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Resource centre on India's rural distress
 
 

This Decade for Agriculture by Ashok Gulati

July is a month when we need to remind ourselves how reforms have changed India since 1991, from vulnerability to resilience, whether to external shocks (say, oil) or internal ones (droughts).

In 2009, we witnessed the worst drought since 1972, yet the agricultural growth rate stayed positive (0.4%), nor did we resort to any major cereal imports. And in 2010-11, we are likely to have a record harvest of 241 million tonnes (mt) of grain and public sector stocks of 65 mt. This heroic achievement is presumably the result of the doubling investment in agriculture from less than 10% of agri-GDP in 2002 to more than 20% of agri-GDP in 2010. Let us celebrate this resilience and new-found confidence and salute the duo of Narasimha Rao and Manmohan Singh and their teams, who worked to bring about this massive change.

But big challenges remain: ahigh fiscal deficit, inflation, deficient governance, deficient infrastructure, remnants of crony capitalism in some sectors, recidivist visions of the control raj. While there has been a seachange in the services sector, as also in the manufacturing after several hiccups, agriculture continues to underperform.

The sector cries out for major reforms, from marketing to investment and institutional change, especially in water management, new technologies (seeds), land markets and creation of efficient value chains. This needs to come uppermost in the reform agenda during the Twelfth Five-Year Plan, if we have to reduce poverty faster than has been the case so far.

In agriculture, normally our Five-Year Plans target increasing production of almost everything. True, with rising incomes and population, India will perhaps need more of most of things. Yet, a strategic vision must factor in three important elements: (1) India’s comparative advantage; (2) efficient markets at home and/or abroad; and (3) environmental sustainability. Plan schemes have to fit within this three-dimensional architecture. We often forget that besides the farmers and the government, there are several other actors in agriculture, especially private companies and NGOs working at the grassroots. These various stakeholders should come together in an institutional framework that can incentivise and unleash a new change in agriculture. To see how, we need to look at the big-bang achievements of the last decade.

Three biggest successes in agriculture during the last decade seems to be in cotton, maize and basmati rice, each one of these successes giving the nation a benefit of almost . 10,000 crore each year. Cotton production more than doubled in the country, from 16 million bales to about 34 million bales, between 2002-03 and 2010-11, driven by Bt cotton. Today, almost 90% of cotton area, including millions of small holdings, is under Bt,. The seeds of this change came from a large multinational company (Monsanto), and today there are more than 30 companies in India producing and multiplying those seeds in an extremely competitive environment. They have the potential to change the cotton scene even in Africa! Hybrid maize is another success story driven again largely by the private sector multinationals, and then multiplied by Indian companies, taking maize production from 12 million tonnes in 2000-01 to 20 million tonnes by 2008-09. Indian public system (ICAR) also has some good varieties, but it needs a better strategy to multiply and reach the farmers. So far, almost 90% of the game is with the private sector, domestic and multinationals. Pusa Basmati 1121 is yet another big hit in the last decade, taking basmati exports to almost . 10,000 crore. It was invented in the public sector (IARI) and then multiplied by the Indian private sector (KBRL) in a perfect example of publicprivate partnership.

These three agri-cheers in the last decade yield an important lesson. That future breakthrough technologies in agriculture will perhaps come increasingly from the private sector (foreign or domestic), and that India’s private sector has its strength in multiplying those technologies and reaching millions of farmers (big and small) in the fastest possible way. But the private sector is driven by incentives (profits), and to see that farmers also gain reasonably well from these technologies, government has to facilitate and regulate the process as a fair referee. This is where the question of “deficit of trust” between the government, private sector, and farmers comes in. We need to innovate institutions/practices such as producers organisations to negotiate with large companies, farmer equity in these companies or purchase by the government of new technologies from the private sector for transfer to some others for distribution. It is here that NGOs working in rural areas at the grassroots can be of great help in building these “bridges of trust”. It needs a clearer vision, a positive mind to recognise our strengths in the private sector, and finding ways and means to tap that potential in a manner that can also enrich the farming community. Only then Indian agriculture can turn around, and we can hope for 5-6% growth in agriculture in a sustainable manner for at least a decade. That would be the most powerful engine for poverty reduction. Can the second phase of economic reforms take up this challenge?

(The article was co-written with Kavery Ganguly, an independent consultant on agri issues)