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Seasoned Leader Required to Pursue Reforms

Then, livelihoods of dignity in villages too

Need Agri Clusters a’ la IT Hubs

ITC Agri Business Divisional Chief Executive S. Sivakumar

Eenadu | Business Bureau | Hyderabad, 29 April 2014 Today’s rural youth, especially those who study upto 10th Class and Intermediate, are not interested to work in agriculture. They are migrating to towns & cities in search of other jobs. However, often, their living conditions in towns are worse-off, given their low-paying jobs. These youth can live with dignity in villages itself, if we elect an experienced leader in the State, who can bring the necessary agri-reforms in conjunction with the Central Government, and promote agri and food processing clusters across the state, says S. Siva Kumar, the Divisional Chief Executive of ITC’s Agri Business. He is also the Chairman of ITC Technico Agri Services and the Vice Chairman of ITC Infotech. In a ‘face-to-face’ with Eenadu, he felt that only a reformist leader should come into power to improve the lot of millions of rural youth.

60% of the population in Andhra Pradesh is dependent on agriculture, compared to an all-India number of 50%. Except in the cities like Hyderabad, and mineral-rich districts like Cuddapah, agriculture is the primary source of income in the rest of the state. Hyderabad is the main consumption market in Andhra Pradesh. After 2nd June, once the state is bifurcated, Central Sales Tax of 2-4% is applicable on the produce brought from the Seemandhra region to Hyderabad. This is a significant burden on agri and food products markets, where the profit margins are much lower than that in other sectors, such as electronics. So, farmers from regions like Chittoor who were earlier selling in Hyderabad, will find it a less attractive market, and instead prefer to take their produce to markets like Bengaluru or Chennai. While other countries are reducing their tax barriers by forming common markets like European Union, we are dividing states and multiplying tax incidence. Hopefully, the new Government will recognize the power of unified Indian market and work towards implementing the GST (Goods and Service Tax) system faster.

Special Courses for Rural Youth

There are many courses for Industrial and IT sectors, but only B.Sc and M.Sc (Ag) for the

Agriculture sector. Agri graduates prefer management and other high-end jobs.

To serve the field-level needs of the farmers, we need ITI and Diploma equivalent courses in

Agriculture too.

Then the rural youth, who typically discontinue studies after 7th or 8th Class, as also the

students who fail in 10th Class & Intermediate, can get into these courses and take up jobs in

emerging areas such as agri-services, farm mechanization etc.

Such knowledge-embedded agri jobs are considered more worthy by the youth, and will

reduce migration from rural areas; when more youth stay back in villages with more

disposable incomes, amenities in rural areas too will improve, leading to better quality of life

in villages.

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Possible only through transparency

Much like the Industrial Clusters, if we establish a large number of Agri and Food Processing Clusters, employment opportunities for youth will expand manifold. Globally, clusters for Orange Juice in Brazil, Aquaculture in Thailand, Pepper Processing in Vietnam etc are running successfully. Knitwear in Tirupur, Tamil Nadu, is also a good example of what we would look for in a successful cluster. In Seemandhra, there are clustering opportunities in Paddy, Mango, Spices, Aquaculture, Poultry, Dairy, Tobacco, and Cotton; similarly in Telangana, Vegetables, Fruits, Pulses, Oilseeds, Agroforestry clusters can be set up. Depending on the nature of the produce and the aggregation requirements, a few clusters could be at district-level eg Chillies, while some clusters would spread across 4 to 5 districts eg aquaculture. These clusters can be run on Public-Private Partnership (PPP) mode. Once each cluster provides access to appropriate shared infrastructure and services - in roads, power, generator back-up, quality testing labs, training facilities etc – reducing the establishment costs for the individual units, more food processing units will come up in those regions. Rather than restricting the Government support to one or two companies, if these opportunities are transparently opened up to many aspirant entrepreneurs the development will be faster.

Several Challenges to be Overcome

Development of new technologies in seed and other agronomic practices is required through state-of-the-art R&D, so also the refinement of techniques in organic farming, and establishment of micro-irrigation infrastructure, to overcome the challenges related to extreme weather conditions like droughts, cyclones and hailstorms that farmers face. For example, some of the Bhadrachalam clones of Eucalyptus and other tree species developed by ITC can grow well in the degraded soils also. These inputs and technologies must be disseminated extensively amongst the farmers to reduce their production risks and improve productivity. Such outreach is not happening to the desired extent currently, because of the constraints imposed by the Agriculture Produce Marketing Act. Relationships between the farmers and the agribusinesses / food processors remain transactional, as the interface is limited to market yards. The 2013 Agricultural Marketing Policy of Karnataka State is quite forward looking, and is a model for Telangana and Andhra Pradesh to adopt. Market signals from the consumers must get transmitted to the farmers, for them to produce what’s in demand. Then, they will fetch better prices. Reforms are also required in the Essential Commodities Act as well as the Forward Contracts Regulation Act, for the farmers to benefit from the emerging market opportunities. Subsidies should be sharply targeted at the resource-poor small farmers and the low-income consumers, so that the market distortion in the rest of the sector is minimised.

Benefits to the Farmers

Due to the risk of moral hazard inherent in the crop insurance surveys at the individual farm level, crop insurance is covered at a block or regional level. Often, the farmers who suffer from crop losses are not eligible to claim compensation, as the crop in the broader region is satisfactory. In such a situation, crop insurance linked to weather based derivatives will be a good alternative solution. State Governments like Rajasthan are giving subsidies to farmers to cover a part of the insurance premium to popularize Weather Insurance. For this Scheme, weather monitoring stations must be set up in villages. Each unit will not cost more than Rs 1 lakh. It will be good if a leader with interests of people as his priority, and is capable of implementing such programmes comprehensively, comes into power in these elections.