Chapter 9: AGRICULTURE ECONOMICS
Currently 17% of the GDP is from agriculture and allied activities
as per the 2014 year data. The share of agriculture and allied sector in
employment is 49% followed by services and then manufacturing.
Indian agricultural land is higher than China and also the potential for
agriculture is more but China has higher productivity. The northern states
like Punjab, Haryana are best in terms of productivity but lag the World's
best. The resources like land, water, fertilizers are intensively consumed
here for less output.
Mechanization is also less in India.
Irrigation land is 65 million hectares with 25 million from surface
sources and 40 million from ground water.
Pesticide consumption per hectare is lowest in the world. Improper method
of use like spraying or dissolving.
Fig 1: Agriculture seasons
PM Fasal Bima Yojana, 2016
- Remote sensing, smart phone, DBT for payment
- Kharif premium: 2% of total premium, Rabi: 1.5%, horticulture: 5%.
- Covers damage due to natural calamities and pest attacks.
- All farmers, share croppers eligible.
- Ministry of agriculture is implementing it.
Kisan Credit Card
The scheme started in 1999 by the Govt of India, NABARD and RBI to
provide short term cash loans to farmers without the need to go through
hassles of loan approvals.
The card is valid for five years and collateral is needed if loan amount
is Rs. 1 lakh or more. Repayment has to be within 12 months.
India is the second largest producer of silk in the world after China.
Indian silk is 74% Mulberry, Eri - 16%, Tasar - 10% and Muga - 0.5%.
Land Reforms and Green Revolution
The Land reforms process had failed due to lack of political support and apathetic bureaucracy. The green revolution had emerged during the same time and had provided promising results in other countries. The international organizations too had supported this initiative and there was pressure to adopt the same in India to increase its wheat yield. India couldn’t get diplomatic independence as long as it depended on the USA for subsidized wheat. It was therefore important to adopt Green revolution and this marginalized the process of land reforms.
Other reasons were
- Green revolution wanted large land holdings but land reforms would have led to fragmentation.
- The propertied rural class had opposed the land reforms; their support was needed for the success of green revolution.
- Green revolution had more promise of removing inequalities than land reforms.
- No opposition to Green revolution unlike land reforms.
Impact of green revolution:
The revolution increased the focus on rice and wheat and thus other crops like pulses; oilseeds and vegetables were neglected leading to imports and price rise. The inputs and soil fertility was found in Haryana, Punjab and Western UP and so green revolution flourished here. The rising incomes created inter regional and inter personal disparities. Cropping patterns lead to loss of fertility, rise in malaria due to water-logging and overuse of ground water led to depletion in water levels
Market intervention scheme:
This is implemented for procurement of perishables or horticulture commodities when there is a fall of demand. This scheme is implemented when there is atleast a 10% increase in production or 10% decrease in the ruling rates over the previous year. The states have to bear 50% of the cost of production
Agriculture Produce market committee
Every state has an APMC Act and currently there are more than 6000 APMC’s and sub yards in the country. These are the first points of sale for produce and the farmers have to bring the produce to these centers and sell their produce via auction which are conducted by licenced commission agents under this Act.
The amenities present in the APMC are; Weighing bridges, loading scales, auction halls, warehouses, bore wells, water treatment plants, soil testing kits, toilet blocks etc. The APMC can charge many fees and levies for these services and the charges are high which lead to a cascading effect on the prices of the produce.
The licenced agents also charge a fee for the transaction between buyer and seller and this is on the entire value of the transaction. The taxes collected by the APMC though are authorised by the state but not credited to it. Thus they escape scrutiny.
The licence fee charged from the commission agents is nominal but due to the limited number of licences there is a premium on them. This creates monopoly and corruption.
The APMC top posts are occupied by politically connected persons and these enjoy a good support of the commission agents. Hence the agents can form cartels and keep the auction price low so the farmer has to sell at a lower level to the buyer.
All these factors cause market distortions and prevent a supply chain from forming between farmers and consumers. The APMC Act also inhibits competition. Any attempt to modify the Act is met with resistance from the members of the APMC who are politically connected. Even the Center can’t act without the states consent as agriculture is a state subject.
Model APMC Act
Since the state Acts have fragmented the agriculture market, the Centre has published the draft Model APMC Act and is circulating it amongst states and urging them to implement it.
- Farmers can sell directly to consumers or contract purchasers
- Establish direct selling markets so consumers can buy from farmers.
- Remove licences with registrations so the intermediaries can increase and operate in any market. The common registration portal can be opened so that more intermediaries can participate and make market competitive.
- Use a single market levy on agriculture goods transactions and use the money to build infrastructure in APMC.
- Permit private persons, consumers and farmers to establish new markets for agriculture produce anywhere.
The Model Act still allows the buyers to continue payment of agriculture levy to APMC even if the transaction is made outside the APMC area. It also doesn’t create a National unified market or a state level unified market.
Although the APMC Act prohibits commission agents from deducting any fee from the sellers but the buyer will reduce his bid by discounting his amount to include the commission to the agent and so the farmer gets low returns.
APMC Model Act allows creation of private markets but even these shall have to collect APMC fees on behalf of the APMC over and above any other charge that the owner wants to levy. So this shall make the private market costlier than APMC’s.
Agro loans: Short term (> 15 months), Medium term loans (15 months to 5 years) and Long term loans (5 years +)
Irrigation schemes classified on basis on cultivable command areas: major (10000+ hectares), medium (2000-10000 hectares) and minor (up to 2000 hectares).
Second Green revolution (2004)
It focuses not just on rice and wheat but on cereals, pulses, animal husbandry, sericulture, pisciculture etc. Thus it is a rainbow revolution i.e. overall development of agriculture. Sustainable practices for agriculture are the focus here. It also deals with cropping patterns, crop management, plant protection, checking pre harvest losses and post-harvest losses and integrated pest management.
Since switching to green farming might reduce output, the focus has also been to involve biotechnology in farming.
The original green revolution never tapped the potential of agro processing and so no value addition was there. This lacunae is addressed.
Other challenges addressed here are development of telecommunication facilities, infrastructure for transport and storage, credit facilities and marketing facilities. Thus S.G.R. can make the agriculture take advantage of globalization and also help the rural poor.
WTO : Sanitary and phyto-sanitary measures
The member countries can set their own health and safety standards for food crops entering their regions. But these should be based on scientific grounds. These provision bar countries from setting arbitrary barriers to trade and allow some freedom to developing countries to meet the international safety and hygience standards on food.
The developed nations have used this provision to their advantage and banned unhygienic produce of developing countries. This has caused a trade barrier and developing countries have argued against such measures.
Food processing in India
Indian food processing sector hasn’t developed due to lower urban population (about 30%). The urban population has not yet accepted agro processed food items. The reports of chemicals being used in the processed foods has also reduced the demands for these. Preference of fresh food is also a big hindrance.
Food processing includes a value addition of food products. It increases its shelf life and makes the food more hygienic and improves its quality. This leads to better variety for the consumer, more money for the farmer and increases the value of the economy. The food processing industry also creates a lot of jobs in the sector. India has allowed food processing industries to function without licences and 100% FDI is allowed in these sectors.
Ministry of Food Processing is implementing enabling infrastructure for this sector:
Mega Food Parks: Establish backward (producers to manufacturers) and forward (manufacturers to retailers) linkages. Create infrastructure for food processing and storage. 50% of the project cost is borne by Center.
Declaration of droughts is done by the States.Meteorological
drought and agriculture drought are the two types of droughts.
Meteorological drought is when rainfall is 10% or more less than normal.
Agricultural drought is 20% or more area of State is affected by drought.
Nisarga Runa technology to convert the fly ash from
thermal boilers or ordinary biodegradable waste into weed free manure,
CO2, water vapour and biogas. This technology is developed at Bhabha
Atomic Research Center, Trombay, Mumbai.
Sikkim, Land of flowers, first fully organic State.
E- Waste Handling Rules, 2011
The producer of electronic goods has the responsibility of disposing a product no matter how many times it has changed hands. Manufacturers should setup e-waste collection centers. State Pollution control boards shall have the responsibility of ensuring that the e-waste is treated properly.
Facts and Statistics of e-waste in India.
- Only 4.5% of the e waste is handled.
- Western region generates 1/3rd of the e waste and Mumbai is top in e waste generation.
- e-waste has Antimony, cadmium, lead, mercury, triphenyl phosphate, polychlorinated biphenyl.
Problems of Land ownership in India
In India, land ownership is primarily established through a registered sale deed (a record of the property transaction between the buyer and seller). Other documents used to establish ownership include the record of rights (document with details of the property), property tax receipts, and survey documents. However, these documents are not a government guaranteed title to the property, but only a record of the transfer of property. During such transactions, the onus of checking past ownership records of a property is on the buyer. Therefore, land ownership in India, as determined by such sale deeds, is presumptive in nature, and subject to challenge.
Land records are poorly maintained; they do not reflect the on ground position
Land records consist of various types of information (property maps, sale deeds) and are maintained across different departments at the district or village level. These departments work in silos, and the data across departments is not updated properly
Digital India Land Records Modernization Programme) - seeks to achieve complete computerisation of the property registration process and digitisation of all land records. However, the pace of modernisation of records and bringing them to an online platform has been slow.
THE NEED FOR CLEAR LAND TITLES
High litigation: A World Bank study from 2007 states that some estimates suggest that land-related disputes account for two-thirds of all pending court cases in the country.2 These land disputes include those related to the validity of land titles and records, and rightful ownership. A NITI Aayog paper suggests that land disputes on average take about 20 years to be resolved.
Land is often used as collateral for obtaining loans by farmers. It has been observed that disputed or unclear land titles inhibit supply of capital and credit for agriculture.
CHALLENGES TO ESTABLISHING CLEAR LAND TITLES
The Ministry of Rural Development has undertaken a land records digitisation and modernisation scheme, the National Land Records Modernisation Programme (NLRMP) which seeks to move to a conclusive system of titles. While moving to a conclusive land titling system is desirable, it poses several challenges. Conclusive titles are state guaranteed titles, where the state guarantees the title for its correctness and provides for compensation in case of any disputes.
Firstly, it would require ensuring that all existing land records are accurate and free of any encumbrances
Secondly, it would require that all information around land is available through a single window
Thirdly, with regard to the legal framework, land, registration of documents, and contracts are regulated across both centre and states. Moving to conclusive titling would require amending these central and state laws, and creating a unified legal framework that provides for government guaranteed land ownership.
The entire process of data collection and storage with regard to land records happens at the village, city, or block level. The Committee on State Agrarian Relations (2009) had observed that for updating land records and strengthening land management, there is a need to build capacity among officials at all levels. It recommended that, with the introduction of new technology such as GIS, GPS and use of satellite imagery to update land records, manpower responsible for upgradation, registration, and maintenance of land records should be adequately trained and skilled. This training should include understanding revenue records, surveying, creation of the record of rights and their maintenance. The training exercise should also include development of skills such as computer operation, maintaining records, and data management.
National Wastelands Development Board
The Central Government set up NWDB in 1985 to bring 5 million hectares of wasteland per year under fuelwood and fodder plantation
The setting up
of the Board was the Government's response to the
continuous deforestation in the context of the exploding population
on the one side and the tremendous suffering
to the weaker sections in the rural areas in their search
fuelwood and fodder, on the other.
NWDB works under the overall guidance of the National Land Use and
Waste lands Development Council headed by the Prime
and attempts to reverse the trend of rapid
deforestation and to conserve the already depleted forests by bringing wastelands under tree cover.
Reasons for the disastrous performance of Social Forestry in India.
The so-called spectacular success of social
forestry is actually the success of farm forestry
undertaken specially by the large farmers and encouraged by the supply of free or heavily subsidized seedlings by the Forest Department.
Farm forestry has
become extremely lucrative because of the heavy
demand for wooden poles, and for wood-pulp needed by
paper and rayon mills and for firewood in urban areas.
The richer farmers spontaneously responded to the
commercial incentive of rising wood prices and perceived that "farming fast growing short rotation trees as
a cash crop could be profitable as farming some of the
traditional cash crops."
This has led to the conversion of
large tracts of prime agricultural land to tree fanning
especially eucalyptus plantations. It was a mistake to equate farm forestry with social forestry.
The social forestry programme has completely ignored the primary objective of ensuring for all
rural households and particularly the landless in the
rural areas ready access to fuelwood and fodder for
domestic consumption and, thereby (a) reduce the
amount of time women and children have to spend daily
in collecting fuelwood, and (b) prevent the use of animal
dung as fuel.
As a matter of fact, the social
forestry programme has worsened the energy crisis for
landless labourers and intensified the fodder problem
by encouraging the plantation of hybrid eucalyptus which
even animals do not touch.
The social forestry programme has made no
real attempt to involve the landless in afforestatiom
Properly planned and executed, 5 to 10
million landless families could be settled in these lands,
making it the country's largest land reform programme.
The social forestry programme could have become an
anti-poverty and pro-employment programme.
Instead it actually aggravated unemployment in rural areas.
For instance, a study of the Kolar district in Karnataka
estimated that for each hectare of land shifted from
foodcrops to eucalyptus, there was a loss of about 258
man days of employment per year.
An important failing of social fores
programme is the lack of involvement of poor women
who ought to be the main beneficiaries of this
It is the women who collect fuel for
family every day but the social forestry program
ignored them altogether.
The male orientation of
social forestry projects has turned them into cash generating rather than basic needs generating exercise.
The social forestry programme has also not involved 'tribals' who are deeply interested in the protection and promotion of forests.
PM expressed hope in 2017 that the cooperative movement shall soon extend to the bee-keeping or apiculture sector along with the seaweed cultivation sector. This strategy would be used to double farmers incomes by 2022. This may be used to harness honey cultivation potential of India which is 200 million bee colonies and provide employment to 215 lakh people.
However currently only 1% of this potential is being utilised. The problems with the apiculture industry is that majority of the sector is unorganised and lacks support from government. Pesticide and fertiliser usage affects the ability of bees to smell and this reduces their pollination potential.
The farmers also mistrust the apiculturists and the market potential is low as public doesnt believe the unbranded honey is of good quality. The problems of this sector could be lessened if the government helps them in branding, packaging and marketing their produce
Thus they would get full value for their work. Farmers should also understand the benefits of associating with the api-culturists as it would mean better returns for them too.
Q.In India, markets in agricultural products are regulated under the (UPSC CSAT 2015)
Essential Commodities Act, 1955
Agricultural Produce Market Committee Act enacted by States
Agricultural Produce (Grading and Marking) Act, 1937
Food Products Order, 1956 and Meat and Food Products Order, 1973
Ans . B
Agricultural Markets in most parts of the Country are established and regulated under the State APMC Acts.
The whole geographical area in the State is divided and declared as a market area wherein the markets are managed by the Market Committees constituted by the State Governments.
Once a particular area is declared a market area and falls under the jurisdiction of a Market Committee, no person or agency is allowed freely to carry on wholesale marketing activities.
Q.The terms ‘Agreement on Agriculture’, ‘Agreement on the Application of Sanitary and Phytosanitary Measures’ and Peace Clause’ appear in the news frequently in the context of the affairs of the: (UPSC CSAT 2015)
Food and Agriculture Organization
United Nations Framework Conference on Climate Change
World Trade Organization
United Nations Environment Programme
Ans . C
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