use of agricultural technologies needapplications of agricultural meteorology. Satellite remote sensingtechnology is increasingly gaining recognition as an important source ofagrometeorological data as it can complement well the traditionalmethods agrometeorological data collection. Agrometeorologists all overthe world are now able to take advantage of a wealth of observationaldata, product and services flowing from specially equipped and highlysophisticated environmental observation satellites. In addition,Geographic Information Systems (GIS) technology is becoming an

essential tool for combining various map and satellite information sourcesin models that simulatethe interactions of complex natural systems.

RELEVENCE OF SATELLITE REMOTE SENSING AND GISAPPLICATIONS IN AGRICULTURAL DEVELOPMENT:


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Agricultural planning and use of agricultural technologies need applicationof agricultural meteorology. Agricultural weather and climate datasystems are necessary to expedite generation of products, analyses andforecasts that affect agricultural cropping and management decisions,irrigation scheduling, commodity trading and markets, fire weathermanagement and other preparedness for calamities, and ecosystemconservation and management. Agrometeorological station networks aredesigned to observe the data of meteorological and biological phenomenatogether with supplementary data as disasters and crop damages occur.The method of observation can be categorized into two major classes,manually observed and automatic weather stations (AWS). A third sourcefor agrometeorological data that is gaining recognition for itscomplementary nature to the traditional methods is satellite remotesensing technology. Remotely sensed data and AWS systems provide inmany ways an enhanced and very feasible alternative to manualobservation with a very short time delay between data collection andtransmission. In certain countries where only few stations are in operationas in Northern Turkmenistan (Seitnazarov, 1999), remotely sensed datacan improve information on crop conditions for an early warning system.Due to the availability of new tools, such as Geographic InformationSystems (GIS), management of an incredible quantity of data such astraditional digital maps, database, models etc., is now possible.The advantages are manifold and highly important, especially for the fastcrosssector interactions and the production of synthetic and lucidinformation for decision-makers. Remote sensing provides the most

important informative contribution to GIS, which furnishes basicinformative layers in optimal time and space resolutions.


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Incentive for agriculture:

Agricultural policy repeats the policy concerns echoed in the beginning ofgreen revolution to provide favorable economic environment forpromoting farm investments through (1) removal of distortions in theincentives (2) improvement in terms of trade with manufacturing (3)external and domestic market reforms. This is most important area forpolicy actions. The document states only the intention but does notelaborate how it would be achieved. Some reforms which government hasinitiated in this area are (a) liberalization of land lease market (b) proposalto change regulationto promote contract farming and private markets. Liberalization of landlease market has been quite misunderstood in India. It is taken to implythat it would lead to transfer of land from small and marginal farmers tobig farmers and also adversely affect interest of tenants. Reality is justopposite of this. It is the small and marginal farmers who lease in andlease out much more than large farmers. Also, the need for leasing in landis much greater at small and marginal farmers to make their holdingsviable. Land lease laws in the country are such that if there is legal ordocumentary evidence of leased in land, the lesser can face problem inevicting the lessee. Because of this, the landowners, who have land tolease out, either do not lease out his/her land for fear of loosing controlover it or tenancy is totally

concealed. Because of this, most of the small and marginal farmers aredeprived of raising the size of their operational holdings when they cantlease in. When they leasein in a concealed manner they cant getadvantage of credit etc. Similarly, large number of small and marginalfarmers who do not find farming viable and find some other attractive vocaction, but do not want to sold their land, avoid renting out land. This way,because of adverse legal implications of leased land market, small andfarmers are sufferers in several ways. The fears related to security ofalready existing tenants due toliberalisation of land lease market are also misplaced as their interest canbe

safeguarded by exempting them from the new regulation.

Investments in agriculture:

The purpose of investments in agriculture is to generate capital in theform of infrastructure, improvement in quality of natural resources andassets, and creation of productive assets for promoting long run growthand improving efficiency in production and marketing. This investment inany sector comes from two sources viz. public and private. While publicinvestment is meant mainly to create infrastructure, private investment is

used mainly for assets formation and for improvement in quality ofexisting assets. Traditional agriculture and agriculture in underdeveloped


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countries is generally starved of investment resources because privatecapital is deterred by the risk involved in agriculture (Schultz, 1964) andinstitutional investment has also been meagre (Shonfield, 1960).Therefore, special efforts and attention are required to direct and inducepublic and private investments in agriculture in underdeveloped

countries.In the recent years there has been renewed interest in publicand private investments in Indian agriculture. This has been induced byserious concern for secular decline in public investments in Indianagriculture, which began in the early 1980s.This adverse trend did not reverse even during 1990s (Table 6 and Fig. 1and 2). GFCF in the public sector showed some improvement during mid1990s but again declined during late 1990s. GFCF public sector as percentof GDP agriculture has declined to 1.56 percent compared to more thantwo percent during early 1990s . This shows that infrastructuredevelopment for agriculture sector failed not only to keep pace withgrowth of the sector but lagged far behind the growth in the sector. Thereis some comfort that like the decade of 1980s decline in publicinvestments did not cause decline in private investment even during1990s.

Institutional structure:

NAP advocates land reforms by focusing on consolidation of holdings,redistribution of surplus/waste land among landless, tenancy reforms,development of lease market and recognition of womens rights in land.Other areas listed for policy attention are private sector participation

through contract farming, assured markets for crops especially foroilseeds, cotton and horticultural crops, increased flow of institutionalcredit, strengthening and revamping of cooperative credit system. Out ofthese, some policy concerns like land lease market have already beendiscussed at length in section 4.5 above. Land consolidation has assumedgreater importance due to large scale fragmentation of land holdings dueto division of inherited property and certain other factors. Division of landparcels into smaller pieces scattered over space has become so complexthat their consolidation by revenue authority, as witnessed during first twodecades of planned development in some states, would not help much butwould leave it free to revenue officials to use their authority to show

favours and disfavours. The best way to encourage land consolidationwould be to encourage mutual transfers of land by providing incentiveslike complete waiving or nominal stamp duty in land transactions thatlead to land consolidations.

Risk Management and Management Reforms:

Price fluctuation and natural calamities are recognised as main factor forimparting instability to condition of farmers. NAP suggests AgricultureInsurance Scheme covering all farmers and all crops throughout the

country with built in provision for insulating farmers from financialdistress. Other measures suggested under this are (1) enhancing flood


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proofing and drought proofing through (2) ensuring remunerative pricesthrough announcement of MSP and (3) future trading in agricultureproducts.Risk proofing in agriculture through insurance is a very complicatedprocess. Covering all crops and all farmers through this seems to be

gigantic, rather ambitious task. Technological and infrastructural solutionsare more appropriate in the Indian circumstances. Announcement of MSPin itself does not ensure that farmers get remunerative price or priceabove the ceiling level. Obviously, ensuring that farmers do not receiveprice below MSP requires some mechanism to buy produce if market pricehappens tobe lower than MSP. This mechanism exists only in a few states and for afew crops. Because of this, some regions have benefited too much wheregovernment procure produce and some got nothing for same crops, fromsystem of MSP (Chand 2003b). It is also not feasible to guarantee MSP bymaking procurement of produce by official agencies in the event of fall inmarket prices below MSP everywhere and for all the crops. Therefore,alternatives like deficiency price payment, as suggested by some studies(Chand 2003a) needs to be used to make MSP effective over large numberofcrops and over large region. Future trading is being allowed in more andmore agricultural products in India with a view to minimize pricefluctuations and for hedging price risk. It is difficult to conjecture aboutthe impact of future trading in reducing price risk for farmers becausebasis of future trading itself is price fluctuation. Second, success of futuretrading would require that government intervention does not influence

normal course of price. Thus, future trading and government interventionin influencing behaviour of prices through MSP and issue prices would notgo together. Therefore some clear policy is needed on price interventionand future trading. Under the management reforms, proposals like movingaway from schematic approach to macro management approach andworking out effective partnership between the Centre and States areworth implementing.


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Enhancing agricultural productivity, competitiveness, and ruralgrowth:

Enhancing productivity:Creating a more productive, internationallycompetitive and diversified agricultural sector would require a shift in

public expenditures away from subsidies towards productivity enhancinginvestments. Second it will require removing the restrictions on domesticprivate trade to improve the investment climate and meet expandingmarket opportunities. Third, the agricultural research and extensionsystems need to be strengthened to improve access to productivityenhancing technologies. The diverse conditions across India suggest theimportance of regionally differentiated strategies, with a strong focus onthe lagging states.

Improving Water Resource and Irrigation/DrainageManagement: Increase in multi-sectoral competition for water highlightsthe need to formulate water policies and unbundle water resourcesmanagement from irrigation service delivery. Other key priorities include:(i) modernizing Irrigation and Drainage Departments to integrate theparticipation of farmers and other agencies in irrigation management; (ii)improving cost recovery; (iii) rationalizing public expenditures, withpriority to completing schemes with the highest returns; and (iv)allocatingsufficient resources for operations and maintenance for the sustainabilityof investments.

Strengthening rural non-farm sector growth: Rising incomes are

fueling demand for higher-value fresh and processed agricultural productsin domestic markets and globally, which open new opportunities foragricultural diversification to higher value products (e.g. horticulture,livestock), agro-processing and related services. The government needs toshift its role from direct intervention and overregulation to creating theenabling environment for private sector participation and competition foragribusiness and more broadly, the rural non-farm sector growth.Improving the rural investment climate includes removing trade controls,rationalizing labor regulations and the tax regime (i.e. adoption of thevalue added tax system), and improving access to credit and keyinfrastructure (e.g. roads, electricity, ports, markets).

Improving access to assets and sustainable natural resource use:

Balancing poverty reduction and conservation priorities:Findingwin-win combinations for conservation and poverty reduction will becritical to sustainable natural resource management. This willinvolve addressing legal, policy and institutional constraints to devolvingresource rights, and transferring responsibilities to local communities.

Improving access to land: States can build on the growing consensusto reform land policy, particularly land tenancy policy and landadministration system. States that do not have tenancy restrictions can


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provide useful lessons in this regard. Over the longer term, a more holisticapproach to land administration policies, regulations and institutions isnecessary to ensure tenure security, reduce costs, and ensure fairnessand sustainability of the system.

Improving access to rural finance:It would require improving theperformance of regional rural banks and rural credit cooperatives byenhancing regulatory oversight, removing government control andownership, and strengthening the legal framework for loan recovery andthe use of land as collateral. It would also involve creating an enablingenvironment for the development of micro-finance institutions in ruralareas.Strengthening institutions for the poor and promoting rurallivelihood

PRICE AND MARKETING:

Even after agricultural production has been raised to its highest possiblelevel and all cultivable land has been brought under the plough, the lot ofthe actual tiller of the soil will not improve as long as he is unable to get afair price for his produce. As matters stand, the cultivator has to acceptlowAnd unremunerative prices because:

(a) The general level of prices of agricultural commodities falls rather

steeply during a depression (and depressions are rather too common inIndia!) and

(b) The distributive organization is such that a very large proportion of theprice paid by the ultimate consumer goes to middlemen. That there havebeen violent fluctuations in the prices of farm products during the twenty-year period between the end of the last war and the beginning of thepresent one will be patent to anyone who has studied the course of pricesof at least the principal agricultural commodities. This may have been ofsome advantage to the urban consumer arid the capitalist-user of

agricultural products, but it has been the cause of untold misery andsuffering of the agriculturist-producer. Instances are not rare of cultivatorshaving been compelled to sell off their produce at fantastically low pricesin order to meet the dues of the State or the demands of the money-lender. As regards the distributive organization, it has been costly anddefective, always operating to the disadvantage of the producer andunduly enriching middlemen and financiers only.

PROBABLE SOLUTIONS FOR THIS PROBLEM OF PRICE ANDMARKETING:


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* For example,under the Milk Marketing Scheme in England andWales (before the War), the producer received only 42% of the price paidby the consumer, but 41% of the difference was covered by expenses ofprocessing. In India, although the producer gets more, i.e., 60% of theprice paid by the consumer, hardly 1% of the difference represents any

processing costs. In actual practice, the price of agricultural commoditiesis determined in this country, not so much by their cost of production asby the expectations of supply and anticipations of probable demand bycertain groups of wholesale dealers, Buyers at secondary markets and inthe villages are guided by these prices as determined by wholesaledealers and pay the sellers at the mandi or the village accordingly. Thelatter make a further reduction on this price to cover their costs, risks andprofits and the price that the cultivator producer ultimately gets is farremoved from the price he would have received if the ordinary economicforces had free play. The price mechanism works backwards and notforward. The producer becomes puzzled and resentful because he feels hehas been cheated of a large portion of his legitimate due. Another factorwhich disturbs the Price Mechanism, in so far as the primary cultivator isconcerned, is the frequent adoption of economic policies without dueconsideration of the repercussions they would have on primary prices.Very often, imports of competing commodities have been permittednotwithstanding the fact that the internal price-levels of thosecommodities were already on the downward grade.


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Backward Integration Emerging Business Model:

The generic value chain of the food processing industry from rawmaterials to retail to the consumer, is shown below.Traditionally, differentplayers across the value chain played the different roles and worked moreor less independently. Recently, the trend has been towards increasingintegrationand collaboration across players in the value chain, to garner mutualbenefits. Such integration is being driven by the manufacturers, who arelooking to integrate backward and establish linkages with both rawmaterial producers (farmers) and aggregators/logistics providers. Theselinks have led to two new models emerging in the sector ContractFarming and Terminal Markets. These are further discussed below.

Contract Farming:

Contract Farming is an agreement between the food processor(contractor), who is typically a large organized player, and the farmer,whereby the farmer is contracted to plant the contractors crop on hisland. He also agrees to harvest and deliver to the contractor a quantum ofproduce, based upon anticipated yield and contracted acreage at a pre-agreed price. The food processor provides inputs in terms of technologyand training to the farmer, to improve the yield and quality of theproduce. This results in a win-win situation that generates a steady sourceof income for the farmer and eliminates supply shocks and assures good

quality farm inputs which are crucial for the processor. The Government ofIndia has been actively encouraging contract farming endeavours.

Terminal Markets:

A Terminal market is a central site, often in a metropolitan area, thatserves as an assembly and trading place for agricultural commodities.Here there are different options for disposing off the produce. It can eitherbe sold to the end consumer, or to the processor, or packed for export, oreven stored for disposal at a future date. It thus offers different options to

farmers under a single roof. Typically, terminal markets operate on a huband spoke model where the markets form the hubs, and are linked todifferent collection centres (spokes) that are located close to theproduction centres. The typical value chain structure for a terminalmarket, as well as the key activities and corresponding infrastructurerequirements at each level, are depicted in the figure below: TheGovernment of India is looking to promote terminal markets, as a meansof integrating domestic produce with retail chains. There are plans to setup such markets in eight cities across five states, at a cost of US$ 131million. The cities being considered are Mumbai, Nashik, Nagpur,Chandigarh, Rai,Patna, Bhopal and Kolkata.


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FURTHER SUGGESTIONS:

If we go behind the objective facts, we would find that the fundamentalobstacle to any scheme of agricultural improvement in this country is the

Ill-health, sloth and inertia of the cultivator. The ill-health of the cultivatoris due partly to his ignorance and the insanitary conditions under which helives (it is well-known that public health measures are still in arudimentary stage of development in this country) and partly to hisextreme poverty and consequent malnutrition. His sloth and inertia, onthe other hand, are the results of years of habit coupled with the beliefthat what* ever he does to improve production, owing to the curiousinterplay of certain social and economic forces, be himself shall never beable to reap the benefit thereof. In any scheme of agriculturalreconstruction, therefore, these fundamentalobstacles will have to be taken into account and squarely faced. Secondly,in any framing and execution of a plan for agricultural reconstruction, weshould bear in mind the tragic fact that so far no attempt has been madeto keep the farmer in continuous touch with the work of the researchinstitutions and to help him in all practicable ways to apply the results ofresearch on his farm. The contrast in this regard between what SovietRussia has been able to achieve and our failure in India is too glaring toneed emphasis. While in Russia an organic link has been establishedbetween the farmer and the State institutions engaged in agriculturalresearch, in India the two still work in deplorable isolation from eachother. Here, the research institutions and demonstration farms appear to

function in an atmosphere which has little or no relation to the actualconditions under which agriculture is carried on, and the cultivator, for hispart, has a deep distrust of anything new that is sponsored byGovernment. The wall of isolation that separates the cultivator at presentfrom the State research institutions and farms must be pulled down. In theplan of the future, the State must actively organize large-scale farmingunits and prove by demonstration on the cultivators' plot or plots thatscientific farming (i.e., better agronomic practices and management) isprofitable not merely to the farm as a whole but to every member thereof.To sum up, large-scale farming, practical demonstration of better culturalpractices technological improvements, better facilities for the disposal of

his produce and a guaranteed minimum price for his produce so as toleave him a decent margin of profit all these must be provided forsimultaneously, if the Indian cultivator is to be lifted out of his presentstupor. In these, the State must play an increasingly bold and imaginativepart, going even to the extent of compelling any dissentient minority tofall in line with the general programme of development. Whether thiswould mean the "liquidation" of the objecting minority, as was done withthe Kulaks in Soviet Russia, no one can foretell at this stage. But it isobvious that certain drastic powers will have to be assumed by the State.Past experiments in better farming, in voluntary consolidation of holdings

and in the carrying out of the results of researches on the fields ofcultivators by persuasion have almost always ended in failure. The lesson,


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therefore, is obvious. There must be authority to carry out plans ofreconstruction and to compel all to fall in line. If India is to meet in full itsobligation to make available to all its people at least the minimum of food,clothing and shelter, without which, in the wois of 'President Roosevelt,life itself would be. Impossible, mere must be increased production and

better distribution of agricultural commodities an ideal which can besecured only by the wholehearted participation of all the sections of thecommunity in a national plan.

The document on National Agricultural Policy released by Government ofIndia in July 2003 contains set of policy intentions of government. In orderto implement those intentions a concrete and time bound action plan wasneeded but that is missing. The document is quite comprehensive inexpressing what ought to be done in agriculture; this is a first step ingiving policy direction. The subsequent step is, how and when policy goalsand objectives would be achieved. In most of the cases the NAP is notsilent on this, nor, there is any follow up document on this. This is thereason that inMore than three and half years after release of NAP no serious action isinitiated on most of the aspects. It is highly desirable to prepare actionplans at the Centre and at the State level in quantitative terms toimplement the new policy agenda in a time bound framework. Forinstance, to achieve 4 percent annual growth rate in agriculture certainplanning and strategy has to be there on how much growth in eachcrop/enterprise in various states is visualized. How much growth thiswould require in inputs, irrigation, credit etc. There is no such follow up

action plan and it is assumed that setting goals with change in overallpolicy environment would automatically help in achieving the goalsenshrined in new policy. Besides action plan on quantifiable goals, a timeschedule for change in qualitative policy aspects like changes inregulations is also needed. Achieving the goal of high growth (more than 4percent) through efficient use of resources and promoting sustainabilityand equity would require area specific strategies. Past experienceshows that this can be achieved by promoting area specificSpecialization taking into accounts the groundwater status, soil health andother micro characteristics. This often results in diversification at countrylevel. The advantages of specialization pockets are (i) it is useful in

harvesting advantages of scale economy and (ii) it is easy and less costlyto develop infrastructure to boost one or few commodities, rather thanmany commodities. Raising productivity in already agriculturally advancedregions would involve more cost in terms of inputs compared tounderdeveloped regions as the developed regions are at a higher level onthe production frontier. Since the domestic supply would be facingcompetition from imports, the emphasis should be on increase inproductivity in a cost effective manner. This, in turn, require paradigmshift from output growth or maximizing production to efficient growth. Thetwin goal of increase in productivity and efficiency can be achieved by

harness sing potential of


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Underdeveloped regions and through development of specializationpockets. The focus must shift to area specific enterprises as has been thecase of dairying in Gujarat, rice-wheat in Punjab, apple in sub-temperateWest Himalayan region, grapes in Nasik region of Maharashtra, mangoesin Rayalseema region of Andhra Pradesh. Large scope exists for raising

productivity of most of the crops by ensuring that improved technologiesalready developed in various states are adopted by farmers. Efforts intechnology generation go waste if it is not disseminated to end users. Thisrequires rigorous efforts on extension front. Competitive globalliberalization has thrown new and formidable challenge to compete withinternational technologies. Facing this challenge would require vigorousefforts in domestic R&D. Some countries have very effectively appliedtools of biotechnology to raise yield, reduce cost of production, andimprove quality. India needs to learn from the experience of suchcountries and should encourage new yield enhancing and cost reducingtechnologies without getting bogged down in the debates on transgenicand genetically modified products. There is no mention of Organic farmingin NAP. Organic farming offers an alternative method pf production thatcan be suitably exploited to benefit some segment of farmers. There arefrequent reports of pesticides and chemical residues beyond safe limits invarious foods. The main reason for this is indiscriminate use of agriculturalchemicals. Farmers need to be educated about proper use of variousagro-chemicals.

VALUE CHAIN FUNCTIONS AND ACTORS:

This section describes the functions in the value chain as well as keyactors who perform those functions. It includes the key technical supportservices of(1) Research and development/extension,(2) Input supply and(3) Certification, in addition to financial services.These descriptions, for the most part, apply to both organic sesame fromRajasthan as well as other organic crops in India.

Research & Development (R&D)/Extension: R&D in organicagriculture has been conducted mostly by universities and researchorganizations, with funding support from state and national governmentagencies. Some NGOs also conduct extensive research on organicproduction and post-harvest techniques (e.g. Morarka Foundation) andprovide a range of technical extension and support directly to farmers.Public sector extension for organic agriculture from the Ministry ofAgriculture is limited.

Input Supply: Organic farmers use a variety of bio-fertilizers (e.g. vermi-

compost and farmyard waste) and bio-pesticides (e.g. neem-basedproducts, cow urine, peppers and medicinal herbs) to improve


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productivity, but use of agro-chemicals is strictly prohibited. Farmersrequire on-going technical assistance in the proper preparation andapplication of these bio-inputs, especially when converting fromconventional to organic production. Until these farmers are able tosufficiently produce their own inputs on-farm, they must purchase them

from a variety of suppliers. Local farmers and NGOs skilled in bio-inputproduction techniques have become small-scale bio-input suppliersselling excess production (especially vermi-compost and other bio-fertilizers) to neighboring farmers. Many of the large conventionalagricultural input companies in India (e.g. NAFED, Hindustan Lever andExcel Industries) also sell a line of products suitable for organic productionand act as large-scale bio-input suppliers. All inputs used in certifiedorganic farmingincluding seeds, fertilizers and pesticidesmust complywith the same standards for organic production. This is especiallyimportant for seeds used in organic production since internationalstandards require strict seed traceability.

Production: Available data for organic agriculture in India is ofteninconsistent and contradictory, and should be considered illustrative only.It is estimated that approximately 5,147 farms in India are producingorganic products on 37,050 total hectares (which is 0.03 percent of totalagricultural area in the country).7 According to the latest statistics fromADEPA, India exported 31 different organic products which totaled 6,792metric tons valued at Rs 7,123 lakh ($16.1 million).

Procurement/Consolidation: Organic products are typically

procured from farmers and consolidated by the following marketplayers:


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Medium- and large-scale farmers (e.g., Amit Spinning)They playsimilar intermediation roles by consolidating their own production withadjacent small-scale farmers (often on a contract farming basis) and thenselling directly to exporters. Private intermediaries (e.g., Agrocel Industries)These entities do

not have their own major sources of production but rely on procurementfrom small-scale farmers on a contract basis.The majority of organic products are sold to exporters or to specializeddomestic traders, but approximately 15-25 percent of total production issold via the conventional mandi agricultural marketing system with littleor no price premiums paid to the producers. The mandis are agovernment-regulated rural marketplace where agricultural commoditiesare sold by auction. Initially established by the government to facilitatedirect trade for small-scale farmers, the mandis are now generally viewedas inefficient.Processing:There are very few processed organic agricultural exports.8There is some semi-processing (i.e., cleaning and hulling) of organicoilseed crops including sesame carried out by small- and medium/large-scale exporters in-house. Due to the certification requirements forprocessing of exports, it is not usually out-sourced to stand-aloneprocessors.Exporting: There are a variety of exporters of certified organicagricultural products from India. The medium/large scale exporters aregenerally focused on specific organic products (e.g., IITCtea and MaikaalbioRecotton) while smaller-scale exporters market a wider range ofproducts. With a few exceptions (i.e., ITC), most organic exporters

specialize in certified organic products and have limited trade inconventional agricultural products. Exporters also perform the function oflabeling and packaging as these must also be certified.Certification: The process for organic export certification is usuallyinitiated and managed by the exporter, intermediary or medium/large-scale farms. They are the ones who pay for the inspection services of acertification firm. The cost to these firms of certifying smaller-scalefarmers, especially those located on contiguous plots, can be reduced bypursuing group rather than individual farm certification (this entailsconducting certification based on a statistical sampling of the groupedfarms). Individual small-scale farmers do not have the economies of scale

to justify export certification on their own.Importing: The major buyers of organic agricultural products from Indiaare traders/wholesalers in the importing countries. Although specialtyretailers and supermarkets are important marketing channels for organicproducts in these countries, Indian exporters typically do not sell to themdirectly. Europe is the main market for certified organic exports from Indiabut specific trade varies by country. The Netherlands is the biggest buyerof sesame, but many Indian exporters see the U.S. organic market as theone with the highest export growth potential.International wholesalers/traders of organic agricultural products in the


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Financial Services: Small business startups are generally funded withpersonal and/or family funds, and credit is available as an embeddedservice provided to contract producers by the contracting firm (see Inter-


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firm Cooperation, below). Bank financing is available to larger enterprisesand to producers with assured markets.INTER-FIRM COOPERATIONAll of the inputs, farming practices and processes used to produce anorganic product must meet the organic standards of the importing

country.Unlike conventional agricultural production and marketing in India, thereis a high degree of inter-firm cooperation among all participants and at alllevels in the organic agricultural products value chain. Since traceability isa major principle of organic agriculture, the relationships betweenexporters, intermediaries and producers are very close. Not only doesinformation flow down the chain, but access to inputs, the provision oftechnical extension and market intermediation are also embedded inthese relationships. The organization of organic agricultural trade in Indiacan be grouped into four general models: NGO intermediary, privateintermediary, integrated producer and integrated exporter (see figure 3,below).

REFERENCES:Chand Ramesh (2001). Emerging Trends and Issues in Public and private

Investments in Indian Agriculture: a Statewise Analysis, Indian Jn. of Agril.Economics, vol. 56 No.2, 161-184, April June 2001.


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Agricultural Interventions adopted in different countriesand possible solution for Indian Agriculture on thatbasis:

Brief Introduction Clustering Intervention:

Caribbean governments and private sector agencies, supported byInternational Development Organizations, are being encouraged to

promote small business, increase supply capacity, expand value addingand build competitive value chains in agriculture. Support is expected tobe forthcoming from the Economic Partnership Agreements (EPA) whichemphasizes the importance, inter alia, of supporting conditions forincreasing investment, private sector initiative and enhancing supplycapacity, competitiveness and economic growth. Further, itsDevelopment Cooperation Pillar prioritizes support measures to promoteprivate sector and enterprise development (especially smallentrepreneurs) and enhanceCompetitiveness and diversification and diversification of CARIFORUM

exports of goods and services via new investment & development of newsectors. Governments and private sector agencies, supported by


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International Development Organizations are expected to put in placevarious financing offering, including micro-financing and speciallyestablished business development support units, to achieve theseobjectives. While primary production, generally, does not rank as high onthe areas for support as value-added products, these initiatives do offer

some stimulus to expand farm production. Building farm supply capacity -the start of the value chain will be a pre-requisite for successfullydeveloping the business of agriculture in the Caribbean. In a buyer-driven world, the worst nightmare for these buyers, be they importers,wholesalers, supermarkets, hotels, or consumers, is supplier failurethrough the over reliance on importer/distributor supply systems.2 Also, ina buyer-driven world, the business of agriculture is not about helpingmarginal poor farmers. A prosperous agricultural sector feeds industrialdevelopment, supports the services sectors and is a prerequisite for foodand nutrition security. These are essential to promote employment,economic growth and sustainable development. As consistentlyemphasized by Chelston Brathwaite, Director General of IICA, agriculturecontributes to three fundamental aspects of development, namely:national food security; national social stability; and environmentalprotection. Agricultural development is not about helping3 Clustering for competitive value chains in agriculture marginal poorfarmers; the agricultural sector is a strategic sector of every CARICOMeconomy.

The new approach to economic developme

24439861 Project Report on the Revival of Indian Agriculture

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