Policy Options and Investment Priorities for Accelerating Agricultural Productivity and Development in India

The workshop on: Policy Options and Investment Priorities for Accelerating Agricultural Productivity and Development in India

November 10-11,  2011 Organised by:

Indira Gandhi Institute of Development Research and Institute for Human Development Venue: New Building, 40, Lodhi Estate, New Delhi, India International Centre      



Panel discussion and conclusions. Lessons from the deliberations: Note: these are personal notes made by F.Gatzweiler from the panel discussion. PRAVESH SHARMA, Former principle secretary, dpt. of agriculture, Gov of Madhya Pradesh; current managing director Small Farmers Agri-Business Consortium, Dept. of agric., Gov. of India: “…India is struggling with 2nd green revolution in the non-resource rich eastern regions. The goal in those areas should be livelihood security and not just food security. Agricultural intensification is only part of the story. …A clear policy objective is missing for the 12th year plan. … Agriculture is market driven and it is not the cereal sector which is growing fastest, but vegetables. … The 12th plan should be for smallholders: 1) focus on farmer institutions and organization (cooperatives, (tribal) producer groups, farmers markets…); 2) diversification: livestock gives more returns than land for many smallholders. Strengthening the rural non-farm sector. 3) Risk mitigation; insurance for farmers has not been successful; 4) Knowledge – create avenues to knowledge for smallholders; ICT can be an enabler, but it cannot replace education; 5) Marketing revolution is needed. …Too tight regulation. Famers cannot sell where they want. There is no free movement of goods among states. …The same extension as in the 60s can not be taken… 56000 cooperative societies in India in which was invested in the 60s. Less than 70% bring value to their members. Currently producer organizations are being mapped.… Incremental reforms are better feasible for India than “big leaps”.

V. S. VYAS, Member, Economic Advisory Council to the Prime Minister, Emeritus Professor at the Institute of Development Studies, Jaipur: “Major challenges, e.g. technological gaps need to be filled in. Technological future depends on our researchers. We need to ask ourselves “do we have the people who can work in that area?” any vacant posts in the government. Today we do not have the environment in which our scientists are working (incentives, freedom, support,…). How to getter competent people.Second, about investments. Where are the investments going? E.g. investments in irrigation – have we been able to improve on that? Not really. Why? Same with fertilizers. Response to fertilizer application is not as expected. What do we get from one Rp. invested in different sectors in agriculture? Same about institutions: It is not about the amount of institutions, it’s about their quality. Institutions do not function properly. Transaction costs: many people, TAC high, banks not going for micro-credits, ….also institutions are not functioning because of the perception of risk of the farmers….also: absorption capacity of credits is limited…. Also the banks need to work on a revenue basis and not on a “serving the poor” basis. We need to make it possible for the farmer to absorb more credits. Also we have neglected the human capacity of the producer. We have not invested enough in education…. We have grossly failed in strengthening farmers´ capacity. Vietnam is a good example: field school programme. …Now Vietnam is 2nd largest exporter of rice. Finally it is at the state level where the real drama is taking place. States need autonomy to function. Devolution of state functions which change the livelihoods of people. …Agriculture changes the livelihoods of people. …Today the process of planning is planning by percentage, like:”… if 5% last year, let’s make it 6% next time…”

S. MAHENDRA DEV, Director and Vice Chancellor, Indira Gandhi Institute of Development Research, Mumbai: “Importance of research, education and extension is paramount. Agriculture alone cannot improve the livelihoods, e.g. Bihar and migration out of agriculture. Data quality needs to be improved. …The states contrast clearly. In Bihar things are happening, also in Gujarat. … “

SIMEON EHUI, Sector manager Agriculture and Rural Development, South Asia, World Bank: “How the WB can work with the Gov of India to improve agricultural productivity. India was at the forefront of the green revolution in the 60s…that gain has been eroded. No “one size fits all” solution for India. Recommendations need to be specific at the spec. levels. Technology has been at the forefront. It’s not like in the 60s where focus was on poverty and hunger. Now the focus is on different commodities than cereals. Let’s talk about high value commodities. …There is a need to move East and develop the area. The resource management efficiency needs to be improved. Growth is below China. Much gain by managing resources more efficiently. Rain-fed agriculture needs more attention. 60% of cultivated area is rain-fed. ….Marketing revolution will bring the second green revolution in India. …Way forward: in partnership with the planning commission: accelerating agric. productivity in India. Example: Good WB cooperation with Bihar. …Water is another important issue. “

MANGALA RAI, Special advisor on Agriculture to the Chief Minister of Bihar and former DG, ICAR, Government of India: “I have observed missing links which we need to look into: In the last green revolution we had a tremendous productivity increase driven by land expansion. We still have millions of ha of land which is degraded, idle,….we need to invest in bringing land into production. Population is growing. We have forgotten that soil is a living organism. We think we can improve productivity by applying more and more fertilizers. …I just read a publication…In Punjab too much fertilizer is used… why can’t you have roads and besides create water bodies?… Roads, canal and drainage need to be built together…we need a water policy in this country… water use efficiency is not more than 25%… Forests: why can’t we go for intensification of forests…go for unconventional approach…go for carbon sequestration…rehabilitate degraded lands. Quality inputs: less is more…. Seed and planting material. …We need an effective land use plan. …We need to change the whole system of input support. There is no such system. …”

PETER KENMORE, FAO, Rome: “Natural resource management: we no longer can destroy natural resource base. Population growth will stop around 2070. But we cannot wait with resource conservation. We need better ecosystem management and less input…. If you do not have pollinators you do not get economic value. …Earth worms are essential… So, take the ecosystem approach. The ecosystem approach can improve productivity. Look at the book: SAVE and GROW from FAO. Take conservation agriculture approach…biomass…getting urea right…deliver nitrogen….short duration varieties which fit into the season…monitor the quality…West Bengal: the appropriate counterfactual is Bangladesh. Bangladesh became rice self-sufficient. Please look at the right counterfactual. Look at what can be learnt: New systems are being worked out in Bangladesh. Drainage is important. Pests: Good lessons from Bangladesh, based on cyclones early warning; cell phones; monitoring pests …Subsidy traps: 1994 in India, 10% tax on pesticides… Pesticides went down, productivity maintained. …Institutions and people: seems that the self-help groups did better than producer groups. Maybe because of building social capital. … Extension: there are ways to develop human capital, e.g. Farmer field schools. They are culturally appropriate. Example: the peppermint business in Palampur. Farmers need to understand global markets. India made a decision 50 years ago that they want to go for technology. At that time it was not obvious that it would be successful. This was supported by appropriate institutions and education.”

ABIJIT SEN, Member Planning Commission, Government of India: “…let things compete…If 50% of the people depend on agriculture – is it about increasing incomes? ..Increasing efficiency in natural resource use.…More serious than land is water deficiency.50-60% of the cropped area are under cereals, mainly rice…Too many subsidies are distorting the market. Subsidies must be cut back and the market should play its forces, means competition…Fertilizer subsidies, food subsidies…Cereal consumption of the poorest 40% is subsidised by 20-25%…Hudge infrastructure problems of East India”

ALAKH N. SHARMA, Bihar, Director of IHD: “…Non-farm sector is playing an increasing and more important role in reducing poverty…Collapse of extension service…Agricultural statistics are lying”

UMA LELE: “Fast growth in India, but slow growth in agriculture…Challenges of decentralization…Agricultural growth has contributed less to overall growth in India as compared to Brazil…TFP is slowing down…Agric prod is slowing down…Institutional reforms are less in India, as compared to China, Brazil, or Indonesia…Agric growth rates in East India < 2%…Hudge variation of productivity growth within states…Terms of trade: Asian countries have subsidized agric more than Brazil…Rental market – not ownership but renting land-possibility to cultivate larger plots of land – has been a success in China but not in India…India has a problem with WUE (Water use efficiency)…!! Difference in share of value added in agriculture and share of employment in agriculture: big diff. in India; points to poverty; India did not create productive employment for labor coming out of agric. – necessary is productive employment connected to agriculture. That means employment along the value chain…China and Indonesia have managed to absorb labor from agric in manufacturing sector connected to agriculture…Policy implications: China and Brazil have invested more in infrastructure, R&D, technology and physical capital (roads) and service delivery during the structural transformation….India has not managed the structural transformation well.”

Workshop Programm 10-11 Nov Delhi (pdf 1.59MB)

‘High farm growth failed to control food inflation’ 

BS Reporter / New Delhi November 11, 2011, 8:37 IST

Food inflation continued to be high despite one of the best average annual farm output growth rates of 3.3 per cent in the 11th Five-Year Plan period. This calls for a need to improve marketing of agricultural produce, Planning Commission member Abhijit Sen said today.

“This clearly shows that the nature of marketing of agricultural products needs to change in order to realise the full benefits of high farm output,” Sen said, while talking on ‘Policy Options and Investment Priorities For Accelerating Agricultural Productivity in India.’

Sen’s statement is significant in view of persistent high inflation, particularly in food items. The government is also under attack, as inflation is hovering close to the double-digit mark. It stood high at 9.72 per cent, while food inflation in the country touched a nine-month high of 12.21 per cent in the week-ended October 22, on the back of costlier tomatoes, pulses and milk.

On subsidy dependence, Sen said two years ago total, cereal production was ‘2,75,000crore, while food subsidy totalled to ‘60,000 crore and that on fertiliser was ‘75,000 crore.

“Food and fertiliser subsidy add less than half of the value of cereals produced in the country. In other words we are grossly distorting things as far as subsidy distribution is concerned,” Sen said.

Subsidy forms part of non-plan expenditure.

Sen said the central government’s total plan outlay on the farm sector two years earlier was less than ‘20,000crore. Even if added with planned expenditure made by the states it would be less than the average annual subsidy givenon the other items.

Sen said though investment in agriculture had improved from around 12 per cent of agriculture GDP in 2004 to almost 20 per cent in 2010, much of it had come from the private sector and the evidence is now suggesting that the investments have not been on farming but on allied activities.

He said the 12th Plan would allocate much more for research and development in agriculture and for programmes to enable research bodies focus on specific research.


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