Emerging Trends in Indian Agriculture: Challenges, Possibilities and Solutions Vijay Paul Sharma, Chairman Commission for Agricultural Costs and Prices (CACP) Ministry of Agriculture & Farmers Welfare Government of India Email: chairman-cacp@nic.in

Presentation Outline Overview of Trends and Patterns in Indian Agriculture: Major Drivers Key Challenges & Opportunities in Indian Agriculture Policy Options and Strategies to Accelerate Agricultural Growth

EMERGING TRENDS IN INDIAN AGRICULTURE

Performance of Agriculture Record Production in 2016-17 Cereals – 250.98 Million Tonnes Pulses – 22.4 Million Tonnes Oilseeds – 32.5 Million Tonnes Record Production of Horticulture Crops Fruits – 92.8 Million Tonnes Vegetables – 175.2 Million Tonnes Source: DAC&FW

Performance of Agriculture Livestock Sector Largest Milk Producer – 155.5 Million Tonnes Fish Production 2nd Largest Producer (10.8 Million Tonnes) Agri-Exports – ₹2.35 Lakh Crores Growth in GVA from Agriculture & Allied Sectors – 4.9% in 2016-17 (0.7% in 2015-16)

Structural Transformation Still Single Largest Employer in the Economy????? Employs about half of Workforce 138.3 Million Farming Households Source: CSO (2014)

Changing Composition of Indian Agriculture: Rising Importance of High-Value Sub-Sectors

VALUE OF OUTPUT FROM AGRICULTURE TE2014-15 TE1993-84 High-Value: From <40% to about 50% Source: CSO (2016)

Major Drivers of Change: Demand-Supply

Drivers of Change Higher Disposable Income Technology & Infrastructure Rising Demand for High-Value Agri. Products Higher Disposable Income  Expenditure on Non-Food Items Drivers of Change Changing Demographics 2/3rd Population <35 yr ing Urbanization Technology & Infrastructure Increasing Trade Opportunities

Composition of Consumer Expenditure: Rural Source: NSSO (2013)

Composition of Consumer Expenditure: Urban Source: NSSO (2013)

Diversification of Indian Diets: Rural Consumers High-Value: From <40% to >50% Source: NSSO (2013)

Diversification of Indian Diets: Urban Consumers High-Value: From about 50% to >60%

Expanding Agricultural Trade Opportunities Source: GoI (2017)

MAJOR CONSTRAINTS FACING INDIAN AGRICULTURE

Major Constraints/Issues Low Value-Addition & Poor Post-Harvest Infrastructure ing & Fragmenting Farms Competition for Land Major Constraints/Issues Rising Imports of Edible Oils & Pulses Low Prices Availability of Labor & Rising Wages Poor Access to Technology, Inputs, Services & Markets Land Tenure Systems Lack of Irrigation Facilities High Risks; Low Productivity; High Yield Gaps Climate Change?? Institutional Bottlenecks

Marginalization of Farms & Swelling Bottom: Challenge of Linking Smallholders with Modern Markets/Food Chains Av. Size (ha): 2.28 1.84 1.55 1.33 1.15 Source: GoI (2014)

Farm Size: Economic Viability Source: GoI (2014)

Competition for Land: Agriculture & Non-Agri. Uses Source: MOA&FW

Lack & Inefficient Use of Irrigation Facilities Low Coverage of Irrigation (48%) Maharashtra (18%); Jharkhand (15%) Punjab (99%), Haryana (89%) Inefficient Use of Water Resources Low Cropping Intensity - 141% <120% in Odisha, Jharkhand, Chhattisgarh >185% in Punjab, Haryana, West Bengal Source: GoI (2016)

Low Growth & High Fluctuations in Agriculture Source: CSO (2017)

LOW YIELDS & HIGH YIELD GAPS: Role of Technology & Extension Services

High Yield Gaps - Wheat Source: ICAR & DAC&FW

High Yield Gaps - Gram Source: ICAR & DAC&FW

High Yield Gaps - Tur Source: ICAR & DAC&FW

High Yield Gaps – Rapeseed & Mustard Source: ICAR & DAC&FW

LACK OF AWARENESS ABOUT MSPs & QUALITY NORMS (FAQs)

Low Awareness about MSP Less Coverage of Procurement Operations (Few States/Crops) Market Prices < MSP in some Crops/ Regions Source: NSS Report No.573: Some Aspects of Farming in India, 2012-13

Paddy & Wheat Production & Procurement: TE2016-17 Rice State Share (%) in Proc as % of Prod. Prod. Proc. WB 14.3 5.3 12.0 UP 11.8 6.6 18.5 Punjab 10.7 26.9 83.0 Odisha 7.2 9.7 44.7 A.P. 7.0 11.1 52.0 Bihar 6.4 3.9 19.9 Chhattisgarh 6.1 11.0 59.5 TN 6.0 2.3 12.4 Assam 4.9 0.1 0.6 Haryana 8.1 68.5 MP 3.6 2.8 26.2 TG 3.2 8.3 85.6 Karnataka 2.9 1.5 Jharkhand 0.3 3.8 All India 100.0 32.9 State Share (%) in Proc as % of Prod. Prod. Proc. UP 28.2 6.1 6.4 MP 19.1 21.8 33.9 Punjab 17.1 41.6 72.1 Haryana 12.0 25.3 62.2 Rajasthan 10.3 5.1 14.6 Bihar 4.9 0.0 All India 100.0 29.6 Source: FCI (2017)

Rice Price Trends: Prices Below MSP in Eastern States Source: http://agmarknet.gov.in/

Market Prices Below MSP: Tur Source: http://agmarknet.gov.in/

Market Prices Below MSP: Mustard Source: http://agmarknet.gov.in/

Rising Imports of Pulses & Edible Oils

Issues in Capital Formation & Agricultural Credit Slow Down in Capital Formation in Agriculture Declining Share of Public Investment Significant  in Credit Flow to Agriculture (Rs. 1.25 Lakh Crore in 2004-05 to 9.6 Lakh Crore in 2016-17 Interest Subvention Scheme – Crop Loans Only Declining Share of Investment Credit Regional and Inter-Farm Inequalities

Decline in Gross Capital Formation (at 2011-12 Prices) Source: CSO (2016)

Share of Public & Private Sector in Capital Formation Source: CSO (2016)

Share (%) of Crop Loan & Term Loan in Agricultural Credit Source: NABARD (2017)

Agency-Wise Share (%) of Credit Flow to Agriculture Source: NABARD (2017)

DRIVERS OF GROWTH IN FARM INCOME

Doubling Farmers Income Improve Crop Productivity: Technology & Extension Reduce Cost of Cultivation: Rational Utilization of Inputs  Cropping Intensity (141%) Irrigated Area & Efficiency (48%) Remunerative Prices to Farmers Reduce Post-Harvest Losses & Wastages Diversification to Farm (Horticulture, Livestock, Fisheries) & Non-Farm Activities Value-Addition & Agro-Processing Divert Surplus Labour from Agriculture: Skill Building

III. POLICY INSTRUMENTS FOR AGRICULTURAL DEVELOPMENT The Four Pillars

The Four Pillars of Agri. Development Technology Institutions Infrastructure Incentives Strong R&D HYV Seeds Fertilizers Farm Machinery Irrigation Water Management Value-Addition Post-harvest Management ………….. Extension Services Land Reforms Rural Financial Institutions Risk Management Instruments Market Information & Intelligence Investment Basic Rural Infrastructure Roads, Power, Communication Irrigation Post-Harvest & Market Dev Agro- processing ……….. Price Policy: MSP, Proc. & PDS Subsidies: Inputs & Services Trade Policy ……………. INNOVATIONS

Recent Initiatives Focus on Irrigation and Water Management Pradhan Mantri Krishi Sinchai Yojana (PMKSY): Har Khet Ko Pani; Per Drop More Crop (Micro-Irrigation), Water Conservation, AIBP Improve Crop Productivity & Increase Cropping Intensity Improving Soil Productivity: Soil Health Card Scheme Need to Promote Balanced Use of Fertilizers (N:P:K) & Micro-Nutrients Risk Management Pradhan Mantri Fasal Bima Yojna (PMFBY): Low Premium & More Coverage; 40% of Cropped Area to be Covered

Recent Initiatives Organic Farming: Paramparagat Krishi Vikash Yojana(PKVY) Agricultural Market Sector Reforms APMC Act Amendments – Establishment of Private Mandis; Delisting of Perishables; Contract Farming, Direct Producer-Consumer Linkages; Unified Single License and Single Point Levy of Market Fee e-National Agriculture Market (e-NAM) Dairy Processing and Infrastructure Development Fund: Corpus of Rs. 8,000 crores over 3 years

Recent Initiatives Increased Flow of Credit to Agriculture Target for 2017-18: Rs. 10 Lakh Crore Interest Subvention Scheme for Crop Loans National Food Security Mission Rice, Wheat, Pulses, Jute, Sugarcane, Cotton, Coarse Cereals; 60% Allocation for Development of Pulses National Mission on Oilseeds & Oil Palm (NMOOP) Mission for Integrated Development of Horticulture Digital Agriculture: Use of ICT - Kisan Call Centres, DD Kisan Channel, Radio, …….

POLICY PRIORITIES TO ACCELERATE GROWTH

Policy Priorities Improve Crop Productivity Increase in Public Investment in Agri. R&D, Extension, Rural Infrastructure, Post-harvest & Market Infrastructure including Storage & Processing Bridge Yield Gaps Accelerating Pace of Reforms in Laws related to Land Markets and Marketing of Agri. Products Promotion of Farmers’ Organization/Groups, SHGs Effective Price & Procurement Policy Create Awareness about MSP & Quality Norms Effective Participation of States - Decentralized Procurement Effective Use of Price Stabilization Fund Scheme

Policy Priorities Rationalization of Pricing of Inputs Irrigation Water, Power, and Fertilizers (Imbalanced use of N:P:K and Micro-nutrient Deficiency) Address Distributional aspects of Agri. Credit Access to Small and Marginal Farmers & Poorer Regions Strengthen Rural Branch Network Significant Regional and Inter-class Inequalities Better Targeting of Input Subsidies – Without hurting Small and Marginal Farmers

Thank you !