India Needs Fundamental Changes In Agricultural Policies

By Dr. Gyan Pathak

While policies and institutional arrangements aimed at intensification and growth of the Indian agriculture sector are inevitable for the livelihoods and food security of the country’s vast population, the inclusion of land-constrained farmers especially women, therein requires certain fundamental changes in the approaches.

This observation has been made in an ADBI working paper titled “Development of Capitals and Capabilities of Smallholder Farmers for Promoting Inclusive Intensification in Agriculture: Experiences from Northern West Bengal, India”.

This is crucial for accelerating the transformation process in rural India as these vulnerable sections account for a significant portion of the rural population, but are characterized by limited capacity and capabilities, the study says. This is crucial in the Indian context as the smallholder farms can potentially provide viable livelihood opportunities and ensure food security for the large majority, even when the large commercial farms have greater economic efficiency.

It is also important in the light of the Agriculture Census of the Government of India report that observed a decline (though marginal) in operational landholding across different sizes, possibly because of fragmentation of land owing to an increasing population, the division of families, and the use of farmland for other activities. About 96% of holdings belong to the small and marginal farmers, with an average operated area per holding of a mere 0.64 hectares in 2015–2016 in West Bengal, whereas they are 87% and 0.58 hectares, respectively, for India in the same year.

In addition, limited access to protective irrigation coupled with imperfections in the markets and weak institutions often make the problems more complex. This is more so with increasing production and market-related risks, primarily because of climate change and other external shocks.

Thus, achieving inclusive agricultural intensification at the community level at present as well as in the future (sustainable across generations) would require addressing the externalities and trade-offs associated with soil and water resources, and agro-biodiversity, along with the market-related aspects.

In this context, it is often suggested that accelerating the growth of the Indian agriculture sector and making the intensification inclusive and sustainable would require emphasis on the development of the necessary infrastructure, the promotion of value chains and entrepreneurship, and facilitating free movement of farm produce and exports, along with conservation and judicious use of critical natural resources and the promotion of a climate-smart approach to agriculture.

However, while many of these measures are seen largely in the context of the failure of the existing system of minimum support price (MSP) and the government’s procurement through the Agricultural Produce Market Committee (APMC), it is not clear whether they would necessarily promote inclusiveness of the growth process, particularly when there is a significantly high number of land-constrained farmers.

Importantly, the inclusiveness of interventions has been the subject of discussions and debates for a number of years. It is argued that government procurement and the MSP are biased in favour of cereals such as paddy and wheat.

Further, small marketable surpluses of land-constrained farmers and high transaction costs associated with market access often exclude these stakeholders from the benefits of the MSP.

Similar apprehensions and concerns are raised even when market-oriented policy suggestions are made, as it would be difficult for the smallholder farmers to bargain effectively with the big corporate houses, given that they often fail in negotiating even with the middlemen and local traders.

What is more critical is that the land-constrained farmers lack the necessary capacity and capabilities to reap the benefits of government interventions in activities ranging from input sourcing to selling the produce and enhancing their competitiveness. Given that the small scale of farm operations (along with high input costs and limited use of modern technologies) often results in rising average costs of cultivation, inadequate access to, and a lack of bargaining power in, output markets would make agriculture further unviable for this farming group.

The conditions are likely to be more critical with limited access to critical inputs like irrigation and credit, poor extension services, and both an inadequate infrastructure and unsatisfactory adoption of technology. Since these aspects are linked closely with policies and institutions contributing to a deceleration in Indian agriculture, revisiting the intervention strategies and institutional approaches to overcome these constraints is imperative.

In particular, emphasis is required on enhancing the capacities and capabilities of the land-constrained farmers to strengthen their competitiveness, bargaining power, and market position so that they can effectively use the infrastructure facilities, participate and survive in value chains, gain access to markets, and contribute to judicious use and conservation of critical natural resources through appropriate farming practices.

The authors of this paper have said, “Efforts toward such changes based on a deeper understanding of the underlying issues and dynamics seem to be more pertinent, particularly at the onset of various crises in the sector and measures undertaken by the government to address the same.”

Using insights from focus group discussions, open interviews, field observations, and repeated engagement with the stakeholders, this paper argues that while collectivization of resources and actions can potentially lead to the inclusion of smallholder farmers and women in the intensification process, benefitting from the opportunities under the changing socio-economic environment would require the development of the necessary capacities and capabilities of the farmers.

Further, such capital formation and capability building through the process of ethical engagement with the community would also be crucial to overcome various constraints, particularly with regard to the scale of farming, market access, bargaining power, and risk-bearing ability.

Nevertheless, continuation of the supporting incentives and related institutional reforms would be essential in this regard. (IPA Service)

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