To achieve higher returns, the bridge of higher risks needs to be crossed. Put differently, ceteris paribus, greater compensation may be needed to incentivise willingness to assume greater risk. Perceiving agriculture as an enterprise may well assist in diagnosis and suggesting the way ahead. Given the diversity and complexities characterising Indian agriculture, let us briefly examine the pulses scenario.
Production of pulses is currently at a record high and has breached the 25 million MT mark in 2017-18, as per the fourth advance estimates. Procurement by the government has been in force, in a bid to boost certainty in farmers' income. Prices have witnessed strong inverse correlation with production as seen by dramatic price increases on account of fall in production and vice versa. A vicious circle persists with the grower being at the receiving end. Procurement of total marketable surplus may be neither sustainable nor advisable, given logistical and budgetary constraints and retailing the procured stock. Loan waivers are certainly not healthy behaviourally as well as financially in the long run.
The way forward is to empower the farmer with tools to look after his own economic well-being. Through innovations like e-National Agriculture Market (e-NAM) to create a unified agriculture market for agricultural commodities and e-Negotiable Warehouse Receipts (e-NWRs), better price discovery is ensured. Such innovative measures, by reducing the level of intermediation in the supply chain and concomitant cost cascade, benefit farmers as well as consumers who pay a reasonable price, resulting in a win-win situation for both. Convergence with MGNREGA may be strengthened by including construction of storage facilities under permissible works. These efforts will certainly empower farmers and minimise distress sales by enhancing holding capacity at micro level. The Centre is also relieved of stock liability and procurement.
A key concern here is to reap benefits in full potential of aforementioned innovations. Awareness and capacity building is central. Agriculture being a state subject, action needs to be initiated by the states and finding regional/local solutions is the key. To be successful, solutions need to transform into movements, which are impossible without community participation. There are a few dimensions here which may be explored. The relatively big farmers benefit from early adoption. Since they have the wherewithal as well as domain expertise, they may volunteer in handholding small and marginal farmers with the same. While the benefits to the latter are obvious, the former will be showered with immense goodwill. The state, with proactive role by Panchayati Raj Institutions, may have to step in for a mapping of sorts between the two, given spatial considerations. Another dimension that may be unlocked is that of Corporate Social Responsibility (CSR). Much-needed funds and functionaries may be pooled in to strengthen this effort of building social capital. They can also play a leading role in leveraging financial innovations and instruments like derivatives (primarily with the objective of hedging), services of small finance banks and payment banks.
The role of these two players, i.e. large farmers and CSR can also be extended to revitalise agriculture extension activities. Agriculture extension has the twin advantage of local reach and creation of feedback loop, i.e. spread awareness among farmers and learning from success stories for dissemination. In our visit to Rajasthan, we learnt that exchange programmes are conducted for farmers to learn about best practices across the country. This can be scaled up. CSR funds may also find collaboration with agriculture universities for much-needed region-specific diagnosis and indigenous solutions. This should integrate elements of land use, water use, soil management along with recommending suitable cropping patterns. This is more so in case of water-intensive crops like paddy where concerns of water scarcity are looming large in face of depleting groundwater reserves at an alarming rate.
A realignment of cropping pattern to relatively less water-intensive crops like pulses in water-scarce areas will have myriad benefits of nutrition of both mankind and mother earth with a lesser recourse to power subsidies, a substantial burden on the state exchequer. As noted in the report on incentivising pulses production by Dr Arvind Subramanian, whilst setting MSP for pulses, returns, risks and externalities for crops that compete with pulses in specific areas may be compared. For this, competing crops need to be identified, as these vary across regions and across pulses. Thus, the farmer may be adequately rewarded by compensation of risks thereof (say with a bonus on MSP), for production of such crops that bestow positive externalities.
— The writers are officials at the Ministry of Consumer Affairs, Food and Public Distribution. Views expressed are personal
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