Surinder Sud: Ploughing a new furrow

FARM VIEW

If India has to achieve above 4 per cent annual growth in agriculture and allied sectors, a shift from low-value foods to high-value ones is unavoidable.

The key to the reversal of the present deceleration in agricultural growth is held largely by high-value farm commodities, such as fruits, vegetables, milk, poultry products, meat and fish, rather than by low-value cereals. In fact, the output of these commodities has already begun growing much faster than that of food crops, changing the profile the Indian farm sector. The economic studies conducted by the Indian Council of Agricultural Research (ICAR) have now ascertained that the deceleration in overall agricultural growth would have been far more pronounced but for the cushion provided by the handsome growth of high-value farm products.

The production of fruits and vegetables, for instance, has risen annually by about 6 per cent between 1992-93 and 2002-03. Similarly, dairy output has increased consistently by over 4 per cent a year despite a marginal deceleration in the economic reforms period. The poultry output, too, has maintained a steady 6 per cent-plus annual growth throughout the last two decades. Fish production, in fact, has shown a marked acceleration in annual growth from 3.7 per cent to 5 per cent during this period.

"The deceleration in agricultural growth in recent decades is largely because of a significant fall in growth in the rest of agriculture from 2.7 per cent during the 1980s to 1.5 per cent between 1992-93 and 2002-03," states the ICAR in its Annual Report 2006-07. The growth in the high-value segment, on the other hand, accelerated from 4.1 per cent in the 1980s to 5 per cent between 1992-93 and 2002-03. Going further, the report says: "The fast growth of high-value segment provided a cushion to agricultural growth which otherwise would have decelerated at a faster rate."

As a result, the share of high-value commodities in the total value of agricultural output has swelled from 33 per cent in 1982-83 to nearly 45 per cent in 2002-03. At a disaggregated level, fruits and vegetables account for about 18 per cent of the agricultural sector GDP. The share of the dairy sector is only marginally lower than this while that of fisheries is now about 4 per cent and poultry about 3 per cent. This can be viewed as the onset of the process of gradual diversification of Indian agriculture away from staple foods. The trend, obviously, needs to sharpen further to push up overall agricultural growth and rural incomes to alleviate farmers' distress.

This apart, high-value agriculture is ideal for the Indian rural set-up dominated by small land holders. The ICAR has listed several reasons for this. The most significant among them is that the production of high-value commodities is relatively more labour-intensive and small farm holders (holding less than 2 hectares) have sufficient family labour to take care of it. Most high-value products require as much as two to four times more labour than the low-value, high-volume cereals. But, in the process, they generate six to eight times more returns. As such, they provide a good opportunity for small farmers to utilise their family labour to generate higher income.

Significantly, small farms have been found to be relatively more efficient than large farms for the production of high-value produce. Also, the water requirement of most high-value crops, on a per hectare per unit of output basis, is much less compared to, say, crops like rice, cotton and maize. Such agriculture, therefore, will put lesser strain on water resources which are fast depleting.

In fact, tillers of large farms usually prefer to avoid going in for high-value commodities because of the higher labour requirement. The numbers compiled by the ICAR reveal that though small land holders account for a relatively lower portion of total agricultural land, their share of area under vegetables is 61 per cent and under fruits 52 per cent. Also, they have a relatively larger share of animals, including cattle and small ruminants. As such, their contribution to the production of high-value commodities is far higher than that of the large farmers.

Thus, if the country has to achieve above 4 per cent annual growth in agriculture and allied sectors, the shifting of area from low-value foods to high-value ones is unavoidable, besides measures like higher consumption of fertilisers and expansion of irrigation. The ICAR reckons that around 0.5 per cent of the area needs annually to be diverted to high-value agriculture for this purpose.