Every rupee spent on agricultural research gives a return varying from Rs 1.39 to Rs 3.66 on different cereals (food crops). The figure is even higher for some other crops. On the whole, average returns on investment in farm research can be as high as 42 per cent. Yet, successive governments have been stingy in funding agricultural research.
The total government spending on this vital input has stagnated over the past decade at a measly 0.6 per cent of the agriculture sector’s gross domestic product (agricultural GDP). It is even lower, 0.14 per cent, on agricultural extension that is vital for taking technology to farmers. This, obviously, acts as a drag on returns from research expenditure. Several expert committees that have gone into the issue of investment in agricultural research, including some parliamentary committees, have recommended that resources equivalent to at least one per cent of the agricultural GDP, if not more, should go into farm research.
Ideally, however, this expenditure should be around two per cent of the farm sector GDP to facilitate technology-driven and knowledge-based growth in agriculture. Farm research needs to be stepped up to achieve the coveted four per cent annual growth in farm output. This goal has remained elusive since the Ninth Plan. Even the Twelfth Plan has stuck to this unmet target.
A comprehensive study by New Delhi-based National Centre for Agricultural Economics and Policy Research (NCAP) on the total factor productivity in agriculture and the contribution of research investment to it has revealed some interesting findings that have significant policy implications. It shows highly uneven annual increases in research financing, varying from as little as one per cent in 2001-02 to about 15 per cent in 2005-06. “Such large fluctuation in resource allocation results in break in research effort which leads to inefficiency and constrains in attaining desired output. There is need to maintain smooth growth in allocation of resources,” states the study that has been published by the NCAP as a “Policy Brief No. 25”.
The study shows that the growth in the total factor productivity of different crops has varied widely over the past three decades. So has the production cost of various crops. As expected, the annual productivity growth has been the maximum, 1.9 per cent, in wheat. But what is surprising is that the increase is far lower, just 0.67 per cent, in the case of the most-consumed cereal — rice.
The total production of wheat and rice, however, has risen substantially, resulting in massive stock accumulation in the government grain coffers.
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In pulses, on the other hand, the productivity growth has, predictably, either stagnated or declined in almost all crops, except for mung. This is a clear indication that these protein-rich crops have not gained much from technological advances.
In oilseeds, crops show divergent trends. The rapeseed-mustard group, which benefited immensely from technology infusion between 1975 and 1985, could not sustain the trend in subsequent years. Groundnut and soyabean have clocked productivity enhancement of around 0.7 per cent. But the total output has spurted more in soyabean than other crops owing largely to area expansion.
Interestingly, the outcome of this study also holds some significant cues that explain why prices of some farm commodities – notably staple cereals like wheat and rice – have remained stable, while those of mass-consumption vegetables like onions and potato have tended to soar in recent years. In the case of cereals, the research and technology-driven rise in output has resulted in a steady decline in production cost in real terms, ranging from 1.0 per cent to 2.3 per cent a year. This seems to have helped keep their prices relatively steady.
On the other hand, potato and onion that had gone through a nearly decade-long phase of high productivity surge between the mid-1980s and mid-1990s lost momentum after 1995. The uptrend in their production since 1995 is being maintained largely by higher input use, which has pushed up the output cost, requiring higher prices.
A noteworthy inference that can be drawn from this study is that higher investment in agricultural research is imperative to not only increase the productivity and production of crops but, more importantly, to reduce their output costs to tackle volatility and spike in prices.