July 21, 2011
Agriculture has been practiced in India since last 3500 years. Due to variation in climate, soil type and available moisture; variety of crops can be grown here. Since large areas of land are under agriculture, India is a major producer of almost all kinds of crops, but the yield per Hecate is amongst the lowest in the world.
During the first Green Revolution in 1966-75, irrigation facilities were extended to large areas, farmers were provided high-yielding variety of seeds, and agriculture was supplemented with fertilizers, insecticides and pesticides. These efforts led to a spike in agriculture production and made India self sufficient in food grains.
The Government established several Agriculture Universities and Research Institution to train and support Indian Farmers. The farmers have benefitted from subsidies, Minimum Support Price for their produce and several freebies like Loan Waiver, Low Interest Finance, Free Electricity and Water.
Farmers indiscriminately used fertilizers to extract more from their crops, new bore-wells were dug and the existing ones went deeper. Today, the most fertile lands of the country are turning bare and most of North Indian wells would run dry by 2030. Agriculture in India, employs over 60% of the Indian workforce, yet contributes only 17% to our GDP. Since the economy is growing at around 8% and Agriculture is growing by only 3%, the contribution from this sector is expected to fall.
Most of the Agriculture Research Institutions have come up with only micro incremental innovations, which have not addressed and solved problems for Agriculture. These institutions have been directed at the technical side of the problem and there is no effort at the policy and business side of Agriculture.
India globalised and liberalized its economy in 1991 and since then the rate of growth in India has doubled and we are the next emerging super-power. But Agricultural Sector remains the clutches of Socialism and the government has not allowed it to grow to its potential.
NREGA and the rapidly growing Indian Middle Class has increased the consumption of the food, while the supply has remained almost constant and farmers have not been able to benefit much from this growth due to Socialist Model. I have the following 7 Suggestions to bring about Green Revolution 2.0
Develop Core Infrastructure
The development of infrastructure has boosted agriculture in the past and there are several examples to prove it. Bihar is blessed to have several small streams which are tributaries to Ganges. There streams provide natural irrigation, but deny farmers access to market for their produce. The Government established a special department to build small bridges over these streams and also village roads. Due to better access to market, the growth rate in Agriculture and GDP was over 10%.
Rains in India are seasonal and to grow more than one crop a year, irrigation facilities are required. The strife in Andhra Pradesh is over the difference in prosperity coastal Andhra and Telangana. This difference is only because of irrigation facilities. Bore-well based irrigation, extracts water from ancient reservoirs without any effort to refill them. This is unsustainable and should be discouraged. Instead, India should work on phase wise interlinking of rivers.
Conservation of available resources should also be encouraged. The reservoir capacity in Dams has reduced due to silting. De-silting should be carried out. The alluvial soil present there is extremely fertile and could be provided to the farmers, whose fertility has reduced.
Land Use Pattern
There are a lot of discussions and politics over the acquisition of land. The world population is expected to grow by 1 billion people in the next 15 years, most of this growth would occur in India, making it the most populous country in the world. With stagnation in yield per hectare, falling water levels and fertility, should we reduce the fertile land available for agriculture?
Land has become a source for massive corruption across in India and it happens because of the way land is classified. Only farmers can acquire agricultural land and since the purchasing power is low, the price of land is low. But as soon as the Agricultural Land gets converted into Non Agricultural Land, the value increased by 1000%. This conversion is nothing but a small noting on the file. Farmers hence lose out on the value of the land, and this is socialism and a form of License Raj, where the States dictates what a person can do with his land.
I believe that land should be classified into two categories- Ecological Land and General Land. The General Land should be rated on two factors- Fertility and Moisture. Dry and Unfertile Land should be industrialized.
The land to the West of Bangalore City (Mandya District) is well irrigated and can produce 2-3 crops every-year. The current policy is to encourage industrialization of every district. Hence, the fertile lands would have to be used for Industries. But to the east of the city, there is rocky dry land extending from Kolar to the coast. But since the region belongs to another state, the Government does not encourage industries linked to Bangalore to flourish there. States are just administrative units and should not take a position of a sub-nation.
Utilization of land is another concern. It is estimated that 20% of the land is wasted in agriculture. Even when land is acquired for SEZ or Industries, about 40% more land than required is acquired. Land would determine the future of India and efficient utilization of land is important.
Agriculture as an Industry
Any nation or industry grows due to fresh talent, ideas and investment. Agricultural Sector in India has closed its door and is firmly in the grip of Government. It is subject to Government’s whims and fancies. Populism has destroyed its competitiveness. The Government has prevented growth and enterprise in the sector. There are no “Agricultural Companies”. There are only large bunch of small producers, who are incapable of investing in large improvements.
The Corporative Society Movement got high jacked by politics. It is an example of how democracy can sometimes lead to inefficiency, lethargy and corruption. The system was again inward looking and did not encourage new energy and talent. Agriculture is the only Primary Sector of the Economy devoid of any Enterprise.
The Government should allow people to establish Agricultural Companies. Investment in these companies can come from farmers, who could pledge their hand holdings, which would be valued as land and not categorized land. Investors could invest money as well. These should be publically traded companies.
Professional Managers would be employed to run these companies and their business acumen would build these companies as brands. They would soon work on forward chain integration; the middlemen in farm to market would be eliminated. They would also be in position to develop private infrastructure, including storage capabilities, transport etc. They would introduce better practices, innovation and bring about operational efficiency.
The farmers would be in a stronger position. Their landholdings would not be acquired, instead would be part of a larger unit. The farmer would earn dividends and salary. He would get benefits like pension, leaves and healthcare. Crop Failure would not affect him as much, as companies would operate across different regions. Since the companies would establish brands and create infrastructure, the rise in value of the farmers’ investment would be more than what it would be for the land. Additional rural employment would be created.
The competitiveness amongst companies would result in farmers working for higher yield, better quality of produce and lower prices. The consumers would benefit.
The Government would have to provide tax holidays to these companies for a few years. The Government could reduce its subsidies. The pressure on the Government to acquire, store and transport food grains would ease. After ten years, the Government can earn taxes from these companies.
The concept of Factories developed in the Industrial Revolution, developed in large urban centers where large number of worked using large machines. The concept of Special Economic Zones further enhanced this model. But modern industries do not need concentration of resources at a common place.
Restaurants like Mc Donald’s have shown that standardization is possible around the world. Similarly factories could be established which several mini/micro production facilities. A village cannot sustain a large factory or a unit, but it can sustain a small unit. This could be established in textile, food processing, art/craft etc. The primary produce of agriculture should have an enhanced value, as it steps out of the village.
Alternate Consumption Sources
The rotting of food grains in go-downs and over production of some agricultural commodities at certain times causes a glut and the prices crash. Agriculture sourced energy is the best form of Renewable Energy. It would be easiest to implement with the existing systems.
A large chunk of India’s foreign exchange is from Oil. It is a drain on our foreign exchange, Government spends a large amount of taxes on subsidies, oil prices cause inflation and even slow down economic growth. As the reserves reduce and it becomes more expensive to extract oil, prices would increase.
Brazil became energy independent from expensive foreign oil by investing on sugarcane based ethanol. In India is amongst the largest producers of sugarcane, wheat and jerboa, all of which can be converted to Ethanol. India also has one of the largest populations of cattle and can be large source of Natural Gas, as Bio Gas contains 50-60% Natural Gas.
Innovation and Advancement
Yield per Hecate in India had stagnated and is amongst the lowest in the world. Innovation should focus on bringing larger improvements in agriculture. Due to climate change, we face a real challenge, to manage the extremities of agriculture. The policy improvements would lead to an improvement of around 30%, but a real improvement would come from technology and its implementation. Enterprise in agriculture would ensure that the technology is implemented.
Agriculture is the most critical sector of the economy. The growth and well being of our country is dependent on it. The Time Magazine says, it is the best time to be a farmer, but it does not really apply to Indian Farmer. Reforms in the agriculture sector, would encourage new talent, investment, technology and energy into the sector, creating additional sources of income.
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