06

Agriculture has always been the centre of attention for political parties and academicians in India. The sector generates less than a fifth of gross value added yet provides livelihood to more than three-fifth of the population.

India has done well to increase its gross domestic product, to improve infrastructure or to develop a booming service sector since independence, but the real transformation has come in its flourishing agriculture that provides livelihood to three-fifths of its population. The devastating Bengal famine happened just four years before Independence laying bare the pitiable state of Indian agriculture.

And if analysts later claimed that it was largely a man-made famine, the fact remains that the country was suffering from a severe food shortage. Agriculture thus, was given prime importance with the beginning of the planning era and India has come a long way since then; from a food deficit country it has become a food surplus nation now.

India's foodgrains production rose more than six times in seven decades from 50.82 million tonnes in 1950-51 to 315.72 million tonnes in 2021-22. As per advanced estimates by the government, the total foodgrains production in 2022-23 would be a record 328 million tonnes, which is higher by nearly 30 million tonnes compared with the previous five years’ (2017-18 to 2021-22) average production.

India is the world's second largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit and cotton. India is also a leading producer of spices, fish, poultry, livestock and plantation crops. It is the world's largest producer of milk, pulses and jute.

The importance of agriculture was a testimony during Covid-19 days. While bumper stocks allowed the government to distribute foodgrains for free or at subsidised prices to distressed millions, higher farm sector growth helped the economy from falling down further. The World Bank in its ‘Global Economic Prospect’ report recognised the role of the farm sector in India and said that it was the only sector that displayed growth resilience as it had largely remained unscathed during the lockdown. 

That was during Covid-19 days but this year too agriculture is expected to compensate some of the loss of other sectors, which are all projected by most rating agencies and development institutes to decelerate. NITI Aayog too has claimed that the agriculture sector could be a silver lining for the Indian economy in the current year and has projected the sector to grow at more than 3%.

This is important as the world at large is feared to face food shortage in 2023. According to the Global Report on Food Crisis 2022 Mid-year Update of World Food Programme, up to 205 million people are expected to face acute food insecurity and to be in need of urgent assistance in 45 countries. This is the highest number recorded in the seven-year history of the report.

In 2021, according to the USDA’s Economic Research Service, 33 million Americans lived in food-insecure households. In the summer of 2022, 11.5% of people surveyed by the Census Bureau said that people in their household sometimes or often did not have enough to eat, up from 8.2% the year before.

Foodgrains production records another high in 2022

And if higher price of foodgrains is a cause of concern in India, neither availability nor supply chain disruption has any bearing on the market. This was largely possible because of the steady rise in foodgrains production in the country. 

Backed by a good monsoon, foodgrains production comprising rice, wheat, coarse grains and pulses was estimated at 315.72 million tonnes in 2021-22 - up by nearly 30 million tonnes in three years since 2018-19. Foodgrains production is predicted to touch another record high of 328 million tonnes in 2022-23.

Export of farm products rise

With the growth in production and rising surplus foodgrains, India has steadily increased export of its agricultural products. As per the DGCI&S data, the country’s agricultural products exports grew by about 20% in 2021-22 to touch $ 50.21 billion. The growth rate is significant as it is over and above the growth of 17.7% recorded in the previous year despite unprecedented logistical challenges in the form of high freight rates and container shortages.

Rice is the largest exported agricultural product from India and accounted for about a fifth of the total agricultural exports. In five years, between 2016-17 and 2021-22, rice exports have grown by about 69% from $ 5.73 billion to $ 9.67billion. Wheat exports were valued at $ 2.1 billion last year against $ 67 million in 2016-17. 

The rise in the export of agricultural and processed food products is the outcome of the centre's initiatives for export promotion of agricultural and processed food products such as organising B2B exhibitions in different countries, exploring new potential markets through product-specific and general marketing campaigns by the active involvement of Indian Embassies.

Farm mechanisation spreading

The long-term growth in foodgrains production was driven largely by introduction of high yielding varieties, higher uses of fertilizers and rising farm mechanization. With technological progress and improvement in agricultural sciences, that has given better knowledge of the uses of inputs mechanisation has become a big issue world over. Mechanisation improves efficiency of man power, reduces input costs, increases the net sown area by undertaking timely operation, improves output by adopting crop diversification and reduces harvesting and post-harvesting losses. According to studies by the Food and Agriculture Organisation of the United Nations (FAO) farm mechanisation can save inputs like seeds up to 15-20%, fertilizers by 15-20% and can increase cropping intensity by 5-20%. It increases the efficiency of farm labour and reduces the time of agricultural operation by 15-20%.

Sale of tractors and power tillers may be used as an indicator of farm mechanisation. The Indian tractor industry is the largest in the world accounting for one-third of the total global production. According to Economic Survey 2021-22, the farm equipment market in India is estimated at $ 8.8 billion in 2017 and it is expected to reach $ 12.5 billion by 2022. The tractor market is expected to grow at a CAGR of 7% by 2022.

True, India is way below the developed nations in mechanising its farm as it has begun late, but it is catching up fast, the level of mechanisation has seen strong growth through the last decade. At about 40-45%, farm mechanization in India is low compared to 95% of the US, 75% of Brazil, 57% of China. The farm power availability on Indian farms has grown from 1.47 kW/ha in 2005-06 to 2.76 kW/ha in 2020-21 indicating increase in the use of mechanised inputs.

The level of farm mechanization varies greatly from region to region. Northern states such as Punjab, Haryana and western Uttar Pradesh have high levels of mechanisation (70-80% overall; 80-90% for rice and wheat) due to high productive land as well as declining number of agriculture workers and also  support by state governments.

The western and southern states in the country have a lower level of mechanisation due to the smaller and scattered land holdings. As a result, in many cases, mechanisation has been uneconomical leading to lower development.

New seeds developed

If use of fertilisers and better farm techniques helped India’s agricultural production to grow at a higher rate, the introduction of high yielding varieties of seeds revolutionised the farm sector. In fact, innovations of high yielding varieties of seeds have been the most important. M S Swaminathan, known as the architect of the Green Revolution, convinced the government to import 18,000 tonnes of Mexican dwarf seeds and the rest is history.

Indian scientists took up the exercise from there to breed new seeds to suit regional, climatic and soil textures. Major emphasis was to develop new varieties/hybrids tolerant to various biotic and abiotic stresses with enhanced quality. Recognising these objectives, the National Agricultural Research System of India has produced significant results in terms of mechanisation of agriculture and development of climate resilient technologies and high yielding varieties (HYVs) of seeds, etc. For example, the Indian Council of Agricultural Research (ICAR) during 2020 and 2021 notified/released a total of 731 new varieties/ hybrids of field crops and 98 of horticultural crops.

The farm sector in India is undergoing major transformation to suit the changing ecological and environmental circumstances. But amid these changes the sector needs to raise its production continuously to feed the rising millions. This requires an optimal usage of available farm inputs, be it fertilizers, HYV seeds, irrigation or mechanization.

Agriculture’s share in GVA stagnates

What is disturbing, however, is that even after growing at a higher rate than the total GVS, agriculture’s share in total has remained the same for years. In fact, the share has hovered at around 18% during the last ten years, some fluctuations, notwithstanding. Conventional economic wisdom suggests that with economic development, the share of the primary sector in national output declines. But in India the decline seems to have been rather sharp, especially since the share of population depending on it has not gone down proportionately.

The question is: Why has agriculture’s share in the national economy gone down so sharply? Is it because other sectors have grown at a higher rate? Or, agriculture has failed to cope with the national economic growth? The answer is both, but the main reason probably is the apathy of the policy makers.

The unremunerative prices of farm produce seem to be the major cause of low earnings. This is reflected in the steady decline in the share of agriculture in GVA. This happens despite considerable rise in agricultural production. This was partly because the GVA is calculated in monetary value and the growth in crop production is not fully reflected due to poor prices of agricultural produce.

Farmers’ income does not rise

The main sufferers of this dichotomy are the farmers, especially, the small and marginal farmers who are left to the mercy of the market forces in selling their produce. In fact, when one thinks of Indian agriculture two images invariably come to mind; one that of a bare-footed farmer ploughing on a dry field and the other is that of FCI warehouses overflowing with foodgrains. This dichotomy of deprivation amid abundance portrays the true picture of Indian agriculture. Agricultural production is growing but benefits of growth are not reaching the farmers despite repeated promises, like doubling farmers’ income.

The government has promised to double the farmers’ income by 2025. It has announced a host of schemes for the development of the farm sector and has also increased the minimum support prices (MSP) of agricultural commodities at regular intervals to address farmers’ immediate problem.

Granted, the government revises the MSP upward on a regular basis but since they do not fully reflect the cost structure of farming, farmers are not benefited much from these revisions. According to the National Sample Survey, the estimated average monthly income per agricultural household has increased from Rs. 6,426 in 2012-13 to Rs.10, 218 in 2018-19. The real increase will be far less when price rise is taken into account.

Maybe, higher prices of farm produce would raise farmers’ income but that would not give a long-term solution. Indian agriculture needs a definite strategy to develop its land, extend mechanization, manures and HYV seeds to raise yield rates. Low productivity is probably the main problem of Indian agriculture. 

The lower yield has been affecting the overall production leading to a steady decline in agriculture’s share in GDP. The yield rate of foodgrains production during the last ten years, between 2011-12 and 2021-22, has increased by just 16% or by an average 1.6% a year. In actual terms, it has increased by 34 kg a hectare from 2,078 kg/ha to 2,419 kg/ha during this period. Yield of rice has increased by 40 kg per hectare annually to 2,800 kg in 2021-22 and wheat by 33 kg to 3,507 during this period.