Uttar Pradesh agriculture sector calls for immediate reforms - I

The agrarian economy of Uttar Pradesh continues to grapple with low productivity and lack of proper infrastructure and forward industry linkages.

Since a major chunk of the state population subsists on agriculture and the sector also comprises a major share in the state gross domestic product (SGDP), reforms in the sector are urgently needed.

Improvement in the sector in the context of UP is also vital to maintain food security in the country and to insulate India's economy from the recurring fluctuations in the international commodity prices.

Almost 90 per cent of the state's farmers are small farmers and have very little understanding of and access to institutional credit. Agriculture and allied activities including fisheries, animal husbandry, dairying and horticulture play a major role in the economic development of the state. UP also figures among the top producers in the country on the sheer basis of area under crop.

However, if we consider the acreage (production per acre), gaps in farming get apparent. Agricultural production, including paddy, wheat, pulses and oilseeds, has been fluctuating over the years and has not posted much growth over the last decade. In 2004-05, the paddy production (9.6 million tonnes) was less than what was achieved in 1994-95 (9.79 million tonnes).

Several other crops have registered negative growth or even decreased in productivity, such as pulses.

Unlike Punjab and Haryana, the mechanisation of the agricultural sector has been slow in UP. Falling size of land holdings (over 75 per cent of land holdings are less than one hectare) is partly to blame for low productivity.

In UP, almost half of the small farmers are indebted. To make the matters worse, there is declining public investment in agriculture, stagnant gross capital formation and falling share of agriculture in the total plan outlay. There has been a deceleration in the sector over the past decade according to a state planning department note.

Lack of proper infrastructure and proper marketing channels have proved to be impediments to the growth of the sector.

On August 23, 2007, a day after 10 stores were opened in Lucknow, the state government had ordered closure of Reliance Fresh stores in UP, citing law and order problems in the wake of traders' protest.

Interestingly, farmers, consumers and the industry at large were in favour of the retail format, which was expected to give a major fillip to the agricultural sector.

However, the UP State Horticultural Cooperative Marketing Federation (HOFED) is rolling out 14 agri retail outlets across the state this month to provide a vital forward linkage to farming.