Arvind Singhal: The Challenge of Agriculture

MARKETMIND

A lot has been said and written on the state of agriculture in India and if the recently-announced largesse of Rs 60,000 crore in the form of farm loan waivers can do anything significant to mitigate the plight of the Indian farmer. In this context, it may not be out of place to reflect on the even bigger challenge India will be forced to face in the near future when it comes to agriculture and its food security.

Let us start with some hard facts and ground realities. For almost 25 years now, the growth of agricultural output has languished between 2% and 3% per year barring a few exceptional years when it touched about 5%. In the poorest of states such as Orissa, Madhya Pradesh and Rajasthan, the growth of farm output has been just about 1% per year for the last decade. In the same period, the population has increased by over 400 million and continues to increase by almost 20 million per year.

Over the last three decades, farm productivity has consistently remained much below average in just about every staple commodity with minimal improvement despite various attempts and missions to improve yields. Both in rice and wheat, India's productivity languishes at merely 30-35% levels of the leading countries.

There has been practically no change in the net cultivable area or the sown area, which remains more or less stagnant at around 185 million and 145 million hectares, respectively. On top of this, there is an alarming degradation of water resources with the per capita availability of water down to 20% of the figure of the 1950s. This is leading to an alarming reduction in the water table across the most fertile of places such as Punjab and thereby leading to the impending situation of steady decline in the area available for sowing crops in the coming years, with a marginal decline of about 3 million hectares already in the last 20 years. The situation will be further aggravated as more pressure comes on available land on account of rapid growth in population and thereby expansion of habitation, physical infrastructure in the form of roads and buildings, and industrialisation.

It is therefore no surprise that the food availability per capita has now become stagnant over the last 20 years. The much-touted "young India" has another implication in the context of food "" with over 300 million Indians below the age of 15 years, the calorific intake needs are bound to increase when these children and teenagers become adults, putting even more demand pressure on all kinds of food including staples such as wheat, rice, lentils, vegetables, fruit, dairy products, and cooking oils.

In this situation, the overall food situation outlook is grimmer than it ever has been in the past. With even a larger population than India, and affluence rising much faster than anywhere else in the world, the impact of China on the availability of global food surpluses is already visible by way of record prices of basic staples. Hence, imports may not necessarily be a feasible option unless the government subsidises them heavily (as it already is doing in case of petroleum products).

Hence, aspirin-type of solutions such as farm loan waivers, waivers of electricity dues, and promises of supplying free electricity and groundwater are not going to provide any relief from the deeper malaise that today afflicts only the agriculture sector but has the potential to impact the entire country in the near future. The challenge has to be tackled on multiple fronts at the same time. The more critical ones have to start with creating non-farm jobs in rural India. The land mass is just not enough to directly or indirectly support over 650 million Indians through farming alone. Travel and tourism, healthcare, manufacturing, and retail are some of the sectors that can potentially create tens of millions of new jobs where they are needed immediately. Consolidating highly fragmented farm holdings and managing the scarce land resource more optimally through cooperative or corporate farming will probably yield superior farm productivity. A partial substitution of water-intensive crops with less water-intensive ones, and relying on augmenting domestic production with some imports of such water-intensive substituted crops (such as rice and sugarcane/sugar) may help conserve water resources without reducing output in gross metric tonnes. Controversial though it may be, perhaps greater emphasis on genetically modified crops may give the farm output production the boost that has eluded it for the past 30 years. One only has to look at the success of such a measure in just the last five years on the cotton production and productivity in the country. And finally, India must put a long-term pragmatic policy in place for global trade in farm products. Ironically, it may well be in India's interest to have the rich countries subsidise their farmers even more so that the cost of our own imports is kept low. It may not be too far when India will have to seriously consider restricting exports of just about every major category of agri-products.