AGRICULTURE SECTOR IN INDIA

UGI USER
May 17, 2024
18 Likes
2 Comments

Introduction
Primary Livelihood Source

Agriculture is the primary source of livelihood for approximately 58% of India’s population. This high percentage reflects the country’s dependency on agriculture for employment and economic stability. The sector’s extensive reach across rural India plays a crucial role in the socio-economic fabric of the country.

Agricultural Land and Employment

India boasts the second-largest agricultural land area in the world, underlining its capacity for extensive agricultural production. This vast expanse of arable land is fundamental in supporting the country’s large population and making it a key player in global agriculture. Furthermore, the agriculture sector is a major employment generator, employing about half of the country’s workforce, which underscores the critical role of farmers in the agricultural ecosystem.

World Records and Productions

India holds several world records in agriculture, including having the world’s largest cattle herd (buffaloes), and being the top producer of milk, pulses, and spices. These records highlight India’s agricultural diversity and its leading position in various agricultural domains. Additionally, India is the largest area planter of wheat, rice, and cotton, and stands as the second-largest producer of fruits, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, and sugar. Such vast production capacities not only meet domestic demand but also contribute significantly to global food supply chains.

Growth Rate and Factors

The agriculture sector in India has witnessed an average annual growth rate of 4.6 percent over the last six years. This growth can be attributed to favorable monsoon seasons, which are critical for rain-fed agriculture, and various government reforms aimed at enhancing agricultural productivity. These reforms may include improved irrigation, subsidy programs, access to credit, and advancements in agricultural technologies.

Government Reforms and Productivity

The Indian government has implemented various reforms to boost agricultural productivity. These include initiatives to improve irrigation infrastructure, seed quality, and access to market information and financial services. Such efforts aim to increase yields, reduce costs, and improve the overall efficiency of the agriculture sector.

Food Industry Potential

The Indian food industry, closely linked to the agriculture sector, is poised for substantial growth. With its vast agricultural outputs, India has a significant potential for value addition, especially within the food processing industry. This potential for growth not only enhances India’s contribution to the world food trade but also creates employment opportunities and promotes sustainable agricultural practices.

Basic Fundamentals of Agriculture & Allied Sector

Aspect	Details
Sector Overview	· Share in Gross Value Added (GVA) (2020-21): 18.8%. · Average annual growth rate (last six years): 4.6%. · Growth rate (2021-22): 3.9%. · Share in total employment: Less than 49%. · Contribution to GDP (from 1950-51 to 2016-17): Decreased from 54% to less than 17%.
Land Use Pattern	· Net Sown Area: 43%. · Pastures & Groves: 4%. · Cultivable Waste: 4%. · Fallow Land: 9.6%.
Food Grain Production	· Wheat and Rice: Account for around 78% of food grains production.
Irrigation Status	· Canal Irrigation (Public): 30%. · Wells and Tube wells (Private): 60%. · Tanks: 5%. · Rainfed agriculture contributes 40% of the agricultural output. · Area under cultivation that is rainfed: 53-55%. · Rural workforce in rainfed areas: 50%, and livestock: 60%.
Horticulture	· Contribution to Agriculture GDP: About 33%. · Fruits and vegetable production: Nearly 90% of total horticulture. · Rankings: 2nd in fruits and vegetables; 1st in Banana, Mango, Lime and Lemon, Papaya, and Okra production. Largest producer & exporter of spices.
Livestock Sector	· Contribution to agriculture GDP: 4.11% of GDP and 25.6% of total Agriculture GDP. · Livestock population: Largest in the world, with 57% buffaloes and 13% cattle (80% of which are indigenous). · Milk production: First in the world, 23% of global milk, with 20% organized sector and 80% unorganized sector.

Current Status of Indian Agriculture

Per-capita agricultural output has consistently increased.
Despite the rise in per-capita output, the agriculture sector’s share in the Gross Domestic Product (GDP) has declined.
Major agricultural commodities imported to India include pulses, edible oils, fresh fruits, and cashew nuts.
Significant agricultural exports from India comprise rice, spices, cotton, meat and its preparations, and sugar.
The percentage of the workforce engaged in the agricultural sector in India has significantly decreased from 60% in 2000 to 42% in 2019.

Economic Survey 2022-23

Growth Rate: The Indian agriculture sector has experienced an average annual growth rate of 4.6% over the past six years. This steady growth rate underscores the sector’s resilience and its critical role in the country’s economy.
Net Exporter of Agricultural Products: India has rapidly emerged as a net exporter of agricultural products in recent years. This shift not only reflects the country’s increased production capabilities but also its strengthening position in global agricultural markets.
Expansion in Rabi Season: In the current rabi season, the area under rabi paddy cultivation expanded by 6.6 lakh hectares compared to the previous year. This expansion indicates a positive response from farmers towards agricultural practices and the potential for higher production outputs.
Year-on-Year Production Increase: As per the Fourth Advance Estimates for 2021-22, there has been a Year-on-Year (YoY) increase in the production of food grains and oilseeds. Moreover, the production of pulses has been notably higher than the five-year average of 23.8 million tonnes, showcasing the sector’s focus on diversifying and increasing essential crop production.
Growth in Allied Sectors: The allied sectors of Indian agriculture, such as livestock, forestry & logging, and fishing & aquaculture, are becoming increasingly significant. These sectors are witnessing buoyant growth and offer potential for enhancing farm incomes, highlighting the sector’s diversification beyond traditional farming.
Livestock Sector Growth: The livestock sector has grown at a Compound Annual Growth Rate (CAGR) of 7.9% from 2014-15 to 2020-21 (at constant prices). Its contribution to the total agricultural Gross Value Added (GVA) increased from 24.3% in 2014-15 to 30.1% in 2020-21. This growth signifies the rising importance of livestock in the agricultural economy and as a source of income for farmers.
Fisheries Sector Growth: The fisheries sector has seen an annual average growth rate of about 7% since 2016-17. It now accounts for approximately 6.7% of the total agriculture GVA. The sector’s growth highlights the increasing emphasis on aquaculture and fishing as vital components of India’s agricultural output and food security strategy.

Significance of Agriculture Sector for India

Increase in Per Capita Income: The sector creates numerous job opportunities, thereby enhancing both individual and national income levels. This direct contribution to employment helps in elevating the economic status of individuals involved in agriculture.
Major Source of Employment: Agriculture employs a significant portion of India’s labor force, with about 50% directly engaged in farming activities. This highlights the sector’s role as a primary source of livelihood for a large part of the population.
Reduction in Poverty: The development of agriculture positively impacts rural areas by increasing productivity, which, in turn, reduces poverty and boosts non-farm employment opportunities, contributing to overall rural prosperity.
Supply of Food: Being fundamental to human survival, the agricultural sector ensures a consistent supply of food to the population, including those employed in various other sectors, as well as animals.
Source of Forex Earning: Exports from the agriculture sector are a key source of foreign exchange earnings, vital for importing capital goods. With agricultural trade generating significant trade surpluses, it underscores the sector’s importance in the national economy.
Supply of Raw Material: Beyond food, agriculture provides essential raw materials like cotton, sugarcane, tobacco, rice, oil-seeds, meat, and milk to both small-scale and large-scale industries, underpinning various sectors of the economy.
Development of the Industrial Sector: The agricultural and industrial sectors are interdependent, each playing a crucial role in the development of the other. This synergy fosters mutual growth and technological advancement.
Improvement in Living Standards: The growth of the agriculture sector leads to higher farmer incomes, which translates into improved living standards for the rural population, showcasing the sector’s impact on social welfare.
Extension in Market Size: Advancements in farm mechanization increase agricultural output, which enlarges market size and enables the export of surplus production, further integrating India into the global market.
Capital Formation: Agriculture contributes to capital formation by increasing incomes, which, in turn, leads to higher savings and investment, fostering economic growth and development.
Self-Reliance Policy: The sector is pivotal in achieving self-sufficiency, ensuring a steady supply of food and raw materials for industrial growth, thus promoting a self-reliant economic model.
Controlling Inflation: Agriculture helps control inflation by stabilizing prices through the supply of food and commodities, mitigating fluctuations in demand and supply.
Reduction in Regional Disparities: The development of agriculture elevates the living standard in rural areas, reducing the urban-rural divide and promoting equitable growth across regions.
Demand for Industrial Goods: As agricultural productivity and farmer incomes rise, there is an increased demand for agricultural and industrial goods in rural areas, stimulating broader economic activity.

Issues in Agriculture Sector in India

Uneconomical, Fragmented Land Holdings: Small and marginal holdings (less than 2 hectares) make up 72% of landholdings, limiting economies of scale benefits.
Limited Access to Formal Credit: Small farmers struggle to access formal credit, often resorting to high-interest loans from moneylenders due to the prevalence of indirect lending.
Falling Yields: Inadequate access to quality seeds, irrigation, fertilizers, and poor soil health contribute to decreasing yields.
Declining Cultivation Area: Agricultural lands are being repurposed for industrial and urban development, reducing the area available for farming.
Excessive Dependence on Monsoons: 60% of cultivated land is rainfed, making agriculture highly susceptible to monsoon variability, leading to output loss due to droughts, floods, etc.
Impact of Climate Change: Unpredictable weather patterns are affecting soil fertility, increasing pest and disease risks, and generally degrading agricultural conditions.
Overcrowded Sector: The agricultural sector’s falling GDP contribution, alongside scant non-farm employment opportunities, leads to disguised unemployment.
Faulty Policy Implementation: Issues with APMC Acts, MSP policies, stock limits under ECA, liberal agricultural import policies, and ineffective insurance and credit schemes harm the sector.
Inefficient MSP Structure: Only a small fraction of farmers benefit from the Minimum Support Price (MSP), leaving the majority to rely on market prices.
Lack of Infrastructure: Inadequate development of cold storage, warehouses, and processing facilities does not match up with production increases, causing waste and poor earnings for farmers.
Low R&D Investment: Research and development in agriculture receive less than 1% of Agricultural GDP, hampering innovation and improvements.
Rural Distress and Farmer Suicides: NCRB report (2021) shows a significant portion of suicides attributed to those in the farming sector.
Loan Waiver Expectations: The anticipation of farm loan waivers encourages loan default and demands for waivers across states.
Misuse of Loan Amounts: Loans intended for farming purposes, such as those provided through Kisan Credit Cards, are often used for non-farm activities.
Production Instability: Dependence on monsoonal rains leads to fluctuating food grain production, with years of surplus followed by shortages.
Poor Conditions for Agricultural Labourers: Many laborers face unsatisfactory working conditions and disguised unemployment, pushing wages below subsistence levels.
Inadequate Investment: Conservative fiscal policies have negatively impacted public investment in essential agricultural infrastructure, with a corresponding lack of private sector investment.

Consequences of Agrarian Crisis

Low Levels of Farmers’ Income:
- A significant portion of rural households engaged in agriculture earn incomes below the poverty line, leading to substandard living conditions. This economic strain is exacerbated for those with agriculture as their primary occupation.
Unsustainable Livelihoods:
- To sustain a household, a minimum of one hectare of land is necessary, yet over 65% of farming households possess less than this amount, rendering their agricultural activities economically unviable.
Rising Indebtedness:
- A majority of agricultural households find themselves in debt, with the issue being particularly acute among small and marginal farmers who often resort to borrowing to meet both production and consumption needs.
Increasing Farmers’ Suicides:
- There has been a notable rise in suicides among agricultural workers, driven largely by financial desperation and indebtedness. This tragic trend underscores the severe mental and financial stress faced by those in the sector.
Rural-Urban Migration:
- The failing agricultural sector and lack of rural employment opportunities have spurred a significant migration from rural to urban areas, seeking better livelihoods elsewhere.
Exit from the Agriculture Sector:
- A considerable percentage of farmers express a desire to leave farming behind, driven by the allure of more lucrative and stable income sources in other sectors.
Rural Unrest:
- The agrarian crisis has led to increasing farmer protests and demands for financial relief measures such as loan waivers, highlighting widespread discontent and desperation.
Poor Demand:
- With a large segment of the population engaged in underperforming agricultural activities, overall consumer demand suffers, impacting the wider economy.
Rising Inequalities:
- The income disparity between those in agriculture and those in other sectors is stark, further exacerbating social and economic inequalities.
Human Capital:
- The adverse conditions faced by farmers negatively affect the health and education of family members, potentially wasting the demographic dividend and impairing future human capital development.
Lower Participation:
- Farmers often find themselves marginalized from entrepreneurship opportunities and national-level discussions, reducing their influence and ability to advocate for their interests.
Food Insecurity:
- Disillusionment with farming threatens national food security, as reduced agricultural engagement can lead to shortages and reliance on imports.
Social Unrest:
- The deterioration of agricultural conditions has led to increased protests by farmers, contributing to social instability and highlighting the urgent need for systemic reforms.

Fragmented Land Holdings

Reasons for Fragmentation of Land Holding

Small Scale of Production: Small landholdings hinder economies of scale, making it difficult for farmers to invest in mechanization and leading to reduced productivity and land capability.
Low Prices: Small and marginal farmers have limited bargaining power in the market, often accepting lower prices for their produce due to the small marketable surplus.
Low Income: According to the NSSO Survey, the median agricultural income was about Rs. 19,250 annually in 2012-13, translating to roughly Rs. 1,600 per month.
Indebtedness: There’s an inverse relationship between landholding size and indebtedness, with over 80% of agricultural households with marginal landholdings in states like Bihar and West Bengal being indebted.
Inclusion Issue: The prevalence of small and marginal farmers complicates outreach efforts for government support schemes and technology dissemination.
Failure of Land Reforms: Post-independence efforts at equitable land distribution have largely failed.
Rising Population: Increasing population pressures lead to further land fragmentation as more individuals depend on the same land.

Consequences of Fragmented and Small Landholdings

Reduced Productivity: Fragmentation hinders the cultivation of certain crops and limits farmers’ ability to switch to more profitable crops due to small plot sizes.
Increased Costs: Transport, management, and security of scattered plots are more challenging and costly.
Land Wastage: The complex boundary networks among fragmented plots result in land wastage.
Poor Marketable Surplus: Small holdings contribute to low bargaining power and minimal marketable surplus.
Difficulty in Mechanization: The scattered nature of landholdings restricts the use of modern agricultural technologies.
Litigation: Fragmentation often leads to property disputes, contributing to a significant portion of civil litigation in India.

Doubling Farmer’s Income: Dalwai Committee and Niti Aayog

The Indian government has made concerted efforts to double farmers’ income by 2022, an initiative led by the Ashok Dalwai Committee and supported by NITI Aayog’s recommendations.

Dalwai Committee Recommendations

Target Income Levels: Proposes increasing the farm income ratio of farmers from 60% in 2015-16 to 70% in 2022-23.
Broadening the Definition of Farmer: To include cultivators, lessee sharecroppers, and others for inclusiveness.
Online Database: Suggests developing an authenticated database to define and identify farmers for support.
Prioritization of Subsectors: Focus on diversification into high-value areas like horticulture, animal husbandry, dairying, and fisheries.
Private Investment: Encourages investment in agri-logistics, pack-houses, greenhouses, and micro-irrigation.
Public Investment: Recommends public investment in irrigation, R&D, and rural infrastructure to encourage private investment.

NITI Aayog Recommendations

Stable Export Policy: Advocates for a coherent agricultural export policy with a 5 to 10-year horizon.
Price Realization: Suggests replacing the CACP with an agriculture tribunal and considering a shift from MSP to a Minimum Reserve Price (MRP) for auctions.
Agriculture Advisory Service: Proposes establishing a technology-driven service akin to those in the US and EU.
Futures Trading and Crop Insurance: Promotes futures trading and modifications to the PMFBY for weather-based insurance and broader coverage.
Model Acts Adoption: Urges states to adopt the Model Contract Farming Act and the Model Agriculture Land Leasing Act.
Digitization and FPOs Promotion: Highlights the importance of digitizing land records and supporting Farmer Producer Organizations.
Focus on Precision Agriculture and Research: Emphasizes on precision agriculture, increasing research spending, and creating a knowledge hub.

Recent Initiatives for Doubling Farmers’ Income

Prime Minister’s 7 Point Action Plan: Includes irrigation focus, quality seeds, investment in storage, value addition, risk management, a national farm market, and ancillary activities promotion.
Insurance and Irrigation Schemes: Introduction of schemes like Pradhan Mantri Fasal Bima Yojana and Pradhan Mantri Krishi Sinchayee Yojana.
Funding and Market Access: Enhanced credit facilities, National Agriculture Market (e-NAM), and reforms in the fertilizer sector.
Price Stabilization and Agro-Services: Efforts to stabilize pulse prices, agro-meteorological services, and promotion of organic farming.

Challenges of Price Fluctuations in Agricultural Products

Price fluctuations in the agricultural sector present a complex challenge that affects farmers, consumers, and the entire food supply chain. While price variations can sometimes benefit producers, the unpredictable nature of these changes often leads to significant risks and vulnerabilities.

Factors Responsible for Frequent Price Fluctuations

Weather: Extreme weather conditions, such as droughts or floods, can drastically affect crop yields, leading to oversupply or scarcity that significantly impacts market prices.
Seasonality: The agricultural sector is inherently seasonal, with prices often fluctuating based on the harvest period of certain crops, affecting supply and demand dynamics.
Cobweb Phenomenon: The time lag between planting and harvesting can lead to cyclical price distortions, where the current market prices influence future planting decisions, often exacerbating price volatility.
Cascading Effect: The accumulation of taxes and intermediary costs throughout the supply chain can lead to distorted and fluctuating prices.
External Factors: Global market volatility can affect the supply and demand for commodities, leading to price fluctuations.
Infrastructure: Inadequate supply chain infrastructure and logistical challenges can cause price spikes due to inefficiencies in transporting goods to market.
Government Procurement: The Reserve Bank of India (RBI) has observed that Minimum Support Prices (MSP) and government procurement policies can impact inflation and market prices.
Perishability: The perishable nature of many agricultural products can lead to rapid price changes in response to supply chain disruptions.
Storage Facilities: Changes in storage capacity can affect the supply of commodities, influencing market prices.
Rainfall Variability: Fluctuations in monsoon patterns can lead to variations in crop yields, disrupting the supply-demand equilibrium.
Transportation Blockages: Strikes and transportation blockages can hinder the movement of commodities, affecting their prices.

Way Forward: Strategies to Mitigate Price Fluctuations

Regional Buffer Stocks: Establishing regional buffer stocks can help moderate prices by releasing or withholding stocks based on current market conditions.
Infrastructure Development: Improving storage facilities and transportation infrastructure can extend the shelf life of perishable goods and reduce logistical inefficiencies.
Price Ranging and Stabilization Funds: Implementing price stabilization measures and compensating farmers when prices fall below a certain range can help mitigate income losses.
Technological Advancements: Leveraging technology for better weather forecasting and data analysis can enable more informed decision-making across the agricultural sector.
Rationalization of Schemes: Aligning support schemes with market realities can help avoid market distortions and ensure that interventions reflect actual needs.
Prevent Hoarding: Addressing hoarding at both commercial and individual levels is crucial to preventing artificial price inflation.
Crop Diversification: Encouraging the cultivation of alternative crops can provide a safety net against crop failures and offer more stable income sources for farmers.
Efficient Transportation: Investing in dedicated freight corridors and initiatives like the Kisan Rail scheme can improve delivery times and responsiveness to market demands.

Horticultural Sector

Horticultural Sector in India

The horticultural sector in India is diverse and expansive, covering a wide range of crops and contributing significantly to the agricultural Gross Value Added (GVA). This sector includes six categories: pomology (fruits), olericulture (vegetables), floriculture (flowers), plantation crops, spices, aromatics, and herbal medicines. India stands as the second-largest producer of fruits and vegetables globally, as well as the second-largest producer and exporter of spices. Despite occupying only about 14% of agricultural land, horticulture contributes more than 33% to the agricultural GVA.

Importance of the Horticulture Sector

High-value Crops: Horticultural crops are in high demand due to their nutritional benefits, offering higher returns per unit of land compared to cereal crops. This is especially beneficial for small and marginal farmers, with a shift to horticulture potentially increasing annual income significantly.
Nutritional Security: These crops play a crucial role in overcoming vitamin and micronutrient deficiencies, thus ensuring nutritional security.
Employment Generation: Being labor-intensive, horticulture generates more employment opportunities compared to other agricultural sectors.
Boosts Secondary Agriculture: Develops cottage-based industries, enhancing secondary agriculture.
Gender Equity: Often, women are involved in growing and marketing vegetables, fruits, and cut flowers, though they face challenges in accessing markets, land, inputs, and education.
Diversity in Farm Produce and Diets: Introduces variability in farm produce, enriching diets.
Raw Material for Industries: Serves as raw material for multiple industries, including processing, pharmaceutical, and cosmetics.
Job Creation: Offers a variety of jobs, directly and indirectly, contributing to economic growth.

Challenges in the Horticulture Sector

Long Harvest Cycles: Certain fruits require long sowing to harvest cycles, impacting productivity.
High Input Costs: Burdens farmers financially, affecting profitability.
Aging Orchards: Many orchards are old and have low productivity and planting density.
Quality of Seeds and Planting Material: Affects the quality of the produce.
Poor Canopy Management: Results in inefficient fruit production.
Lack of Irrigation: Majority of horticulture cultivation is rainfed, lacking access to irrigation facilities.
Initial Cost Constraints: High costs associated with adopting improved technologies.
Post-Harvest Management: Inadequate facilities and an unorganized supply chain hinder the management of perishable produce.
Lack of Trained Extension Services: Hampers the dissemination of best practices and innovative techniques.

Strategy to Boost Horticultural Production

Enhancing Productivity: Through hybrid technology, high-density planting systems, and increasing output by area expansion.
Quality Planting Material: Focus on seed production, modernization of nurseries, and accreditation. Initiatives like the CSIR Floriculture Mission aim to develop special trait varieties of crops.
Resource Efficiency: Utilizing micro-irrigation, fertigation, and mechanization to save costs and reduce labor.
Increasing Cropping Intensity: Implementing strategies like irrigation enhancement, crop rotation, and mixed cropping.
Diversification: Encouraging cultivation of high-value crops within horticulture to increase profitability.
Improving Market Access: Initiatives like the KISAN RATH Mobile App facilitate the transportation of produce, improving market access.
Post-Harvest Handling Facilities: Creating near-farm occupations to manage post-harvest processes effectively.

Role Of National Horticulture Mission (NHM) In Boosting Production, Productivity, And Income In Horticulture Farms

The National Horticulture Mission (NHM) was initiated under the 10th five-year plan in 2005-06. Its objective is to foster the holistic growth of the horticulture sector through area-based, regionally differentiated strategies.

Impact on Production and Area Coverage

The mission’s success is evident in the significant production volumes achieved; more than 9 crore metric tons of fruits were produced on 63 lakh hectares of land during the 2015-16 period.

Benefits to Marginal Farmers

Horticulture farms are generally smaller, and crops within this sector yield a high return on investment, enabling marginal farmers to enhance their incomes on limited land.

Diversification and Multiple Income Streams

NHM encourages farmers to engage in multiple cropping on their lands, providing several sources of income from the same plot, thereby maximizing their earnings potential.

Adaptability to Adverse Conditions

The mission has been particularly beneficial in regions with low rainfall or those susceptible to drought. Horticulture, requiring less water and being less prone to crop failure, offers a viable alternative to traditional farming in such areas.

Efficiency and Turnaround Time

Horticultural crops typically have a shorter growth cycle than traditional food crops, allowing for more efficient land use. This leads to increased production and productivity, ultimately boosting the income of farmers.

Integrated Development of Horticulture (Mission for Integrated Development of Horticulture – MIDH)

NHM is part of the broader Mission for Integrated Development of Horticulture (MIDH), which aims to enhance horticulture production, improve nutritional security, and provide income support to farm households.
The mission supports high-density plantations, protected cultivation, micro-irrigation, and the use of quality planting material, which are critical for improving yield.
It focuses on the rejuvenation of senile orchards, which revitalizes old orchards to make them productive again.
Post-harvest management and marketing initiatives under MIDH ensure that farmers get better prices for their produce and reduce post-harvest losses, making the horticulture sector more lucrative and sustainable.

Precision Farming

Precision farming, also known as satellite farming or digital farming, represents a significant shift towards more technologically advanced agriculture. It involves the accurate and efficient application of various inputs like water, fertilizer, and pesticides to crops at the optimum time to increase productivity and maximize yields. This approach leverages a range of digital technologies, including Information and Communication Technologies (ICTs), wireless sensor networks, robotics, drones, variable rate technology (VRT), geospatial technologies, and automated positioning systems.

Advantages of Precision Farming

Decreased Fertilizer Use: Precision farming practices can significantly reduce the quantity of fertilizers and chemicals needed, lowering application costs while boosting yields. Technologies such as GPS-guided machinery help ensure precise application, avoiding overlaps and waste.
Reduced Input Costs: By optimizing input usage, precision farming can reduce costs by 18-20% and enhance yield by up to 30% for crops like rice and wheat, and up to 100% for sugarcane, fruits, and vegetables.
Improved Farm Management Software: Tools like Agrivi simplify farm operations, enhancing productivity and making management tasks more efficient.
GPS Soil Sampling: This technique provides detailed information about soil nutrients and pH levels, enabling informed decision-making and optimizing inputs for maximum profitability.
Labor Cost Savings: Automation and technology use in crop cultivation, protection, and irrigation through automated sensors can significantly reduce labor costs.
Soil and Plant Monitoring: Placing sensors across fields allows farmers to monitor and achieve optimal conditions for plant growth, improving efficiency and crop health.
Optimal Chemical Application: Precision farming ensures chemicals are applied in the right amounts, at the right place, and at the right time, benefiting crops, soils, groundwater, and the entire agricultural cycle.
Pollution Reduction: By minimizing chemical use, precision farming reduces pollution and slows the development of pesticide resistance.
Resource Efficiency: Technologies like remote sensing allow for better management of land, water, and other resources, minimizing waste.
Increased Agricultural Productivity: Automated applications of nutrients and other inputs enhance crop yields.
Socio-Economic Benefits for Farmers: Higher yields with lower input costs can improve farmers’ profitability and socio-economic status.

Government Initiatives and Budget 2023-24

Recognizing the benefits of precision farming for achieving the goal of doubling farm income, the Indian government has initiated projects such as PMKSY (Per Drop More Crop), SENSAGRI (sensor-based smart agriculture), and the use of drones and mobile apps to promote these practices.

Rainfed (Dry Land) Agriculture

Rainfed or dryland agriculture in India refers to farming practices that rely solely on natural rainfall for water. It encompasses approximately 60-65% of the country’s total net sown area, with 48% under food crops and 68% under non-food crops.
Predominantly practiced in regions with annual rainfall below 75 cm, dryland farming focuses on cultivating hardy and drought-resistant crops such as ragi (finger millet), bajra (pearl millet), moong (green gram), gram (chickpea), and guar (cluster beans), alongside implementing soil moisture conservation and rainwater harvesting techniques.

Significance

According to a World Bank report, India has around 195 million hectares of land under cultivation, with 63% being rainfed. This highlights the significant role of dryland agriculture in the country’s agricultural framework.
The climatic conditions of India are divided as 1/3rd humid and 2/3rd sub-humid or arid, making dryland agriculture more prevalent than wet agriculture.
This sector supports 40% of India’s population, occupying 60-65% of the land and contributing to 60% of the agriculture GDP. Despite its contribution, rainfed areas often receive less public investment compared to irrigated regions.

Parameter	Dryland Agriculture	Rainfed Agriculture
Rainfall	Cultivation in regions with annual rainfall less than 750 mm.	Crop production in regions with annual rainfall more than 1150 mm.
Growing Regions	Primarily in Arid, Semi-Arid, and uplands of Sub-Humid and Humid regions. Example: Rajasthan.	Mostly in Sub-Humid and Humid regions. Example: Bihar.
Irrigation	No irrigation due to insufficient rainfall.	No irrigation, relying instead on substantial rainfall for crop cultivation.
Cropping Systems	Practices often include single crop cultivation or intercropping due to the limited availability of water.	More likely to employ intercropping or double cropping, benefiting from the higher volume of rainfall.

Challenges Facing Rainfed Agriculture

Rising Temperatures: Since the 1970s, both Kharif (monsoon) and Rabi (winter) seasons have witnessed a general increase in temperatures, affecting crop growth and yields.
Declining Rainfall: The average rainfall during the Kharif season has decreased by 26 millimeters, and the Rabi season by 33 millimeters from the 1970s to the last decade.
Extreme Temperatures: There’s been an increase in the days experiencing extremely high temperatures, coupled with a decrease in cooler days, exacerbating the challenges for rainfed agriculture.
Rainfall Extremities: The occurrence of dry days (with rainfall less than 0.1 mm per day) and wet days (with rainfall more than 80 mm per day) has risen, indicating the impact of climate change through more frequent extreme weather events. This unpredictability and extremity in weather patterns pose significant risks to rainfed farming, which is heavily dependent on consistent and adequate rainfall patterns.

Impact Category	Details
Impact of Weather on Agricultural Productivity
High-temperature Shocks	The impact of temperature and rainfall is highly non-linear, significant only under extreme conditions of temperature increases and rainfall shortfalls.
Extreme Weather Shocks	Have a more pronounced effect on unirrigated, rain-fed crops (e.g., pulses) compared to irrigated crops (e.g., cereals), with almost twice the impact.
Impact on Crops
Vulnerability of Crops	Crops grown in rainfed areas, particularly pulses during both Kharif and Rabi seasons, are vulnerable to weather shocks.
Cereals’ Immunity	Cereals, including rice and wheat, grown in irrigated areas, show relative immunity to extreme weather conditions.
Impact on Farm Revenue
Temperature Shocks	Extreme temperature shocks reduce farmer incomes by 4.3% during Kharif and 4.1% during Rabi.
Rainfall Shocks	Extreme rainfall shocks lead to a decrease in incomes by 13.7% during Kharif and 5.5% during Rabi.

Zero Budget Natural Farming (ZBNF)

Zero Budget Natural Farming (ZBNF) is an innovative agricultural practice that emphasizes natural growth processes without the use of chemical fertilizers and pesticides. The concept, developed and popularized by Subhash Palekar, is based on the principle that the soil, in its natural state, contains all the nutrients that plants require for growth. By fostering the soil’s microbial life, ZBNF aims to unlock these nutrients and make them available to crops.

Features of ZBNF

Microbial Activation of Soil: ZBNF focuses on enhancing soil biology through the activation of microorganisms. This is achieved through:
- Bijamrit: A microbial seed treatment using a formulation of cow urine and cow dung.
- Jivamrit: Enhancing soil microorganisms with a concoction of cow dung, cow urine, jaggery, and pulse flour to increase soil fertility.
- Mulching: Covering soil with crop residues to maintain soil moisture, reduce temperature, and promote the growth of beneficial microorganisms.
- Waaphasa: Encouraging the development of soil humus to improve soil aeration and water retention.
Natural Inputs: ZBNF practices require natural inputs primarily sourced from cow dung and cow urine, specifically from indigenous Indian cow breeds, revered for their high-quality microbial content conducive to soil health.
Principle of Nutrient Uptake: It operates on the understanding that plants obtain the majority of their nutrients (98%) directly from air, water, and sunlight, with the remaining 2% from the soil, which should be rich in microorganisms.
Promotion of Biodiversity: Encourages biodiversity through multi-cropping systems, which enhance soil health and ecosystem resilience.

Aspect	Organic Farming	Zero Budget Natural Farming (ZBNF)
Fertilizers and Manures	Uses organic fertilizers and manures like compost, vermicomposting, cow dung manure, etc., which are added to farmlands from external sources.	Encourages the decomposition of organic matter by microbes and earthworms directly on the soil surface, which gradually enriches the soil with nutrients over time.
Soil Management	Requires basic agricultural practices such as ploughing, tilling, and mixing of manures.	Avoids ploughing, tilling of soil, and the use of fertilizers. Practices mimic natural ecosystems with minimal soil disturbance.
Weed Management	Involves manual weeding and other mechanical methods to manage weeds.	Does not practice weeding, allowing natural ecosystems to manage weed growth.
Cost and Ecological Impact	Can be expensive due to the requirement of purchasing bulk manures and has an ecological impact on the surrounding environments due to the extraction and transport of materials.	An extremely low-cost method of farming that is fully integrated with local biodiversity and minimizes external inputs, thus having a lower ecological footprint.
Chemical Use	Similarity: Both farming systems discourage the use of chemical fertilizers and pesticides, promoting a chemical-free approach to agriculture.	Similarity: Both farming systems discourage the use of chemical fertilizers and pesticides, promoting a chemical-free approach to agriculture.
Seed and Crop Variety	Similarity: Encourages the use of local breeds of seeds and native varieties of vegetables, grains, pulses, and other crops, aiming to preserve genetic diversity and adapt to local conditions.	Similarity: Encourages the use of local breeds of seeds and native varieties of vegetables, grains, pulses, and other crops, aiming to preserve genetic diversity and adapt to local conditions.
Pest Control Methods	Similarity: Promotes non-chemical and homemade pest control methods to manage pests without harming the environment.	Similarity: Promotes non-chemical and homemade pest control methods to manage pests without harming the environment.

Sustainable Development and Farmer Income

ZBNF aligns with global and national sustainability goals, including the Sustainable Development Goal No. 2, which focuses on sustainable agricultural practices that enhance land and soil quality and protect genetic diversity. Additionally, it supports the New India Vision 2022 goal of doubling farmers’ income by reducing input costs and promoting ecological balance.

Observations by Economic Survey 2022-23

Organic Farming Leadership: India leads globally with 44.3 lakh organic farmers and about 59.1 lakh hectares area under organic farming as of 2021-22, indicating a significant move towards sustainable agricultural practices.
Government Initiatives: The Indian Government promotes organic farming through schemes like Paramparagat Krishi Vikas Yojana (PKVY) and Mission Organic Value Chain Development for North Eastern Region (MOVCDNER), focusing on cluster development and Farmer Producer Organisations (FPOs).
Namami Gange Programme: Under this initiative, a significant area of 1.2 lakh hectares has been dedicated to organic farming, contributing to the mission’s goal of cleaning and rejuvenating the Ganga River by reducing chemical runoff into the water.

Integrated Farming System (IFS)

The Integrated Farming System (IFS) is a comprehensive approach aimed at achieving efficient and sustainable resource management to enhance productivity in agriculture. By integrating various agricultural practices such as cropping, livestock rearing, aquaculture, agroforestry, and others, IFS aims to create a synergistic effect that maximizes output and sustainability. This method is particularly beneficial in addressing the challenges of food security, farmer’s income, and environmental sustainability.

Objectives and Benefits of IFS

Productivity: IFS enhances the economic yield per unit area through the intensification of crop and allied enterprises. This is especially beneficial for small and marginal farmers, helping them to optimize their land use and increase crop yields.
Profitability: By minimizing the reliance on chemical fertilizers through the recycling of nutrients and integrating various farm activities, IFS increases profitability. The system allows for a more efficient use of resources, reducing input costs and enhancing farm income.
Sustainability: The subsystems within an IFS interact in a way that one by-product serves as an input for another, creating a closed-loop system that minimizes waste and enhances ecological sustainability. This approach contributes to the conservation of natural resources and reduces the ecological footprint of farming practices.
Recycling: Effective recycling of products, byproducts, and waste material within the farm itself is a key aspect of IFS. This not only reduces the need for external inputs but also ensures the sustainability of resources in rural areas.
Year-Round Income: The diverse and interconnected components of IFS provide a continuous source of income through various means such as crop production, livestock, and other allied activities, ensuring financial stability for farmers throughout the year.
Optimization of Small Landholdings: IFS is particularly advantageous for farmers with small landholdings. It allows them to make the best use of available resources by combining traditional knowledge with modern agricultural practices.
Fodder Crisis Resolution: By utilizing crop residues and agricultural waste as fodder, IFS addresses the fodder crisis, supporting sustainable livestock management.
Employment Generation: The integrated approach of combining crop production with other agricultural enterprises increases labor requirements, thereby reducing underemployment and unemployment issues. This creates opportunities for family labor and others in the community to engage in productive work throughout the year.

Implementation for Climate-Smart Agriculture

IFS offers a pathway towards climate-smart agriculture by promoting practices that are adaptable to climate change, reducing greenhouse gas emissions, and enhancing carbon sequestration. It encompasses various aspects of farming including soil management, waste management and pollution control, crop nutrition, energy and resource efficiency, as well as landscape and nature conservation.

Agricultural Education

Agricultural Education in India

Agricultural education encompasses a wide range of studies including horticulture, forestry, conservation, agricultural products and processing, aquaculture, and more. It aims to provide formal education and training in the field of agriculture to enhance productivity, sustainability, and economic growth in the agricultural sector.

Need for Agricultural Education

Enhancing Agricultural Productivity: Educated farmers make better economic and technical decisions, leading to increased productivity.
Improving the Value Chain: Addressing bottlenecks in the agriculture value chain from farm input to market linkages.
Creating Employment: Catering to emerging fields like biotechnology and precision agriculture.
Increasing Labor Value: Adding to an individual’s productivity and hence, their market value.
Adopting New Technologies: Facilitating the adoption of advanced farming technologies and mechanization.
Developing Skills: Bridging the skill gap in the agricultural sector.

Significance of Agricultural Education in India

Empowering Rural Economy: Promotes self-reliance by improving profitability and promoting agro-entrepreneurship.
Poverty Alleviation: Leads to a self-sufficient rural economy and reduces poverty.
Job Creation: Opens up new employment opportunities in agriculture and allied sectors.
Supporting the Food Processing Industry: Technical education in food processing can boost the industry.
Promoting Sustainable Practices: Educates on sustainable agricultural practices, such as organic farming and water conservation.
Boosting Agricultural Exports: Develops skills needed in the global market like IPR and trade practices.
Improving Access to Information: Enhances the link between farmers and researchers, promoting the flow of knowledge.

Challenges Faced by Agricultural Education

Financial Constraints: Lack of funding from state governments.
Faculty Shortages: Non-replacement of retired faculty and high inbreeding within educational institutions.
Lack of Networking: Minimal collaboration with national and international universities.
Perception Issues: Agriculture is often not seen as a lucrative or preferred career path.
Deteriorating University Standards: Lack of focus and funding has led to declining standards.
Outdated Curriculum: Rapid advancements in technology demand frequent updates in the curriculum.
Infrastructure Gaps: Inadequate laboratory and testing facilities hinder educational quality.

Way Forward

Public-Private Partnerships: Collaboration between government and private sector in frontier areas.
Curriculum Revisions: Aligning education with market needs and sustainable practices.
Adopting Global Standards: Harmonizing education with global issues and trade practices.
Regional-Specific Education: Tailoring education to the specific needs of agro-ecoregions.
Statutory Regulation: Establishing a central authority for agricultural education regulation.
Vocational Education: Focusing on non-formal education for technological empowerment in rural areas.

Government Initiatives

National Agriculture Higher Education Project: A collaboration with the World Bank and ICAR for quality education.
Pandit Deendayal Upadhyay Unnat Krishi Shiksha Scheme: Opening new centers for agricultural education.
Attracting and Retaining Youth in Agriculture (ARYA): Empowering rural youth for agricultural entrepreneurship.
Dedicated Agriculture Education Portal: Providing a single window for education resources from Agricultural Universities.
Student READY Program: Offering job-based and entrepreneurial training to students.

Research and Development in Agriculture

Agricultural R&D in India

ICAR’s Role: It is pivotal in the sphere of agricultural research and innovation in India, with efforts directed towards improving crop yields, developing sustainable farming techniques, and ensuring food security.
Funding for Agriculture R&D: Currently, agriculture research funding is less than 1% of India’s GDP, indicating a potential area for increased investment to bolster agricultural innovation.

Challenges in Agro R&D

Workforce Issues: The salary structure and promotion rules for ICAR scientists, which are time-bound and based on seniority, deter highly skilled scientists from joining or continuing in the public sector, leading many to opt for private sector or overseas opportunities.
Research Focus: A predominant focus on improving quantitative yields has been noted, with less emphasis on other quality aspects such as aroma, taste, appearance, calories, nutrients, and antioxidants that could cater to the demands of health-conscious consumers, both domestically and internationally.
Cereal Centricity: Indian agricultural research has been criticized for its heavy emphasis on cereals, with a need to diversify focus towards pulses, oilseeds, horticulture, and animal husbandry to ensure a balanced agricultural development.

Initiatives and Outcomes (Economic Survey 2021-2022)

Role of Agricultural Research: Acknowledged for its critical contribution towards developing a sustainable global food system, ensuring nutritional security, and enhancing farm incomes through innovative technologies and practices.
Achievements:
- Mechanisation of agriculture, development of climate-resilient technologies, and high-yielding varieties (HYVs) of seeds.
- ICAR notified/released 731 new varieties/hybrids of field crops and 98 of horticultural crops during 2020 and 2021.
- Development of 35 special trait varieties, including biofortified and stress-tolerant varieties for field and horticultural crops in 2021-22.
- Design and development of an Agrivoltaic system generating significant annual power output and revenue, showcasing an innovative approach to utilizing agricultural land for both crop production and electricity generation.

Agriculture Extension

Agriculture Extension Services

Agricultural extension services constitute a vital component of the agricultural sector’s ecosystem, primarily focusing on the informal education of farmers and rural communities. These services aim to provide advice, information, and training to enhance agricultural productivity, economic stability, and health awareness. Despite their critical importance, a notable gap exists in the dissemination and accessibility of these services across India.

Objectives of Agriculture Extension Services

Dissemination of Knowledge: One of the primary goals is to transmit the latest technical knowledge and agronomic practices to farmers, ensuring they are equipped with the information necessary to enhance their agricultural output.
Feedback Mechanism: These services facilitate a two-way communication channel, allowing for the feedback from farmers regarding field challenges and constraints, which can inform future research and extension programs.
Professional Competence: Enhancing the professional skills and competence of extension workers to ensure effective service delivery.
Strengthening Linkages: Building strong connections among farmers, extension officers, and researchers to foster a collaborative environment for agricultural innovation.
Motivation for Development: Inspiring farmers towards comprehensive development, encompassing not just agricultural productivity but also socio-economic advancement.

Delivery Channels and Challenges

The delivery of agricultural extension services involves multiple channels, including government initiatives, private sector involvement, and the participation of non-governmental organizations (NGOs). However, the effectiveness of these channels is often hindered by various challenges such as limited reach, the influence of commercial interests, and the adequacy of the information disseminated.

GRI-Extension Channel	Challenges
Individual Counselling	Limited geographical reach and manpower availability, with roughly 1 extension worker per 800-1000 farmers.
(via personal meeting, toll-free Helpline & Letters)
Group Counselling	Farmers’ reluctance due to fear of losing workdays and lack of motivation for time/travel investment.
(via seminar, workshop, group discussion, and field visit)
Government Magazines/Periodicals	Challenges such as illiteracy and poverty reduce the effectiveness of channels like Kurukshetra, along with limited reach in rural areas.
(e.g., Kurukshetra)
Mass Media	Marginal farmers may lack the necessary equipment (TV, radio) to access Kisan TV (2014) and public radio broadcasts.
(via Kisan TV (2014) and Public Radio broadcast)	Difficulty in delivering customized/tailor-made advisory/information.
E-Technology	Though there’s mass reach potential due to the proliferation of mobiles and the Jio 4G effect, ensuring quality and relevance of tailor-made advisory remains a challenge.
(via E- Krishi (Webportal); mKisan (SMS/USSD), Kisan Suvidha App)

National Mission on Agriculture Extension

The National Mission on Agriculture Extension and Technology (NMAET) represents a concerted effort to restructure and strengthen agricultural extension services in India. It encompasses four sub-missions, each targeting specific aspects of agricultural development:

Sub Mission on Agricultural Extension (SMAE): Focuses on the adoption of quality seeds and utilizes Agri Clinics, Agribusiness Centres, and Kisan Call Centres for providing extension services.
Sub-Mission on Seed and Planting Material (SMSP): Aims to manage the entire seed chain efficiently and includes measures to strengthen the Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FRA).
Sub Mission on Agricultural Mechanization (SMAM): Highlights the critical correlation between farm power availability and agricultural productivity, emphasizing farm mechanization.
Sub Mission on Plant Protection and Plant Quarantine (SMPP): Concentrates on keeping crops disease-free through the promotion of Integrated Pest Management and other scientific, environment-friendly techniques.

Impact and Accessibility

Agricultural extension services play a crucial role in boosting agricultural productivity, enhancing food security, and improving rural livelihoods. They also contribute to the adoption of more sustainable and environmentally friendly farming practices. Despite their importance, accessibility remains a significant challenge, with only about 40% of agricultural households benefiting from these services.

Farm Mechanization

Farm Mechanization in India

Definition and Purpose: Farm mechanization involves the development and use of machinery to replace human and animal labor in agricultural processes, aiming to enhance productivity and production while minimizing costs.
Current Status in India: Farm mechanization levels in India stand at 40-45%, which is lower compared to countries like the USA (95%), Brazil (75%), and China (57%). This variance is evident within India itself, with high levels in states like UP, Haryana, and Punjab, and negligible levels in northeastern states.
Government Support: Through the Sub Mission on Agricultural Mechanisation (SMAM), state governments receive assistance in training, demonstration of agricultural machinery, procurement of farm equipment, and establishment of Custom Hiring Centres (CHC).

Need for Farm Mechanization

Input Savings: Mechanization is linked to reductions in seed (15-20%) and fertilizer (15-20%) usage.
Efficiency and Productivity: It can decrease labor time by 15-20%, increasing efficiency and reducing physical strain.
Social Benefits: Mechanization eases the workload, particularly for women, and can make farming more appealing to the youth.
Cost of Labor: With rising labor costs, mechanization can reduce farming costs by about 20%.
Sustainable Agriculture: Optimal use of land and water resources through mechanization can lead to more sustainable agricultural practices.

Challenges with Farm Mechanization

Economies of Scale: The small average landholding size in India makes individual ownership of machinery economically unfeasible.
Farmer Income Levels: The majority of Indian farmers are small and marginal, with low income levels, making it difficult to afford mechanization.
Credit and Awareness Issues: Cumbersome credit procedures and low awareness among farmers about available machinery and technologies.
Variability in Power Availability: Differences in power availability across states affect the adoption of mechanization.
Subsidy Limitations: Despite government subsidies, the high investment required remains a barrier.

Steps to Promote Farm Mechanization

Land Consolidation: Encouraging the consolidation of small landholdings to benefit from mechanization.
Promotion of Small Farm Machinery: Tailoring machinery and implements to the diverse needs of various crops and cropping patterns.
Support through Make in India: Utilizing the initiative to reduce import costs and encourage domestic manufacturing of farm machinery.
Innovation and Rental Models: Developing rental models for high-cost machinery to reduce operation costs.
Government Initiatives: Implementation of the SMAM has led to the establishment of CHCs, Hi-Tech hubs, and farm machinery banks, with the launch of the FARMS mobile app to facilitate machinery rental.
Ease of Financing: Simplifying loan procedures and enhancing bank capacities to support mechanization.
Adopting Dalwai Committee Recommendations: Expanding technology offerings to include modern systems like drones and sensor-based applications.
Long-term Goals: The government aims to double mechanization per hectare in the next decade to enhance productivity and profitability, thus also benefiting the manufacturing sector.

Seed Industry

India’s position as the fifth-largest seed market globally is a testament to the country’s significant role in the agricultural sector. With an expected growth rate of more than 15% during 2017–2022, the Indian seed market is projected to reach a value of more than US$ 7 Billion by 2022. The quality of seeds plays a crucial role in agricultural production, potentially contributing up to 45% to the total production with the efficient management of other inputs. The Seeds Bill 2019, currently under consideration by Parliament, aims to further regulate and enhance this crucial sector.

Issues with Seed Sector in India:

Stakeholder	Issue	Impact/Details
Seed Companies	Research Investment	Private companies invest only 3-4% of their revenue in research, significantly lower than the international norm of 10-12%. This is attributed to a complex and weak Intellectual Property Rights (IPR) regime and restrictive licensing terms for companies.
	Market Monopoly	Companies providing Genetically Modified (GM) Crop seeds often enjoy a near-monopoly status, limiting competition and innovation within the sector.
Government	Regulatory Failure	There has been a failure in regulating the illegal sale and planting of seeds based on unapproved GM crops, with incidents reported in Maharashtra (Akola District) and Telangana. This regulatory gap undermines the safety and integrity of agricultural practices.
Farmers	Seed Replacement Rate	The seed replacement rate remains below the desired 20% for most crops, indicating a lack of access to or adoption of improved seed varieties which can lead to better yields and resilience against pests and diseases.
	Use of Farm-Grown Seeds	Unscientific use of farm-grown seeds, often saved from previous harvests without proper selection or treatment, leads to lower agricultural output due to inferior seed quality.
	Seed Multiplication Rate	The limited area available for seed production affects the Seed Multiplication Rate (SMR), making it challenging for farmers to access high-quality seeds in sufficient quantities. This can contribute to lower productivity and limit the potential for adopting improved crop varieties.

Way Forward for India’s Seed Sector

Emphasis on GM Technology: Developing a national policy on GM (Genetically Modified) crops will delineate the areas requiring GM intervention, promoting public and private investment in GM technology.
Quick Resolution of IPR Conflicts: Resolving the conflicts between different Intellectual Property Rights (IPR) laws affecting the industry is crucial to encourage research investment with assured IP protection.
Incentives for the Private Sector: Offering bankable schemes to the private sector for the production of low-value high-volume seeds can stimulate industry growth.
Enhancing Seed-Research Capacity: Encouraging private sector participation in seed production and distribution, removing price controls, and promoting a robust third-party quality certification system for seeds.
Strengthening Regulatory Mechanisms: Ensuring that the regulatory framework for the seed and biotech industry is transparent, science-based, predictable, and fair.
Integrated Approach: Improving Seed Replacement Rate (SRR), distributing quality seeds suitable for specific agro-climatic zones, and addressing general and region-specific constraints.
Uniform National Procedure for Seed Licensing: Developing model guidelines for seed licensing to address the heterogeneity in procedures across states.

Key Provisions of Draft Seed Bill 2019

Seed Replacement Rates (SRR): The bill aims to enhance SRR in Indian agriculture, setting standards for seed variety registration from producers to retailers.
Formation of Seed Committee: Authorization for the Central government to reconstitute a Central Seed Committee for effective provision implementation.
Registration of Seed Varieties: Mandates that all seed varieties for sale be registered and meet prescribed minimum standards.
Revised Licensing Norms: Differentiates between seed producers, seed processors, and seed dealers for licensing purposes.
Truthfully Labelled Seeds: A significant portion of seeds is sold under a self-certification programme known as Truthfully Labelled (TL) seeds, with the certification process remaining voluntary.
Price Control: Grants the government authority to fix prices of selected varieties in situations deemed ’emergent’, such as seed shortages or abnormal price increases, though this is subject to subjective interpretation.

Value Chain and Rural Infrastructure

Value Chain and Rural Infrastructure in Agriculture: Constraints and Solutions

The agricultural sector in India faces significant constraints in its value chain and rural infrastructure, affecting its efficiency and productivity.

Constraints

Low Public and Private Investments: Since the early 90s, both public and private investments in agriculture have remained subdued due to implementation bottlenecks and a high degree of uncertainty, reducing investor appetite.
Land Acquisition Difficulties: The inability to acquire land for market yards, due to restrictions on land leasing and acquisition, poses a significant challenge.
Inadequate Marketing Infrastructure: Marketing infrastructure is hampered by financial constraints, lack of manpower, and inadequate facilities. Sub-market yards, primarily used for government procurement, do not facilitate open auctions and are irregular in operation.
Poor Rural Road Maintenance: The suboptimal linkage of local and feeder roads to main highways restricts access to markets.
Electricity Supply Issues: The separation of feeders for agriculture and domestic electrification has not been implemented in many states, affecting the reliability of power supply.
Export Standards Non-compliance: The absence of agriculture best practices and a traceability mechanism prevents India’s food products from meeting export standards.

Way Forward

Grant Infrastructure Status: Warehousing, cold storages, ripening chambers, and similar facilities, especially those at the village level, should be granted infrastructure status to avail fiscal benefits.
Establish Village-Level Procurement Centres: To aid small and marginal farmers, government collection centers and warehousing facilities should be established at village/block levels.
Connect Production with Processing: Link village-level collection centers for fruits and vegetables to larger processing units and engage the private sector in developing processing centers near rural markets.
Upgrade Wholesale Markets: Modernize wholesale markets with temporary storage, pack-house operations, and cold storage facilities.
Ensure Convergence in Government Initiatives: Improve coordination among the Ministries of Agriculture, Food Processing, and Commerce to develop effective procurement, processing, retail, and export linkages.
Enhance Railway Freight Operations: Strengthen railway freight with temperature-controlled containers and loading/unloading facilities to minimize post-harvest losses and enhance connectivity to export markets.
Maintain Rural Roads through Women SHGs: Encourage the maintenance of rural roads by women Self-Help Groups (SHGs), a model that has shown promise in states like Uttarakhand.
Incentivize Private Investment in Farm Implements: Motivate private entrepreneurs to establish mechanization hubs for farm implements catering to both small and large areas.
Develop Export-Oriented Clusters: Promote the creation of export-oriented clusters with comprehensive infrastructure facilities, including a functional cold chain and processing units, under the guidance of the Agricultural and Processed Food Export Development Authority (APEDA).

Animal Husbandry Infrastructure Development Fund (AHIDF)

The Animal Husbandry Infrastructure Development Fund (AHIDF) is a significant initiative launched as part of the Atma Nirbhar Bharat Abhiyan stimulus package. With an allocation of Rs. 15,000 crores, the fund is designed to foster infrastructure development in the animal husbandry sector.

Objectives of AHIDF

Incentivize Investment: The primary goal is to encourage investment from the cooperative sector towards developing dairy infrastructure. This includes processing and value addition facilities that are crucial for the sector’s growth.
Promote MSME and Private Sector Participation: The AHIDF aims to attract investments from MSMEs and private companies into the animal husbandry sector by providing incentives for their involvement in processing and value addition infrastructure.

Benefits of AHIDF

Unlocking Potential Through Private Investment: The animal husbandry sector holds vast potential that can be realized through increased private sector investment. The AHIDF seeks to tap into this potential.
Interest Subvention Scheme: To make capital more accessible, the AHIDF includes an interest subvention scheme for private investors. This initiative will help cover the upfront costs of projects and improve the returns/payback for investors.
Export Promotion: Investments encouraged by the AHIDF in processing and value addition are expected to enhance the sector’s export capabilities.
Direct Impact on Farmers’ Income: A significant portion of the dairy sector’s output value goes back to the farmers. Therefore, growth in this sector facilitated by the AHIDF can substantially increase farmers’ incomes.
Leverage Private Investment: The strategic injection of Rs. 15,000 crores through the AHIDF is anticipated to leverage multiple times more in private investment. This will not only encourage farmers to invest in inputs and drive productivity but also lead to higher incomes.
Livelihood Creation: The measures approved under the AHIDF are projected to create direct and indirect livelihood opportunities for approximately 35 lakh people.

Expected Outcomes

The AHIDF represents a comprehensive approach to modernizing and enhancing the infrastructure of India’s animal husbandry sector. By facilitating significant investment in dairy processing and value addition, the fund aims to elevate the sector to new heights of productivity and sustainability.
The initiative is expected to catalyze the development of organized dairy off-takes by both cooperative and private dairies, thereby increasing the market size and improving farmers’ earnings from milk sales.
Overall, the AHIDF is set to play a pivotal role in transforming the animal husbandry sector into a more profitable and sustainable field, with substantial benefits for farmers and the creation of numerous employment opportunities across the country.

Irrigation System in India

Irrigation plays a crucial role in Indian agriculture by providing a necessary supplement to rainwater. It involves the artificial application of water to soil to aid in the production of crops. With agriculture contributing about 17% to the Indian GDP and being the largest source of livelihoods, the importance of effective irrigation systems cannot be overstated.

Aspect	National Estimates	International Estimates
Access to Drinking Water	NITI Aayog’s Composite Water Management Index (2019) indicates that 75% of Indian households do not have access to drinking water on their premises.	UN’s report on SDG-6 highlights that India achieved only 56.6% of the target for “Clean water and sanitation for all by 2030” by 2019.
Utilization of Annual Precipitation	The Central Water Commission’s reassessment (2019) using space inputs shows that India utilizes only 18% of its annual precipitation, amounting to 699 billion cubic meters (BCM) out of a total 3880 BCM received.	N/A
International Rankings and Water Stress	N/A	The Water Management Quality Index ranks India 120th out of 122 countries, identifying it as a water-stressed country.
Per Capita Water Availability	Per capita water availability has declined from 5,178 cubic meters (m3)/year in 1951 to 1,544 m3 in 2011, with projections suggesting it will reach 1,140 cubic meters by 2050.	Similar data likely contributes to international assessments of India’s water stress status.

Types of irrigation system

Well irrigation
Canal irrigation
Sprinkler irrigation
Drip irrigation
Tube Well irrigation
Tanks irrigation

Importance and Need for Irrigation

Variability in Rainfall: India’s rainfall is characterized by spatial and temporal variations, making irrigation essential for consistent agricultural productivity.
Increasing Food Demand: The growing population necessitates a doubling of food production in the next 50 years, driving the need for expanded irrigation.
Enhancement of Crop Yield: Proper irrigation increases crop yield, enables cultivation of superior crops, and helps in soil fertility maintenance.
Climate Change Effects: With increasing climate variability, irrigation becomes crucial for ensuring food security.
Increased Cropping Intensity: Irrigation allows for multiple cropping cycles and the cultivation of high-yielding seed varieties that require more water.

Micro-Irrigation System in India

Micro-irrigation is a pivotal innovation in agriculture, promoting water use efficiency and enhancing crop productivity. It’s particularly vital for India, where agriculture consumes approximately 80% of the freshwater resources, yet only 4% of the world’s freshwater resources are available to support over 17% of the global population. This scenario underlines the critical need for efficient irrigation technologies like micro-irrigation to increase water productivity and manage the growing water crisis.

Types of Micro-Irrigation Techniques

Drip Irrigation: Directly delivers water to the plant root zone, minimizing evaporation and runoff.
Sprinkler Irrigation: Mimics rainfall to distribute water evenly across fields.
Rain-Gun Systems: Covers larger areas than traditional sprinklers, suitable for field crops.
Porous Pipe Systems: Allows water to seep out slowly along the length of the pipe, ideal for row crops.

Need for Micro-Irrigation

Water Crisis Management: With the agricultural sector’s high freshwater usage, micro-irrigation serves as a critical tool in managing the limited water resources efficiently.
Improved Crop Yields: Ensures water reaches directly to the crops’ root zone, enhancing water availability to the plants and leading to better crop yields.
Affordability Concerns: Despite its benefits, the high initial setup costs make micro-irrigation unaffordable for many of India’s small and marginal farmers.

Advantages of Micro-Irrigation

Increased Water Use Efficiency: Reduces water wastage through evaporation, runoff, and deep percolation.
Energy Savings: Lower water usage results in reduced energy requirements for water pumping.
Fertigation: Enables precise application of fertilizers through the irrigation system, enhancing nutrient uptake by crops.
Cost Reductions: Decreases the overall cost of irrigation by reducing labor, land leveling, and weeding expenses.
Support for Inter-Cropping: Facilitates the introduction of new crops or inter-cropping practices due to improved water availability.

Challenges to Micro-Irrigation in India

Underutilization of Potential: Significant portions of the irrigation potential remain untapped due to various systemic and infrastructural challenges.
Technical and Knowledge Gaps: Lack of technical support and knowledge transfer impedes the adoption and maintenance of micro-irrigation systems.
Water Availability: Despite the fixed average water availability, per capita availability is diminishing due to population growth.
Efficiency Gap: The disparity between Irrigation Potential Created (IPC) and Irrigation Potential Utilized (IPU) points to inefficiencies in the system.
Financial Constraints: The high initial cost of setting up micro-irrigation systems is prohibitive for the majority of Indian farmers.

Policy Recommendations

Large public and private investment for expanding the irrigation system to accelerate agricultural growth and to meet the needs of food security;
Speedy exploitation of irrigation potential from major and medium sources;
Completion of on-going projects, improvement in the utilisation of irrigation potential and expansion of rural electrification in the eastern region and replacement of high-cost diesel pump sets;
Ensuring a conjunctive use of surface and groundwater;
The original Gadgil formula, which earmarked 10 percent of the total resource to the State Plans for major and medium irrigation and power projects should be revived;

Implementing Vaidyanathan Committee’ s Recommendations:

Committee suggested the norms for fixing water rates, cost escalation on the Operation and Maintenance (O&M) component of economic water rates.
It suggested conversion of volumetric supply of water rates from crop-wise and area-wise water rates for different agro-climatic zones. Adopting Best Practices from local level to national Level:
Jalyukta Shivar yojana in Maharashtra has played a prominent role in providing farm ponds to every farmer in her/his agriculture field.
In Gujarat ‘Bhungroo’ is a water management system that injects and stores excess rainfall water underground. This water is then used for irrigation during summers.
Mission Kakatiya is a flagship program under the Telangana government aimed at restoring minor irrigation sources of water like ponds and tanks.
Participating with civil society: Pani foundation hosts the Satyamev Jayate Water Cup, a competition for excellence in soil and water conservation.
International Cooperation: Netafim, an Israel based company, has shown the potential of a family drip irrigation system at Ramthal, Karnataka.

Success story of Israel

A desert nation with water scarcity has become a water surplus nation because it adapted microirrigation practices, especially drip irrigation that saves almost three-fourths of the water used for irrigation done through open canals.

Government Initiatives:

Jal Shakti Ministry:
- Established to provide safe drinking water by consolidating various water-related ministries, promoting efficient water resource management.
National Mission on Micro Irrigation (NMMI):
- Launched in 2010 to expand micro-irrigation coverage, enhancing water use efficiency in agriculture.
Micro Irrigation Fund:
- A dedicated fund created with NABARD to support states in expanding micro-irrigation coverage across the country.
Rainfed Area Development Programme (RADP):
- Aims to improve agricultural productivity in rainfed areas sustainably through appropriate farming system-based approaches.
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY):
- Provides end-to-end solutions for irrigation, including water sources, distribution networks, and on-farm applications.
Kaleshwaram Lift Irrigation Project:
- A multi-purpose irrigation project in Telangana aimed at utilizing water resources efficiently for irrigation and drinking water supply.
Neeranchal National Watershed Project:
- Focuses on watershed management to improve equity, livelihoods, and incomes through inclusiveness and local participation.
National Mission for Sustainable Agriculture:
- Targets include expanding organic farming and precision irrigation to enhance sustainability in agriculture.

Challenges and Recommendations:

The World Bank’s report highlights India’s water storage limitations compared to developed countries, emphasizing the need for better water resource management and infrastructure development.
Fundamental factors like collective efforts, leadership, capacity building, political will, and monitoring are crucial for successful water management.

Fertigation:

Definition: Fertigation is a fertilizer application method where fertilizers are dissolved and applied through irrigation water, often utilizing drip irrigation systems.
Benefits: This method ensures uniform distribution of nutrients, resulting in high nutrient availability and increased fertilizer use efficiency (up to 90%).
Applications: Liquid fertilizers and water-soluble fertilizers are commonly used in fertigation, offering flexibility and precision in nutrient application.

Groundwater Depletion in India

Groundwater constitutes a significant water source in India, supporting irrigation and domestic supplies. However, unsustainable use and depletion pose severe challenges.

Reasons for Groundwater Depletion:

Impact of Green Revolution: Intensive cultivation of water-demanding crops like rice in regions with light soils led to excessive groundwater extraction.
Increased Water Demand: Growing demand from domestic, industrial, and agricultural sectors, combined with limited surface water availability, exacerbates groundwater depletion.
Overexploitation: Frequent pumping without allowing sufficient time for replenishment results in rapid depletion.
Subsidies and MSP: Electricity subsidies and high MSP for water-intensive crops incentivize excessive water use.
Regulatory Issues: Inadequate regulation of groundwater laws encourages depletion without penalties.
Environmental Degradation: Post-harvest burning, deforestation, and industrial effluents pollute groundwater, rendering it unusable.

Implications:

Groundwater depletion poses significant food and water security risks, especially in North India.
Environmental concerns include land subsidence, reduced groundwater discharge to streams, and sea-level rise.
Projected increases in hot and dry monsoon extremes could exacerbate groundwater depletion.

Measures to Control Depletion:

Reduced Subsidies: Decreasing power subsidies can curb excessive groundwater extraction.
Scientific Evaluation: Policy decisions should be based on thorough research and scientific assessments.
Regulation: Groundwater access should be restricted in critical zones, and a shared resource approach should be adopted.
Local Participation: Encourage bottom-up groundwater management involving local communities.
Traditional Methods: Support traditional water conservation measures to reduce depletion.
Capacity Building: Provide hydrogeological training to NGOs and rural practitioners for effective water management.

Irrigation and Water Productivity Policy Shift:

Enhancing Irrigation Water Productivity (IWP) through improved irrigation methods and technologies.
Promoting sustainability via organic farming, judicious fertilizer use, and improved infrastructure for smallholder farms.

Focus Areas:

Shift focus from land productivity to irrigation water productivity.
Encourage micro-irrigation to enhance water use efficiency and provide equitable access to irrigation water for small farmers.

Sustainable Agriculture Demands Optimum Water Management Initiatives:

Strengthen water management measures to support sustainable agriculture.
Launch campaigns like ‘Catch the Rain Campaign’ to address future water demands.
Focus on sustainable agriculture to mitigate the declining availability of water resources.

Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)

Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) was launched in 2015, amalgamating various ongoing schemes such as the Accelerated Irrigation Benefit Programme (AIBP), Integrated Watershed Management Programme (IWMP), and On-Farm Water Management (OFWM) component of the National Mission on Sustainable Agriculture (NMSA).

Objectives: ‘More Crop Per Drop’

Convergence of Investments: PMKSY aims to achieve convergence of investments in irrigation at the field level by preparing district-level and sub-district-level water use plans.
Enhancing Physical Access: The scheme seeks to enhance the physical access of water on the farm and expand the cultivable area under assured irrigation, encapsulated in the motto “Har Khet ko Pani.”
Integration and Efficient Use: PMKSY focuses on integrating water sources, distribution, and efficient use to maximize water utilization through appropriate technologies and practices.
Improving Water Use Efficiency: It aims to improve on-farm water use efficiency to reduce wastage and increase availability both in terms of duration and extent.
Adoption of Water-Saving Technologies: PMKSY encourages the adoption of precision irrigation and other water-saving technologies to achieve “More Crop per Drop.”
Aquifer Recharge and Conservation: The scheme emphasizes enhancing the recharge of aquifers and introducing sustainable water conservation practices to ensure long-term water availability.
Promoting Extension Activities: PMKSY aims to promote extension activities related to water harvesting, water management, and crop alignment for farmers and grassroots-level field functionaries.
Attracting Private Investments: Another objective is to attract greater private investments in irrigation infrastructure to supplement government efforts.

Cropping Patterns in India

The concept of cropping patterns in India encompasses a wide array of elements, intricately linked to the nation’s agricultural practices, environmental sustainability, and economic well-being. This comprehensive overview will break down the key aspects of cropping patterns, their determinants, systems, significance, types, factors affecting them, prevalent issues, and recent changes, offering a holistic understanding of this dynamic domain.

Definition and Determinants

Cropping Pattern: Refers to the proportion of area allocated to different crops at a given time within a particular area. It’s influenced by various factors such as:
Rainfall and Temperature: Determine the type of crops suitable for cultivation.
Climate: Affects the seasonality and viability of certain crops.
Technology and Soil Type: Influence the efficiency of crop production and choice of crops.
Agrarian Policy and Availability of Inputs: Changes in policy and technology can shift cropping patterns towards more profitable or sustainable practices.

Cropping Systems vs. Cropping Patterns

Cropping Systems encompass a broader scope than cropping patterns, including all crops grown and the practices used on a farm or field. It involves the integration of multiple agricultural practices to enhance productivity, sustainability, and resource utilization.

Ideal Cropping Pattern Features

Prevent disease proliferation.
Avoid nutrient depletion at specific soil depths.
Enhance soil fertility.
Provide consistent income and employment.
Optimize resource utilization (e.g., irrigation, fertilizers).

Significance of Cropping System

Enhance soil fertility.
Reduce disease and pest incidences.
Limit weed growth.
Increase food and financial security.
Reduce crop failure risks.

Types of Cropping Systems

Mono-Cropping: Cultivating a single crop year after year, e.g., sugarcane in Maharashtra.
Multiple Cropping: Involves growing two or more crops, which includes:
- Mixed Cropping
- Inter-Cropping
- Crop Rotation
Primitive Subsistence Farming: Slash and burn agriculture.
Intensive Subsistence Farming: High input use for higher production.
Commercial Farming: Emphasizes high productivity through modern inputs.

Factors Affecting Cropping Pattern

Factors include historical influences, geographical conditions, agronomic practices, market dynamics, government policies, infrastructure, and social norms. These factors collectively influence the selection, rotation, and diversity of crops grown in different regions.

Problems with the Current Cropping Pattern:

Over-reliance on rice and wheat due to the Green Revolution.
Shift from traditional to commercial crops, affecting sustainability.
Water-intensive cultivation practices in areas with scarce water resources.
Excessive use of fertilizers and pesticides, leading to environmental degradation.

Recent Changes and Trends

Rice-wheat cropping patterns since the Green Revolution.
Increased cultivation of cash crops and high-demand commodities like oilseeds and pulses.
Recognition of millets as a healthy dietary option.
Adaptation to climate change and urbanization, influencing cropping choices and methods.

Cropping Season	Time of Sowing	Time of Harvesting	Major Crops	Key Locations	Additional Information
Rabi	October to December	April to June	Wheat, Barley, Peas, Gram, Mustard	Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Uttarakhand, Uttar Pradesh	Grown in winter and harvested in summer. Success attributed to the availability of winter precipitation from western temperate cyclones. Green Revolution boosted growth in specific regions.
Kharif	With the onset of monsoon	September to October	Paddy, Maize, Jawar, Bajra, Tur (Arhar), Moong, Urad, Cotton, Jute, Groundnut, Soybean	Assam, West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Maharashtra (Konkan coast), Uttar Pradesh, Bihar	Coincides with the monsoon season. In Assam, West Bengal, and Orissa, three paddy crops (Aus, Aman, Boro) are grown annually. Paddy is significant in Punjab and Haryana.
Zaid	Summer months (between Rabi and Kharif)	–	Watermelon, Muskmelon, Cucumber, Fodder Crops, Sugarcane (year-round)	–	Short season during summer. Sugarcane has a nearly year-long growth cycle.

Reasons For Declining Rice and Wheat Yield In The Cropping System

Decline in Soil Fertility: Continuous and excessive flood irrigation practices in the rice-wheat cropping system lead to soil salinization. Saline soil conditions hinder plant growth by affecting root water uptake and nutrient absorption, resulting in decreased crop yields. This issue is a direct consequence of inadequate or improper irrigation management, which emphasizes the need for efficient water use and alternative irrigation techniques that minimize soil salinization.
Climate Change Impacts: Climate change poses a significant threat to agriculture, particularly affecting major crops like rice, wheat, and maize. Changes in temperature patterns, unpredictable weather events, and increased incidence of pests and diseases due to warmer climates adversely affect crop development, flowering, and yield. The increase in the annual temperature range disrupts the phenological stages of these crops, leading to reduced productivity.
Increased Input Costs: The rising infestation of weeds and pests, along with the contamination of groundwater, escalates the costs associated with crop production. These increased input costs diminish the profit margins for farmers, making the cultivation of rice and wheat less economically viable. The need for more pesticides, herbicides, and fertilizers to combat these challenges further strains the farmers’ resources.
Change in Water Availability: Over-extraction of groundwater for irrigation has led to a significant depletion of groundwater resources. This decline in water availability forces a reduction in irrigated areas or crop yield due to water stress. The rice-wheat cropping system, known for its high water demand, is particularly vulnerable to changes in water availability, exacerbating the yield decline.

The solution to these challenges lies in adopting crop diversification as a strategic approach to sustainable agriculture. Crop diversification offers several benefits:

Maintaining Soil Fertility: By rotating crops that are suited to the local agro-climatic conditions, the excessive use of nutrients and water can be avoided, thus preserving soil health and fertility.
Conserving Water Resources: Shifting from water-intensive crops like paddy to less demanding ones (e.g., pulses, oilseeds, maize) can help address groundwater depletion.
Enhancing Biodiversity: Diversifying crops can create habitats for beneficial insects and reduce pest colonization, thereby reducing the reliance on chemical pest control methods.
Economic Benefits: Crop diversification can improve farmers’ income by reducing dependency on a single crop, mitigating price risks, and enhancing resilience against natural disasters and climate variability.

Storage, Transport & Marketing of Agricultural Produce

Importance of Storage

Storage plays a critical role in preserving agricultural goods from production until they are needed, addressing food security outside production periods. The UN-FAO estimates significant food loss and waste in India, attributing a major portion to inadequate storage, highlighting the urgent need for improved storage solutions to prevent post-harvest losses, especially for perishable items like fruits and vegetables.

Observations and Capacity

As of the end of 2020, the total storage capacity available with the Food Corporation of India (FCI) and state agencies was substantial, but challenges remain in efficiently utilizing this capacity and minimizing losses. The Eco Survey noted a combined storage capacity but also pointed to the critical deficiency in cold storage facilities, underscoring the mismatch between potential and actual storage utility.

Need for Enhanced Storage and Warehousing

Hunger and Malnutrition: Despite being one of the world’s largest food producers, India faces hunger and malnutrition, partly due to post-harvest losses.
Wastage: Significant quantities of food grains are damaged in storage, contributing to food insecurity and economic losses.
Farmer’s Income: Inadequate storage directly impacts farmers’ livelihoods, with substantial economic losses annually.
Government Supply Chain Efficiency: Issues within the FCI and state agencies’ storage practices have led to food wastage, highlighting inefficiencies in the supply chain.

Role and Importance of Warehousing

Warehousing facilities, including those operated by the Central Warehousing Corporation, State Warehousing Corporations, and the FCI, play a vital role in the agricultural supply chain by:

Protecting the quality and quantity of stored products.
Offering financial services against stored produce.
Stabilizing prices through strategic release of goods.
Providing market intelligence and information.

Challenges in Procurement and Storage

Open-ended Procurement: Leading to overburdened storage facilities.
Excess Stock: Carrying buffer stocks well above norms.
Imbalances and Inadequacies: Regional imbalances and inadequate maintenance of storage facilities contribute to grain damage.
Non-adherence to FIFO Principle: Resulting in outdated stocks in the central pool.
Transportation Losses: Significant losses occur during the transport of grains to warehouses.

Steps to Improve Storage Facilities

Decentralized Procurement: Minimizing transit losses by localizing procurement and storage.
Negotiable Warehouse Receipt System: Allowing farmers to secure loans against stored produce.
Modernization Initiatives: Introducing modern storage solutions like steel silos and promoting private sector involvement under the Private Entrepreneur Guarantee (PEG) scheme.

Way Forward

Modernization of Infrastructure: Upgrading storage facilities and embracing modern technologies for better preservation and handling.
Private Sector Participation: Encouraging private investment in storage infrastructure to augment capacity and efficiency.
Scientific Storage Practices: Implementing and adhering to scientific methods for storing agricultural produce to reduce losses.
Policy Reforms and FCI Reorganization: Streamlining operations and policies to enhance the effectiveness of procurement and storage systems.
Integration and Coordination: Improving coordination between central and state agencies, and integrating storage facilities across regions to optimize utilization.

Transport of Agricultural Produce

Agriculture and transportation are intrinsically linked sectors, each pivotal to the other’s functioning and crucial for national well-being. The efficiency and reliability of the transport system directly impact agricultural marketing, affecting both producers and consumers.

Importance of Transportation of Agri Produce

Encouragement for Production: Transportation empowers farmers by enabling them to invest more and increase production.
Maximization of Returns: An efficient transport system, coupled with careful handling of agricultural produce, ensures maximum returns for the farmer.
Cost Efficiency: By keeping unit costs low, an efficient transport and marketing system retains the robustness of the agricultural value chain.
Affordability and Margins: Low transport costs benefit both farmers and consumers by ensuring affordability and maintaining profit margins.
Market Expansion: Efficient transportation creates a broader market for agricultural produce, enhancing interactions among different regions and focusing on new economic areas.
Impact of Poor Transportation: In rural areas, poor transportation leads to decreased productivity, lower income, and a decline in living standards.

Issues and Constraints in Transportation

Limited modern infrastructure for road and rail.
Incomplete regional connectivity, especially in Northeast India.
Seasonal blockages in routes within Himalayan and Northeastern regions.
Overdependence on road transport over rail.
Absence of all-weather roads in many rural and tribal areas.
Overloading of transport trucks leading to losses during transit.

Steps Taken to Improve Transportation

Kisan Rails: First-ever multi-commodity trains with refrigerated coaches for perishable goods.
Krishi Udan Scheme: For air transport of agricultural goods, improving value realization.
Transport and Marketing Assistance (TMA): Assists with the international freight and marketing costs for specified agricultural products.
Pradhan Mantri Gram Sadak Yojana: Aims to provide good all-weather road connectivity to unconnected villages.
Kisan Rath App: Facilitates transportation of grains and perishables during lockdowns.
Relaxation in Lockdown: For agriculture-related activities to support the farming community.
Dedicated Freight Corridor: Specifically for agricultural products.
Shift from Road to Rail: Encouraging more rail transport of perishable items.

Marketing of Agricultural Produce

Marketing in agriculture involves all activities, agencies, and policies engaged in the procurement of farm inputs and the movement of agricultural products from farms to consumers.

Functions of Agriculture Marketing

Exchange Functions: Buying, selling, and storing of products.
Physical Functions: Includes transportation, processing, and standardization.
Facilitating Functions: Financing, risk bearing, and market intelligence.

Significance of Marketing of Agriculture Produce

Monetizing Produce: Facilitates sales and improves income from agricultural products.
Demand and Supply Equilibrium: Influences value through marketed volume and price.
Competitive Trade: Efficient marketing promotes competitive trade, enhancing price realization for farmers.
Reducing Intermediaries: An effective marketing chain decreases the number of intermediaries, improving both economic and quality aspects of agricultural produce.
Market Information: Acts as a source of market information, aiding in better decision-making for farmers.
Investment and Technology: Showcases growth potential, encouraging investment and technological advancements in agriculture.
Value Addition: Enables downstream industries to access agricultural produce for large-scale value addition.

Challenges to Marketing of Agricultural Produce

Licensing barriers leading to market monopolies.
High market charges and absence of standardized grading mechanisms.
Poor infrastructure in agricultural markets and limited public investment.
Lag in demand signals and limited access to information channels.

Steps to Improve Agricultural Marketing

Electronic National Agriculture Market (e-NAM): A pan-India trading portal connecting all wholesale markets.
AGMARKNET: A portal for transparent and quick dissemination of price and commodity arrival information.
Kisan Credit Card Scheme: Provides term loans for agricultural needs.
Formation and Promotion of FPOs: For specialization and better marketing, branding, and exporting.
Market Intelligence and Early Warning System (MIEWS) Portal: Offers advisories to avoid cyclical production.

Regulation of Agricultural Marketing: APMC

Agricultural marketing in India has been under regulatory oversight to ensure fair trade practices, prevent exploitation of farmers, and maintain an organized system for agricultural produce transactions. The Agricultural Produce Market Committee (APMC) system plays a central role in this regulatory framework.

Background and Reforms

The Ministry of Agriculture and Farmers’ Welfare introduced reforms through the Model APMC Act and the Model State/UT Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017. These reforms aimed at removing malpractices, ensuring fair pricing, and creating transparent market conditions for agricultural produce.

APMC Explained

APMCs are statutory market committees established by state governments to regulate the trade of agricultural or horticultural products. They are designed to ensure transparency in pricing, facilitate same-day payments to farmers, and promote agricultural processing and value addition.

Intended Functions of APMC

Transparency: Ensuring transparent pricing and transactions.
Market-led Extension Services: Providing marketing advice to farmers.
Same-day Payment: Guaranteeing farmers receive payment on the day of sale.
Promotion of Processing: Encouraging activities that add value to agricultural produce.
Data Publicization: Sharing information on market arrivals and rates.

Issues with APMC

Market Fragmentation: Lack of linkages between thousands of APMC markets.
Restricted Movement: Hindering the efficient distribution of produce.
Low Farmers’ Price Realization: Due to intermediaries and lack of infrastructure.
Direct Selling Discouraged: Farmers are unable to sell directly to buyers like food processors or retailers.
Exploitation by Intermediaries: Commission agents often exploit farmers, leading to lower gains.
High Market Charges: Multiplicity of levies inflates retail prices.
Non-transparent Utilization of Levies: Lack of oversight on how collected levies are used.
Political Interference and Corruption: APMCs often fall under the control of politically influential individuals.

Criticisms of APMC

Monopoly and Cartelization: APMCs and their agents can create monopolies and cartels, manipulating prices.
Entry Barriers: High license fees and rents discourage competition.
Conflict of Interest: APMC’s dual role as regulator and market participant leads to vested interests.
High Costs: Farmers face high commission, taxes, and levies.

Recent Government Measures

Model Agricultural Produce and Livestock Marketing Act, 2017: Aiming to create a unified market with better price realization for farmers.
e-NAM: An electronic trading platform to facilitate a national agriculture market.
AGMARKNET: A portal providing agricultural marketing-related information.
GrAMs: Upgrading rural haats to link them with e-NAM and bring them outside APMC regulation.
Formation and Promotion of FPOs: Supporting the creation of Farmer Producer Organizations (FPOs).
Ministry of Cooperation: Established to focus on the cooperative sector.

Growth in Agriculture Exports

India’s agriculture exports have shown remarkable resilience and growth, with the financial year ending March 31, 2023, poised to set new records. Preliminary data indicated a 7.9% increase in the value of farm exports during April-December 2022 compared to the same period in the previous year. This growth trajectory is largely attributed to significant contributions from staple commodities like rice and sugar, underscoring India’s pivotal role in the global agricultural market.

Import Concerns

While export growth is a positive indicator, the surge in imports, especially of commodities like vegetable oils, cotton, and cashew, signals a pressing need to address the balance of trade in agriculture. The sharp increase in imports not only affects the trade balance but also highlights vulnerabilities in domestic production capabilities and market dynamics.

Economic Survey Insights

The Economic Survey of 2021-22 sheds light on India’s status as a net exporter of agri-products since the economic reforms of 1991. Key export commodities include marine products, basmati rice, buffalo meat, and spices, among others, targeting major markets such as the USA, Saudi Arabia, Iran, Nepal, and Bangladesh. This diversification in export commodities and destinations underscores the sector’s potential for growth and its critical role in the country’s economic landscape.

Significance of Agriculture Exports

Agriculture exports are not just economic transactions but pivotal elements in achieving broader economic objectives. These exports are instrumental in doubling farmers’ incomes, generating employment, enhancing GDP, earning foreign exchange, and promoting horticulture. Furthermore, they contribute to the development of “Brand India” on the global stage, highlighting the quality and diversity of Indian agricultural products.

Challenges in Agricultural Exports

Despite the promising growth, Indian agricultural exports face several challenges, including poor export competitiveness, inconsistencies in government policies, and the need for alignment with global quality standards. These challenges underscore the need for strategic interventions to enhance productivity, quality, and market access for Indian agri-products on the global stage.

Way Forward and Government Initiatives

Addressing the challenges and capitalizing on the opportunities require a multifaceted approach, encompassing policy reforms, infrastructure development, market intelligence, and quality standardization. Government initiatives such as the Agriculture Export Policy 2018, Safe Food Export Traceability Portal, and various schemes under the APEDA aim to bolster India’s agricultural export potential by providing a conducive policy framework, improving infrastructure, and enhancing the competitiveness of Indian agri-products.

Strategic and Operational Measures

Key strategic measures include the establishment of a stable trade policy regime, infrastructure and logistics enhancements, and a whole-government approach to ensure inter-ministerial coordination. Operational measures focus on developing export clusters, promoting value-added exports, and strengthening the quality regimen to meet international standards. These efforts are aimed at not just enhancing export volumes but also ensuring that Indian agriculture products achieve and sustain a competitive edge in the global market.

Farmer Producer Organizations (FPOs)

Farmer Producer Organizations (FPOs) represent a collective effort to aid farmers, especially small and marginal ones, in overcoming several barriers they face in agriculture. FPOs are legal entities formed by primary producers such as farmers, milk producers, fishermen, weavers, rural artisans, and craftsmen, aiming to enhance their income and improve their standard of living through various means.

Benefits of FPOs to Small and Marginal Farmers

Reduced Cost of Input Procurement: FPOs enable the bulk purchase of seeds, insecticides, pesticides, fertilizers, and equipment, significantly reducing the per-unit cost.
Access to Affordable Finance: They arrange institutional credit at cheaper rates using harvested produce as collateral.
Minimization of Post-Harvest Losses: Investment in storage and value-addition facilities helps in minimizing losses and avoiding distress sales.
Assured Returns: FPOs facilitate contract farming, offering farmers assured returns by keeping them informed about market prices and demand-supply dynamics.
Increased Profit Margin: Direct selling in the market eliminates intermediaries, allowing profits to be shared among the members.
Better Access to Technology: They invest in R&D and provide training, helping overcome information asymmetries.

Challenges and Issues in Building Robust FPOs

Credit-Related Issues: High cost and lack of sufficient collateral for institutional credit.
Lack of Access to Modern Technology: Small and micro food enterprises struggle to access new technologies.
Lack of Forward Linkages: This results in low market outreach and the non-availability of newer markets.
Compliance Costs: Meeting health and safety standards increases costs, impacting export competitiveness.
Inadequate Infrastructure: Poor cold chain and logistics infrastructure lead to significant post-harvest losses.
Ease of Doing Business: Governmental procedures often delay clearances for establishing new units.

Schemes Related to Food Processing Industries

PM Kisan SAMPADA Yojana: Aims to create modern infrastructure and efficient supply chain management from farm gate to retail outlet.
Operation Greens: Seeks to stabilize the supply of Tomato, Onion, and Potato (TOP) crops, ensuring availability without price volatility.
Mega Food Park Scheme: Provides modern infrastructure facilities for food processing from farm to market.
Scheme for Formalization of Micro Food Processing Enterprises: Targets the unorganized sector across India.
Gram Samriddhi Yojna: Aims to support the unorganized food processing sector in rural areas.
Draft National Food Processing Policy – 2019: Focuses on productivity improvement and addressing gaps in the food processing sector.
TRIFOOD Project: Enhances income of tribals through value addition to Minor Forest Produce (MFP).

Agricultural Credit and Finances

Agricultural credit and finance are critical for the growth and sustainability of the agricultural sector, which is a dominant force in many economies, including India. Credit availability facilitates the adoption of modern technologies and improved agricultural practices, enhancing productivity and production. The focus of government policies has been to ensure timely, adequate, and affordable credit, especially to small and marginal farmers and weaker sections.

Policy Measures for Agricultural Credit

Interest Subvention Scheme: Introduced in 2006-07, allowing banks to offer short-term crop loans up to Rs. 3 lakh at a 7% interest rate to farmers.
Post-Harvest Loans: Extension of the interest subvention scheme to encourage farmers to store their produce against warehouse receipts, thus avoiding distress sales.
Collateral-Free Loans: The limit for collateral-free farm loans has been raised from Rs. 50,000 to Rs. 1,00,000.
Kisan Credit Card (KCC) Scheme: Launched to provide farmers with easy access to credit for purchasing agricultural inputs like seeds, fertilizers, and pesticides.
Agriculture Market Infrastructure Fund (AMIF): Announced in the 2018 Budget to develop and upgrade agricultural marketing infrastructure in GrAMs and APMCs.

Situation of Indebtedness of Farm Households

Increasing Debt: The farm debt per household increased by 57.7% in 2018 compared to 2013, with over 50% of agricultural households in debt.
Loan Sources: While 69.6% of loans were from institutional sources, a significant 20.5% were from professional moneylenders.

Causes of High Indebtedness

Use of Credit for Non-agricultural Purposes: A significant portion of loans is used for household expenses rather than agricultural needs.
Inadequate Access to Low-cost Financing: Many rural households are excluded from institutional finance due to a lack of collateral and informational restrictions.
Loan Waiver Policies: While providing immediate relief, loan waivers can disrupt credit discipline and become a moral hazard.
Social Identity Factors: Caste and social identities influence access to credit, with SC/ST households facing more difficulties.

Measures to Improve the Situation

Gold as Collateral for Agricultural Loans: Encouraging the use of gold as collateral could improve access to credit.
Restricting Farm Loan Waivers: A comprehensive review of agricultural policies is necessary to ensure the long-term viability of agriculture.
Credit Guarantee Scheme for Agriculture: Introducing a guarantee scheme can help mitigate the risk of borrower defaults.
Increasing Credit to Allied Activities: Setting specific targets for working capital and term loans for allied activities can boost the sector.
Land Consolidation: Promoting land consolidation can help achieve economies of scale and encourage long-term investment.

Agriculture Finances and Associated Issues

A recent report by the Reserve Bank of India’s internal working group highlighted significant issues in the agricultural credit system. Despite a 500% increase in agricultural credit over the last decade, less than 20% of small and marginal farmers have been reached. This report underscores the necessity for improved access to credit at reasonable rates to enable small farmers to diversify crops or enhance income.

Key Findings and Issues

Inadequate Reach of Credit: Although agricultural credit has significantly increased, a vast majority of small and marginal farmers remain underserved, highlighting a stark disparity in credit distribution.
Dependence on Non-Institutional Lenders: A substantial portion of agricultural credit still comes from non-bank sources like moneylenders, indicating a gap in formal banking services.
Rising Non-Performing Assets (NPAs): The agricultural sector has seen a notable increase in NPAs, raising concerns over the sustainability and risk management of agricultural loans.

Mechanisms of Agriculture Credit in India

Priority Sector Lending (PSL): Mandates banks to allocate a portion of their net bank credit to agriculture. The PSL norms were revised to better serve farmers and Farmer Producer Organisations (FPOs).
Interest Subvention Scheme (ISS), Kisan Credit Card (KCC) Scheme, and Self Help Group-Bank Linkage Programme (SHGBLP) aim to facilitate easier credit access to farmers.
The Joint Liability Groups (JLG) Scheme: Focuses on providing credit to tenant farmers without land rights.

Causes for Less Credit Availability

Dominance of Larger Farmers: Smaller farmers often find it difficult to access loans due to the preference given to larger, more credit-worthy farmers.
Operational Costs and Stress on Banks: High operational costs and pressures on public sector banks have limited the effectiveness of agricultural lending.
Poor Recovery and Skewed Credit Distribution: The recovery rate in the agriculture sector is low, and there is a significant reliance on commercial banks for credit, leading to regional disparities and neglect of the allied sectors.

Crop Insurance as a Safety Net

Importance of Crop Insurance: Crop insurance plays a crucial role in protecting farmers against losses and stabilizing farm income. However, challenges such as low participation and difficulties in claim processing have hampered its effectiveness.
PMFBY 2.0: The Pradhan Mantri Fasal Bima Yojana (PMFBY) aims to address these issues by making the scheme more farmer-friendly and responsive to their needs.

Issues Related to Direct and Indirect Farm Subsidies

Farm subsidies, both direct and indirect, play a critical role in the agricultural economy, influencing production choices, farmers’ incomes, and environmental outcomes. While they are implemented with various objectives, including income support to farmers and ensuring food security, they also come with a set of challenges that necessitate careful consideration and management.

Direct Farm Subsidies

Direct farm subsidies are payments made directly to farmers to support their income or subsidize the cost of agricultural inputs. These subsidies are usually provided in the form of cash transfers or discounts on inputs like seeds, fertilizers, and equipment.

Advantages

Financial Empowerment: Direct subsidies increase farmers’ purchasing power, enabling them to invest in quality inputs and technologies, potentially leading to increased productivity and income.
Flexibility: Farmers have the flexibility to spend the subsidies according to their specific needs, which can lead to more efficient use of resources.
Transparency and Efficiency: With advancements in digital payment technologies, direct subsidies can be more transparently and efficiently disbursed, reducing corruption and leakages.

Challenges

Identification of Beneficiaries: Properly identifying eligible farmers, especially in densely populated countries like India, can be challenging.
Financial Inclusion: The effectiveness of cash transfers is limited by the degree of financial inclusion among farmers, particularly in remote areas.
Moral Hazard: There’s a risk that farmers might use the subsidy for non-agricultural purposes, reducing its effectiveness in supporting agricultural productivity.

Indirect Farm Subsidies

Indirect farm subsidies are provided through support mechanisms such as subsidized inputs (fertilizer, water, electricity), tax breaks, insurance, low-interest loans, and support prices (e.g., Minimum Support Price – MSP).

Advantages

Technological Advancement: Subsidies on inputs and infrastructure encourage adoption of modern agricultural practices, enhancing productivity.
Food Security: By making farming more affordable and viable, indirect subsidies contribute to food security by encouraging the production of essential crops.
Sustainability Incentives: Certain subsidies can incentivize sustainable practices, such as subsidies for organic farming or water-saving irrigation technologies.

Challenges

Resource Overuse: Subsidies on water and electricity have led to overexploitation of natural resources, contributing to environmental degradation.
Market Distortion: Input subsidies can distort market prices and crop choices, leading to an overemphasis on certain crops like wheat and rice at the expense of crop diversity.
International Trade Implications: Indirect subsidies are often scrutinized and challenged in international trade forums like the WTO, as they can lead to unfair trade practices and market distortions.

Type of Subsidy	Description	Purpose
Fertilizer Subsidy	The difference between the price paid to the fertilizer manufacturer (domestic or foreign) and the price received from farmers.	– To provide cheap inputs to farmers. To ensure reasonable returns to manufacturers. To maintain stability in fertilizer prices. To guarantee the availability of fertilizers to farmers.
Irrigation Subsidy	The difference between the operating and maintenance cost of state irrigation infrastructure and the irrigation charges recovered from farmers. It may also include subsidies for private irrigation equipment like pump sets.	To support farmers by bearing the costs associated with providing proper irrigation facilities.
Power Subsidy	The difference between the cost of generating and distributing electricity to farmers and the price received from farmers.	To charge lower rates for electricity supplied to farmers, primarily used for irrigation purposes.
Seed Subsidy	Covers the low pricing of high-yielding seeds provided by the government and the research and development costs for producing such seeds.	To make productive seeds available at low prices. To support research and development activities for enhancing seed productivity.
Credit Subsidy	The difference between the interest charged to farmers and the actual cost of providing credit, including write-offs and bad loans.	To make credit available to poor farmers who lack collateral for loans. To alleviate the dependency on local moneylenders by offering more accessible financial resources for production activities.

Indian Subsidies Regime

The Indian subsidies regime plays a crucial role in supporting the agricultural sector, which is a vital component of the country’s economy. These subsidies are aimed at enhancing agricultural productivity, ensuring food security, and improving the livelihoods of farmers.

Input Subsidies

Input subsidies are provided to make essential farming inputs like fertilizers, seeds, and pesticides affordable to farmers. These are offered at prices lower than the market rates, enabling farmers to reduce their production costs.

Price Subsidy

Price subsidy is the difference between the procurement price set by the Food Corporation of India (FCI) for food grains and the price at which these grains are sold to traders or through the Public Distribution System (PDS). This type of subsidy ensures that farmers do not suffer losses when market prices are low.

Infrastructural Subsidy

Infrastructural subsidies are crucial for providing public goods such as roads, storage facilities, power, and market information, which are essential for efficient agricultural production and marketing. The costs for these facilities are substantial, but the benefits are widespread, benefiting all cultivators in an area.

Export Subsidies

Export subsidies are intended to encourage farmers and exporters to sell their agricultural products in foreign markets, earning valuable foreign exchange for the country while also benefiting the individual farmers and exporters.

Positive Implications of Farm Subsidies

Enhanced Response to Agricultural Challenges: Subsidies enable farmers to better manage risks and uncertainties, contributing to more stable agricultural production.
Revenue Generation for Government: Tariffs on agricultural products can protect domestic farmers and generate government revenue.
Encouragement of Self-Sufficiency: Subsidies can help countries become more self-sufficient in agriculture, reducing dependency on imports.
Strengthening of Food Supply Chain: By providing financial support during tough seasons, subsidies ensure the continuity of agricultural businesses, contributing to economic stability.

Implications of Farm Subsidies at Domestic and International Levels

Domestic Level

Overutilization of Fertilizers: Excessive subsidies have led to imbalanced use of fertilizers, degrading soil health.
Unsustainable Fiscal Deficits: Subsidies can strain government budgets, diverting funds from other development expenditures.
Distorted Cropping Patterns: Subsidies encourage the cultivation of certain crops over others, affecting biodiversity and sustainability.
Promotion of Inefficiency: Subsidies can reduce the incentive for farmers to improve their productivity and efficiency.

International Level

Trade Disparities: Subsidies in developed countries can create barriers for products from developing countries, affecting global trade dynamics.
WTO Compliance: Developing countries face challenges in meeting the WTO’s Aggregate Measures of Support (AMS) thresholds, which can limit their ability to support their agricultural sectors compared to developed countries.

Food Security: A Global Concept

The concept of food security is founded on the principle that all individuals should have access to sufficient, safe, and nutritious food at all times to maintain a healthy and active life. This concept is characterized by four main pillars: availability, access, utilization, and stability of food.

National Food Security Act (NFSA) 2013: Aims and Objectives

The NFSA 2013 aims to ensure food security at the individual or household level through various schemes implemented in partnership with State Governments and Union Territory Administrations. The objective of the Act is to provide food and nutritional security in the human life cycle approach, ensuring access to adequate quantities of quality food at affordable prices, enabling people to live a life with dignity.

Eligibility Under NFSA 2013

Priority Households to be covered under the Targeted Public Distribution System (TPDS), according to guidelines by the State government.
Households covered under the existing Antyodaya Anna Yojana (AAY).

Revising NFSA 2013: NITI Aayog’s Recommendations

In March 2021, NITI Aayog recommended reducing the coverage under NFSA to 60% for rural and 40% for urban populations, and updating the list of beneficiaries based on the latest population figures, which were previously calculated using Census 2011 data.

Present Status of NFSA 2013

As of February 2021, approximately 2.37 crore households (or 9.01 crore individuals) were covered under the Antyodaya Anna Yojana, and about 70.35 crore individuals were classified as priority households.

Importance of NITI Aayog’s Recommendations

The recommendations suggest a significant change in the number of beneficiaries, potentially saving the government a substantial amount in subsidies. These savings could be redirected towards other critical sectors such as health and education.

Challenges of Revising NFSA

The proposed changes come at a time when many are facing increased unemployment and food insecurity due to the COVID-19 pandemic. Reducing coverage may exacerbate these issues, impacting the nutritional status of children and opposing the Sustainable Development Goal of ending hunger.

Other Recommendations and Direct Cash Transfer (DBT)

Other recommendations include revising the coverage ratio and Central Issue Prices (CIP) for foodgrains. The DBT program, introduced in 2013, aims to transfer subsidies directly to beneficiaries through their bank accounts, reducing leakages and delays. Despite its advantages in efficiency and fiscal savings, DBT faces challenges such as identifying deserving beneficiaries and ensuring that cash transfers are used for their intended purposes.

WTO and Subsidies Regime

The World Trade Organization (WTO) oversees international trade rules and has a significant influence on how countries implement subsidy programs. The relationship between WTO policies and national subsidy programs like NFSA and DBT is crucial for maintaining fair trade practices and ensuring that domestic food security measures comply with international obligations.

Type of Subsidy	Description	Example(s)
Export Subsidies	Provided to encourage the sale of agricultural products in foreign markets. They aim to boost foreign exchange earnings without harming the domestic economy.	Export credit given to farmers in China.
Industrial Promotion Subsidies	Aimed at promoting the agriculture-related industry, these subsidies support activities that enhance agricultural productivity and sustainability.	New UK farming bill that guarantees subsidies for 2020 post-Brexit.
Structural Adjustment Subsidies	These subsidies are designed to support significant changes in agriculture practices, such as improvements in irrigation, to enhance productivity and sustainability.	PM Krishi Sanchai Yojana for promoting irrigation in agriculture in India.
Regional Development Subsidies	Targeted at improving the well-being and living standards of farmers across all regions, particularly in rural areas, contributing to more inclusive and resilient societies.	Not specified, but these subsidies focus on overall regional agricultural development.
Research and Development Subsidies	Financial public tools aimed at encouraging innovation within the agricultural sector. These are available for firms undertaking innovative projects.	Not specified, but these subsidies are critical for advancing agricultural technologies and practices.
Subsidies Contingent upon the Use of Domestic Over Imported Goods	These subsidies are provided to encourage the use of domestically produced goods over imported ones, often ensuring guaranteed returns for farmers and lower prices for consumers.	USA’s policies for guaranteed procurement from farmers.

Agreement on Agriculture (AOA)

The Agreement on Agriculture (AOA) under the World Trade Organization (WTO) framework aims to reform trade in the agriculture sector by reducing trade barriers, promoting transparent market access, and facilitating the integration of global agricultural markets. It seeks a fairer trading system that can boost agricultural trade by implementing rules and commitments for member countries, with specific considerations for developing and less developed countries.

Key Objectives of AOA

Remove Trade Barriers: By opening up markets and reducing tariffs, the AOA aims to foster a more competitive global agriculture market.
Transparent Market Access: Ensuring clearer and more predictable conditions for international agricultural trade.
Special Consideration for Developing Countries: Offering flexible and lesser commitments for developing and less developed countries to fulfill their obligations under the agreement.

Main Components of AOA

Market Access:
- Involves tariff reduction and trade facilitation for agricultural products.
- Developed countries must reduce tariffs by 36% from baseline levels over six years, with a minimum tariff reduction of 15% per item.
- Developing countries are required to reduce tariffs by 24% over ten years.
- Special Safeguard provisions allow for additional duties in the case of import surges or low import prices.
Domestic Subsidies:
- Green Box Subsidies: Non-trade-distorting subsidies that do not involve price support, such as government-funded environmental programs or agricultural research, which are allowed without limits.
- Amber Box Subsidies: Considered to distort trade and production, these subsidies are directly related to the volume of production, like Minimum Support Prices (MSP).
- Blue Box Subsidies: These are Amber Box subsidies with conditions aimed at reducing distortion, such as direct payments under production-limiting programs.
Export Subsidies:
- Direct subsidies to agricultural producers to support export performance and cover the costs of selling agricultural products at lower prices internationally.
- Developed countries are required to reduce export subsidies by 36% in value and 21% in volume over six years. Developing countries have to make reductions of 24% in value and 14% in volume over ten years.

Peace Clause Under WTO

Introduced in the Bali Package of 2013, the Peace Clause is a temporary measure allowing countries to exceed the subsidy limits outlined in the AOA for their food security programs, without facing legal challenges.
It was initially set to last four years until 2017, pending a permanent solution to address concerns over food security programs being labeled as trade-distorting subsidies.
The Peace Clause acknowledges the critical importance of food security in developing and less developed countries, offering them protection while they support their agricultural sectors through public stockholding programs.

Minimum Support Price (MSP)

The concept of Minimum Support Price (MSP) represents a crucial mechanism in agricultural economics, particularly within India, where it serves as a government-led initiative to ensure a minimum income for farmers by setting a safety net price for their produce. This comprehensive guide aims to elucidate the facets of MSP, including its objectives, background, determination process, current status, and the multifaceted benefits it brings to the agricultural sector, farmers, and the broader economy.

Objective of MSP

Supporting Farmers: It aims to prevent distress sales by farmers by guaranteeing them a minimum profit for their harvest.
Procurement for Public Distribution: Ensures the government has enough food grains for distribution among the population, particularly the vulnerable sections, to maintain food security.
Promoting Appropriate Production Patterns: Guides agricultural production in a direction that aligns with the economic needs and nutritional requirements of the country.

Background of MSP Policy

Introduced in the 1960s, MSP was a strategic response to India’s food deficit issues. It encouraged farmers towards adopting high-yield crop varieties by guaranteeing a minimum price for their produce. The policy saw its formal inception with the establishment of the Agricultural Prices Commission in 1965, later renamed as the Commission for Agricultural Costs and Prices (CACP) in 1985. This move was aimed at ensuring a stable and remunerative pricing structure for agricultural commodities.

Determination of MSP

The MSP is set based on recommendations from the CACP, a non-statutory body under the Ministry of Agriculture and Farmers Welfare. Though these recommendations are advisory, the final decision is made by the Cabinet Committee on Economic Affairs (CCEA), led by the Prime Minister. A landmark decision in the Union Budget 2018-19 was to set the MSP at 1.5 times the production cost, enhancing the profitability for farmers.

Present Status of MSP

Currently, MSP is declared for 23 agricultural commodities, encompassing cereals, pulses, oilseeds, and commercial crops. Despite its wide application, the government is not legally bound to procure at MSP if market rates fall below these thresholds, as MSP operates based on executive directives rather than legislative mandates.

Importance and Benefits of MSP Regime

Safety Net for Farmers: It provides a form of insurance against price volatility, securing farmers from potential financial distress.
Encourages Investment: Assured pricing under MSP motivates higher investments in agriculture, including the adoption of new technologies.
Protection Against Global Market Fluctuations: MSP shields farmers from the uncertainties of global market prices, thus promoting domestic stability.
Food Security: By ensuring stable and increased agricultural production, MSP contributes significantly to the nation’s food security.
Rural Poverty Alleviation: By offering remunerative prices, MSP plays a crucial role in uplifting the economic status of farmers, particularly in agrarian states like Punjab and Haryana.
Benchmark for Private Buyers: MSP also acts as a price signal to the market, ensuring that farmers receive fair compensation for their produce.
Crop Diversification and Economic Growth: By offering higher MSPs for pulses, oilseeds, and coarse cereals, the policy encourages crop diversification, which is essential for nutritional security and environmental sustainability.

Phase	Characteristics
Pre-Green Revolution	Poor food security scenario with high reliance on imports. Dominance of food crops, with three-quarters of agricultural land under food crops, showing little diversification. North Indian plains primarily grew wheat and rice. Presence of cash crops like Tea in Assam, Jute in West Bengal, and Cotton in Maharashtra.
Green Revolution	Introduction of Minimum Support Price (MSP), expansion of irrigation facilities, and high-yield varieties led to intensive agriculture. Wheat and Rice became predominant, especially in Punjab, Haryana, and Western UP. Significant increase in the area under Wheat and Rice, with intensification of crop cycles. Achieved self-reliance in food, particularly cereals.
Post-1991 Reforms Period	Liberalization and Globalization led to cheaper imports and opportunities for agricultural exports, e.g., rice. Introduction of Contract Farming. Sustained predominance of rice and wheat due to reforms like PDS and National Food Security Act.

Correlation between the Minimum Support Price (MSP) and cropping patterns

Introduction to MSP and Cropping Patterns

MSP is a form of market intervention by the government of India to insure agricultural producers against any sharp fall in farm prices. It is announced for certain crops prior to the sowing season.
Cropping pattern refers to the yearly sequence and spatial arrangement of crops and fallow on a given area. In the context of India, cropping patterns have been significantly influenced by MSP, among other factors.

Impact of MSP on Cropping Pattern

Wheat and Rice

Monoculture Encouragement: The heavy procurement of wheat and rice, backed by MSP, particularly in states like Punjab and Haryana, has encouraged a monoculture of these crops. This is despite the semi-arid conditions of these regions, which are not naturally suited for such intensive rice/wheat cultivation.

Millets

Decline in Cultivation: Traditional staples like jowar (sorghum) and bajra (pearl millet) have seen a decline as farmers prefer water-intensive crops like rice and wheat, motivated by favorable MSPs, even in areas naturally suited for millets.

Sugarcane

Increase in Cultivation: The cultivation of sugarcane, particularly in Uttar Pradesh, Maharashtra, and Bihar, has been driven by high FRP (Fair and Remunerative Price) and SAP (State Administered Prices), showcasing a direct influence of price support mechanisms.

Pulses and Oilseeds

Reduction in Acreage: With inadequate MSP protection and low procurement, the cultivation area for pulses and oilseeds has diminished, often leading to increased imports during times of scarcity.

Problems and Challenges Associated with the MSP Regime

Distortion of Cropping Patterns

The excessive focus on certain crops like wheat, rice, and sugarcane has marginalized others like pulses, oilseeds, and coarse grains, leading to a monocultural trend that reduces biodiversity and sustainability in agriculture.

Agricultural Productivity and Inflation

Despite MSP’s intention to support farmers, it has not sufficiently enhanced agricultural productivity. Additionally, MSP-driven price increases can inflate consumer prices, disproportionately benefiting larger farmers and skewing the market.

Detrimental Effects on Competition and the Sugar Industry

Government interference through MSP can stifle competition and negatively affect the sugar industry, where state-level price fixing can harm mills’ financial stability and their ability to pay farmers.

Environmental Concerns

The promotion of crops unsuitable to certain agro-climatic regions leads to environmental degradation, including water table depletion and soil erosion.

Regional Imbalances

The lack of procurement infrastructure in certain areas, especially in eastern states, limits the benefits of MSP to farmers in more developed regions.

Market and Economic Sustainability Issues

MSP schemes can distort markets, create storage excesses, and face challenges in international trade forums like the WTO, questioning their long-term sustainability.

Way Forward

Broadening MSP Scope

Expanding MSP to include a wider variety of crops and regions can help diversify agriculture and make it more sustainable and equitable.

Infrastructure and Payment Improvements

Enhancing procurement infrastructure and ensuring timely payments to farmers are critical steps towards making MSP more effective.

Adoption of Scientific Agriculture

Increasing investments in agricultural research and encouraging crop diversification can help improve productivity and environmental sustainability.

Increasing Awareness

Boosting farmers’ awareness of MSP and other support mechanisms through mass media and outreach programs is essential for maximizing their benefits.

UPSC PREVIOUS YEAR QUESTIONS

1. Suggest measures to improve water storage and irrigation system to make its judicious use under depleting scenarios. (2020)

2. Elaborate on the impact of the National Watershed Project in increasing agricultural production from water-stressed areas. (2019)

3. How was India benefited from the contributions of Sir M. Visvesvaraya and Dr. M. S. Swaminathan in the fields of water engineering and agricultural science respectively? (2019)

4. What are the major factors responsible for making the rice-wheat system a success? In spite of this success, how has this system become bane in India? (2020)

5. How has the emphasis on certain crops brought about changes in cropping patterns in the recent past? Elaborate the emphasis on millets production and consumption. (2018)

6. What are the major reasons for declining rice and wheat yield in the cropping system? How crop diversification is helpful to stabilize the yield of the crop in the system? (2017)

7. What are the reformative steps taken by the government to make the food grain distribution system more effective? (2019)

8. What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap? (2018)

9. How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (2017)

10. Which one of the following best describes the concept of ‘Small Farmer Large Field’? (2023)

11. Resettlement of a large number of people, uprooted from their countries due to war, by giving them a large cultivable land which they cultivate collectively and share the produce

12. Many marginal farmers in an area organize themselves into groups and synchronize and harmonize selected agricultural operations.

13. Many marginal farmers in an area together make a contract with a corporate body and surrender their land to the corporate body for a fixed term for which the corporate body makes a payment of agreed amount to the farmers.

14. A company extends loans, technical knowledge and material inputs to a number of small farmers in an area so that they produce the agricultural commodity required by the company for its manufacturing process and commercial production

15. Consider the following statements(2023)

1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds.
2. Niger is cultivated as a Kharif crop.
3. Some tribal people in India use niger seed oil for cooking.

How many of the above statements are correct?

(a) Only one
(b) Only two
(c) All three
(d) None

16. Which of the following factors/policies were affecting the price of rice in India in the recent past? (2020)

1. Minimum Support Price
2. Government’s trading
3. Government’s stockpiling
4. Consumer subsidies

Select the correct answer using the code given below.

(a) 1, 2 and 4 only
(b) 1, 3 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4

17. Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes? (2020)

1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors and mini trucks.
3. Consumption requirements of farm households
4. Post-harvest expense
5. Construction of a family house and setting up a village cold storage facility.

Select the correct answer using the code given below:

(a) 1, 2 and 5 only
(b) 1, 3 and 4 only
(c) 2, 3, 4 and 5 only
(d) 1, 2, 3 4 and 5

What's New

AGRICULTURE SECTOR IN INDIA

INVESTMENT MODELS

E-TECHNOLOGY IN AID OF FARMERS

Indian Economy

INTERNATIONAL FINANCIAL INSTITUTIONS

WORLD TRADE ORGANIZATION (WTO)

BRETTON WOODS INSTITUTIONS

HUMAN DEVELOPMENT IN INDIA

LAND REFORMS IN INDIA

ECONOMIC REFORMS IN INDIA

SERVICE SECTOR

INDUSTRIAL SECTOR

PUBLIC DISTRIBUTION SYSTEM

Agriculture

Environment & Ecology

Disaster Management

Science & Techlonogy

Internal Security