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Producing what buyers want with focus on nutrition and enabling policy prescriptions can make farming a permanently rewarding profession

By Author  |  Dr Ramesh Chennamaneni  |  Published: 21st Jun 2020  12:01 amUpdated: 20th Jun 2020  11:12 pm
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Telangana has launched a comprehensive agriculture policy by introducing new cropping patterns, under which farmers will have to cultivate crops in demand as recommended by the government. The State already provides free electricity, investment support, free insurance, increasing irrigation, crop procurement and other input facilities as well as extension services to its farmers. For the first time, small and marginal farmers have started producing large quantities of agricultural output for profitable marketing.

As traditional monoculture of rice was leading to marketing problems and there is ample demand for other crops, a way forward towards sustaining farm income was designed. This policy of introducing new cropping pattern, among others, is aimed at making farming a permanently profitable profession and promote Telangana’s agricultural products at home as well as in other parts of India and the world market.

Though the initial focus is correctly on cropping pattern, thereby kicking off a win-win strategy, a comprehensive agriculture policy will have to address step by step a number of other related challenges in future, for example, the issue of reforming India’s domestic support policies, safeguarding sustainable agriculture and exploring the export potential for agriproducts.

Cropping Pattern

Agri-food systems are undergoing rapid transformation. Increasing concentration on processing, trading, marketing and retailing is being observed in all segments of production-distribution chains across regions. The traditional way in which food is produced, without farmers having a clear idea in advance of when, to whom and at what price they are going to sell their crops, is being replaced by practices, which resemble manufacturing processes, with far greater coordination between farmers, processors, retailers and others in the supply chain. Farmers have to increasingly produce to meet the requirements of buyers rather than relying on markets to absorb what they produce.

As incomes increase, food consumption is changing. Demand for fruits and vegetables (80% from outside), animal products and oilseed crops (40% from outside), red gram (70% from outside) is growing and farmers have to diversify production for profits. Cropping pattern in agriculture too has to transform from the point of view of nutrition security. This is again a win-win strategy as a change in cropping pattern has the potential to tap the demand gap for nutritious food, fully explore export possibilities, increase soil fertility, reduce investments in fertilizers and pesticides apart from containing crop damages by animals.

Therefore, this strategy of linking farmers to markets, the intervention model to achieve remunerative prices for agriculture products proposed by the Telangana government through its own corporation is highly necessary and will have to be strengthened to tame our highly imperfect conventional market.

On the production front, the choice of product to grow must take into account not just market demand but also farmer location, social structure, infrastructure, farm size, suitability of the land, land tenure situation, farmers’ assets, capacity to establish new enterprises, etc. Consideration of the risk that farmers may face in diversifying into new products is important as well as the technologies promoted by the government should be viable for the type of farmer. Research, technology transfer studies and extension guidelines will have to play a key role in this process.

Nutrition Security

Food security denotes the availability and the access of food to all people; whereas nutrition security demands the intake of a wide range of foods, which provide the essential nutrients. Despite historically high levels of food production in India, undernutrition and micronutrient deficiencies persist. According to a recent National Nutrition Survey, Telangana finds itself saddled with a large number of cases of stunting, underweight and anaemia, and Vitamin A deficiency among children and adolescents. About 29% of the children below five years in Telangana have stunted growth while the national average is 34%. Close to 33.4% of children in India below the age of five are underweight, while in Telangana it is 30%.

Thus, improving the health of the people requires improving their nutrition through more nutritious food. This is where agriculture plays an important role not only as a means of producing diverse, nutritious, safer food that is affordable but is also the pathway to improved household access to nutritious food, improved income and women’s empowerment.

Strengthening the agriculture-nutrition pathway when considering food system development in Telangana is key to addressing these challenges. The main issues now in discussion are ensuring agriculture is represented in our nutrition policy so that cultivation technologies for fruits and vegetables, animal products and oil crops are developed; creating market-based solutions for producers by creating the incentives that are aligned with choices of nutrition-dense products such as vegetables, fruits and animal products near urban centres; creating incentives for consumers through price and non-price mechanisms; and addressing safety and other issues along the value chains for healthy and fresh foods.

Support System

There is ample evidence today that ineffective and inefficient implementation of Centre’s spending in the form of input subsidies, general services or support to consumers through the food distribution system has indeed led to a negative amount of total support to the farmer.

Minimum Support Price or MSP, apart from export restrictions and prohibitions in certain times, is an important factor contributing towards depressing the domestic prices of agriculture. While the system covers 24 crops, it only involves significant purchases at guaranteed prices for rice, wheat and cotton. Apart from Telangana, where a 100% purchase by MSP is guaranteed, the overall India’s picture of just 6% of farmers participating reflects its inefficient implementation.

Input Subsidies constitute the largest category of government disbursements, with roughly Rs 2 lakh crore. The largest input subsidies are provided for fertilizers, electricity and irrigation, and, to a lesser extent for seeds, machinery, credit and crop insurance. While these transfers have played a critical role in increasing production, their indiscriminate use without considering natural resource management is contributing to unsustainable agriculture and fiscal deficit. The most striking example of it is agriculture in Punjab. While intensive farming played havoc with soil fertility, necessitating application of more chemical fertilizers year after year — resulting in a decrease of real output, excessive use and abuse of chemical pesticides — has contaminated the food chain.

Consumer Subsidies are implemented through PDS in India. While PDS provides a means to strengthen consumers’ purchasing power, the main weakness of the system relates to the high level of ‘leakage’ of foodgrains – due to poor targeting, wasteful management of stocks or, in certain cases, outright corruption. Purchases made to support the MSP have also tended to overshoot requirements, leading to the accumulation of stocks far in excess of the norms.

From a policy perspective, correcting the critical inefficiencies that contribute to depressing producer prices remains a priority. In this respect, the objectives of achieving simultaneously affordable food for poor consumers and remunerative prices for producers are indeed a challenge for the government. A possible way forward consists in moving from output and input subsidies towards less trade-and-production-distorting forms of support, including direct payments to producers as has been initiated for the first time by the Telangana government in the form of Rythu Bandhu.

As far as consumer support is concerned, a possible option would consist of moving from an in-kind food distribution to cash transfers to enhance the purchasing power of the target group. This could help reduce the costs of stockpiling and food distribution while addressing leakage and waste. For example, Telangana has initiated a move wherein consumer preferences of rice varieties of the local people within PDS are taken into account by encouraging the cultivation of such varieties for local consumption. The data network to identify the needy consumers for eventual cash transfers should be developed comprehensively as has been done through ‘Sakala Janula’ survey in Telangana.

Agriculture Exports

In contrast to policies of the US and Europe where farmers were offered heavy subsidies to export their produce in the past, policymakers in India used restrictive export policies for most of the agriproducts to keep domestic prices low. To compensate farmers, the government introduced MSP and input subsidies, especially for rice and wheat leading to their excessive cultivation.

One consequence of such an approach is that we are far from being secure in the field of edible oils among a number of other products such as pulses, vegetables and fruits. India produces less oilseeds and imports about 65% of its annual requirement of 23 million tonnes at a cost of Rs 75,000 crore and by 2030, it will be importing 70% of edible oils with about Rs 1 lakh crore. To make amends, certain policy reforms are necessary, including:

• Phasing out the built-in consumer bias (that is anti-farmer) in agri-policies

• Creating business space for private players (including Farmer Producer Organisations) to have integrated markets

• Using income policy approach (through direct cash/benefit transfer) to protect both poor        consumers and small farmers

• Creating a predictable and stable agri-trade policy and streamlining high Customs duties on India’s export-competing products like rice

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(The author is MLA and Humboldt Expert in Agriculture, Environment and Cooperation)

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