The high-value agricultural segment, comprising livestock and fisheries, has to show higher growth for the farm sector to expand at a faster pace, the Planning Commission has said.
The 11th Five-Year Plan (2007-2012) had set an average agricultural growth target of 4 per cent. However, the mid-term appraisal of the plan acknowledges that the average growth in agriculture will fall by 2-3 per cent. Though one of the obvious reasons being cited for the shortfall is the drought that hit foodgrain production in 2009-10, the crop segment is still expected to grow by 2-3 per cent, close to the projected estimate of 2.7 per cent for the Plan period.
However, the livestock segment, which contributes 23.8 per cent to the entire agricultural growth rate, is expected to fall significantly short of the projected average growth rate of 6 per cent. Till 2009-10, the average growth for this segment has been 4.1 per cent. Fisheries, which had grown by 3.7 per cent in the 10th Plan period is also expected to fall short of the 11th Plan period average growth projection of 6 per cent.
“I think the real reason is that investment in logistics like storage and distribution has been quite limited. Though it has happened in some sectors, like milk, others, like meat, have lacked. What we need is better infrastructure at the retail marketing level,” said Shashanka Bhide, senior fellow at the National Council of Applied Economic Research.
Moreover, Bhide adds these sectors have been considered “supplementary” and there are no incentives to turn to these sectors, which are less profitable than traditional farming of crops like wheat, rice and pulses.
The growth in the high-value segment has been declining even as the demand for these products has been on the rise. Analysts say in a high-growth economy, the demand for high-value agricultural products sees a rise and this has been the case with India, too. The demand for livestock and allied products has increased at the rate of 7 per cent every year, while the growth in production has been slowing and is between 3 per cent and 5 per cent.
This has, in turn, led these high-value food items like milk, meat, eggs and fish to have one of the most consistent and rapid inflation rates. Contrary to popular perception that cereals, pulses and sugar have seen the sharpest increase in prices, it is animal husbandry where the Wholesale Price Index (WPI) inflation has been constantly pronounced.
“With growth in the overall economy, the demand for these (food items) has gone up much faster than the supply. I think we got trapped in a mindset that the demand would be slower,” Planning Commission Principal Advisor Pronab Sen told Business Standard in a recent interaction.
In 2009, the average rate of inflation in food articles was 12.42 per cent. The average rate of inflation for eggs and meat had been 14.57 per cent in 2009, up from 3.7 per cent in 2008. Milk, which has had an annual average inflation rate of 6 per cent for three years, registered an average annual inflation rate of 9.03 per cent in 2009.
| NEED FOR SUPPORT Sub-sector-wise growth rate in the Agriculture and allied sectors (in %) | |||
| Share in overall output | Eleventh Plan target | Average growth in 2005-2009 | |
| Crops | 42.4 | 2.7 | 1.7 |
| Cereals | 18.6 | 2.3 | 1.8 |
| Pulses | 2.7 | 2.3 | 3.0 |
| Livestock | 23.8 | 6.0 | 4.1 |
| Fisheries | 4.5 | 6.0 | 4.8 |
| Milk | NA | 5.0 | 4.9 |
| Meat and poultry | NA | 10.0 | 5.1 |
| Overall | 100.0 | 4.0 | 3.0 |
This, when foodgrain, which constitute cereals and pulses and has 5 per cent weight in the entire index, registered an average inflation rate of 14.27 per cent, up from 6.4 per cent in 2008, primarily on account of the drought.
Moreover, given the preoccupation of addressing food security concerns through the traditional foodgrain segment, there is no policy framework till now to address the gradually decelerating growth in the livestock and fisheries segments.
The mid-term appraisal notes that currently “no Central assistance or schemes are available for the meat sector”. Moreover, it also observes how value addition in the meat sector has been non-existent, especially in the domestic market. Similarly, the production of marine fish has reached stagnation and “there seems to be no further scope to increase the production”, while India still has the potential to increase production in the indigenous fish segment through more active participation of the private sector.
