Big Ideas for India Contest: Question 6: What is needed for Indian agriculture to become more productive?

For India to develop, the shift from an agricultural economy to one driven by manufacturing and services is critical. Labour needs to be freed up from agriculture. For that, agriculture needs to become more productive.

Reforms in the agricultural markets are important for increasing farm incomes. There are too many intermediaries – including the government – which drives a very wide wedge between the price the farmer receives and the price the consumer pays. Making the supply chain shorter and more efficient through competition would help producers as well as consumers. Additionally, improved information systems would make price discovery easier and reduce the arbitrage opportunities that attract intermediaries.

So, what are the transformations that Indian agriculture needs? From availability of water and power to ensuring the land under cultivation can produce more, how can Indian agriculture be made more efficient?

Contest Overview.

15 thoughts on “Big Ideas for India Contest: Question 6: What is needed for Indian agriculture to become more productive?

  1. Hi Rajesh

    I doubt the middle-men in the agri sector deserve so much flak. What is their fault? They perform a very useful role in the scheme of things: consolidation and distribution.

    A bad diagnosis will lead to a worse prescription. The root cause of inefficiency in Indian agriculture is small land holding. Unless this is addressed we will always struggle for economies of scale, better return on capital employed and difficulties in new technology adoption.

    My ideas:

    1.Take away land ceilings. Promote large farms and pull people away from being dependent on small farms. Stop romanticising the small farmer – he is doomed!

    2. Cease government intervention on cash crops. Stop banning cash crop export (sugar and cotton mostly, permit toddy tapping for coconut farmers)

  2. Agree with commenter above, before questioning the role of middlemen, we need to understand if their role is appropriately incentivised. If yes, there is no issue there.

    Technology Adoption is key. Government should play a key role in encouraging this.

    Information should be made easily accessible.

    Make interesting possibilities in the field of Agriculture engineering possible, that would encourage youth to study and participate in this field.

  3. Convince small farmers that there is not future in they sticking to their tiny land with a hope that someday they will make enough money.

    Whatever that can produced from a constant areas of land is also constant. Hence over a long term a farmer who has small land and who doesn’t do anything besides producing stuff in his farm will have no option but to commit suicide.

    I feel government can encourage large companies to enter into agriculture. Let them get farmer’s land on lease. Farmer can also become and employee or stake holder for sharing his land with the company.

    A company with huge amount of land can produce more. It can plan better. It can make use of expensive machinery and technology. It can process the raw products better. It can invest money in R&D. Most importantly it can add some long term planning in this sector.

    Currently farmers think only about the year ahead. A large organization will plan for decades. We can then know well in advance which products need to be imported and which to be exported.

  4. The need to provide sound economic infrastructure like water and power to make agriculture productive and profitable should be one of the cornerstones of government’s agriculture policy. The failure of the government today is in getting involved to make this happen. Policy guidelines should be broad enough so that it should not play favorites with technologies. An example of a successful technology neutral policy was the telecom policy devised in 2002-03 by Arun Shourie. This unleashed market forces in that area to accomplish the goals set in that policy. The benefits accruing from that policy are clearly felt today. A forward looking agricultural policy should be formulated by emulating this example. One specific suggestion would be to decriminalize the notion of non-agriculturalists owning agricultural land. This would amongst other things begin the process of dismantling a state mandated caste system where agriculturists are doomed to agriculture by law and non-agriculturists to theirs. This, in addition to the land ceiling act has severely clamped the demand for agricultural land, depressing their market value and hurting the farmer in the process.
    The policy should enable investment of wealth and resources created in the non-agricultural areas of India’s economy (roughly 85%) into agriculture and vice-versa. This would enable agriculture to realize its true potential as a viable economic occupation.
    A useful resource is this program “Policy with Patnaik” that appeared on NDTV for more information on this topic-

  5. An outstanding example of successful agricultural policy worth emulating is that of the Government of Gujarat. Amongst other things, it is based on the people movement’s (Abhiyaan) based model where the government collaborates (instead of imposing a solution) with the local people to create and maintain check dams for storing water. The Gujarat story finds ample mention in the TV program mentioned above.

  6. 1. Information to farmers about what crops to grow, what the prices are etc.
    2. Middlemen menace should be removed so that farmers get most of the profits
    3. Popularize organic farming

  7. Wow!! some of the comments above, tells if why not small farmers be executed because they are small, like as poor should be done the same, as they are poor.

  8. I agree with many of the above.

    Remove land ceilings and tax land instead after taking out a slab for protecting the small farmer. use the proceeds of this tax to scrap all octroi and entrance taxes. India is to be treated as one agriculture market.

    Remove the monopoly privileges for every intermediary. All laws that say the farmer has to sell here only, etc.

    For heavens sake, stop the arbitrary start-and-stop policy with regards exports. If someone is getting a good price abroad, let them sell it there. The agricultural produce is not owned by India. It is owned by the indian who produced it.

    Have organised retail enter in a big way. No need to give any privileges. Just let them buy from any conseting suppliers.

    Stop the cross-subsidization of rail passengers by rail freight. Charge market rates for all the passenger classes in rail. Use the extra money to build more rail.

  9. Incentive Structure –
    Current policy incentives force the agriculture sector to maximize production and get out of the way. Thus longer supply chain reduces the end benefit to the producer.
    To short-circuit the supply chain, small and medium farms need to integrate vertically and cross sell additional products like carbon, water certificates, organic products etc.
    One example of increasing farm incomes are by tying up the rewards to sustainable practices can be seen in this presentation link

    Equivalently Jwar / Bajra should give higher returns to a farmer compared to Basmati rice , for them to shift to these crops. Current policy is forcing farmers to plant paddy and bombard it with subsidized chemicals in order to maximize their incomes and short term gains.

  10. Indian agriculture needs everything that we can give :
    1) Better seeds, fertilizers etc.
    2) Better water supply systems so that there is less dependency on “Rain”
    3) Cheaper loans and freedom from “loan sharks”
    4) Better storage facilities – warehousing/cold storage
    5) Centralized markets for fast selling of produce and hence reduction of losses.

  11. Though many people in India primarily depending on agriculture for thier life, the sector is in bad condition. The reasons are mainly dependent farming, for example unscheduled rain, lack of technology, lack of workers whenever needed, lack of related knowledge and technology, limitation in storage options, poor transport system, uncertain markets and at the end monopoly of mediaters. Farmer as to overcome all these hurdles to see any profit at the end. A solid and effective call for agricultural products gives the farmer an incentive to increase his production beyond the level of subsistence. The achievable prices have to be high enough to cover the costs of production and be a satisfactory reward for the involved efforts. Especially the latter is dependent, among other things, upon the existence of functioning markets. Strong support from all other sectors is very essential to show progress in the filed.

  12. In my opinion for this we can improve the agriculture of India by so many terms like-
    • By improving or setup new seed development center in rural areas. The no of this type of Institutions are less in India.
    • Increase the political will power of India. Because they are not much willing to increase this sector.
    • Reduce the number of mediator; Govt. should take the grin from farmers directly. Means govt. shouldn’t decide the price of the crops because If shopkeepers decide the price of sweet’s which is made by him then why not farmers.
    • Made the plan on actual situations not in air, like the area wise crop development & distribution system.
    • Aware farmers for scientific plantations like Stevie, Jetrofa, etc. If they do it defiantly the become more strong and will also grow.
    Apart from those, we can’t blame always to climate because we are not that much able to change it so plan accordingly and govt. should help in those areas where the chance of occurrence natural disaster is high.
    We are always blaming the old technology , good seed etc. at the time of Before independence we are growing with growth rate of 15 to 16% but after 1947 we are growing hardly 12(in 2002 -2003). Need to analysis those things at that time there is less no of technology and seed development center.
    Need to enhance the will power of farmers to provide good price of their crops, then they keep doing smart as well as hard work and then Indian agriculture sector will grow I am sure.

  13. 1) Water :
    Better forecasting and local information for all farmers.
    More dams. Not the big one but lof of small ones (can also be looked as employment scheme) distributed all over the country.
    Incentives to save every drop of rain that falls. Incentives for efficient water utilization.

    2) Power :
    24 hours and
    Cheap. Yes why provide it with subsidies only for big companies. It must be most cheaper for farmers.
    In every corner of the country (50 years after independence some areas still have not seen electricity should be just shame for every PM that country has seen).

    3) Now this questions also mentions reducing dependence on agri sector and while I am not going to argue against it , I think we need to take different view of this sector and not just see it as one of economic problems. We do want to produce enough food for all people and export but we MUST also produce highest quality food that our farms can produce. Now sometimes this might also mean less in quantity and sometimes it might mean economically the processes are inefficient but we should still do what is best for all in grand scheme of things and not just economy or tons of food.

    4) For 3, we must provide incentives to farmers who produce such food. Also we must encourage/support the research labs which invents new methods of doing so.

    5) National/State/Regional level metadata about everything being harvested in Indian farm land to better estimate production quantity for each food and also help farmers decide what to produce and what not so as to get better price for their crop.

    6) Government must set minimum price for crops produced in each region and protect farmer’s interest. Now some farm products last longer while most do not. Hence agri products are not exactly like other consumer products where market can decide on its own. Some product worth 50 Rs today can be worth 0 Rs in just 2 days after that.

    7) Better incentives to increase crop insurance across the nation( There is always going to be some dependency on nature)

    8) Government protection and encouragement for free market economy and support for direct businesses with farmers. e.g. Big supermarkets and chains when tried to do business at local level lot of people with vested interests opposed it though in the long run it would be best for farmers and consumers. But bad for agents. Such opposition must be curbed by government.

    9) Provide better storage/cooling facilities and also build better roads. Increase rail network.
    It takes forever for food produced in one area to go to all places in country. This must be improved.

    10) Protection for Indian farmers interest in free economy and against global players. As the rich countries provide subsidies to their farmers which Indian farmers don’t get, government must protect its farmers by imposing high taxes for imports.

    11) Better regulation for exports and incentives to start export businesses. Reduce the hurdles to start a new business in this sector.

    12) Loans with low interest rate for farmers and all other low income people depending on farming (loans not just for farming but in general). Government keep giving money to IPL/Car markers which must be stopped immediately and given to farmers instead.

    And in general what is required for agri sector to be most efficient is well known But government must give up control in these sectors and provide high incentives to private players which work on improving efficiency of overall sector.