1. Revitalizing Agriculture in Andhra Pradesh: Role of High-Value Commodities P. Parthasarathy Rao ICRISAT IFPRI-ICRISAT Collaborative Project July, 2005

2. Presentation Andhra Pradesh: a snapshot Agriculture sector: a silent crisis Mapping of High-Value Commodities (HVCs) Policy interventions Conclusions

3. Andhra Pradesh: A Snapshot

4. Andhra Pradesh, India

5. Andhra Pradesh: fast facts Population: 76 million Rural population: 63% Agriculture GDP: 25% 3 agroclimates: dry, semi-arid, and coastal Irrigated area: 45% Front-runner in macro-economic reforms World Bank: “Andhra Pradesh is a leader in economic reforms but not yet in economic growth”

6. Andhra Pradesh is catching up with other developed states

7. Agriculture Sector: A Silent Crisis

8. Andhra Pradesh farming sector: Facets of the crisis Yield stagnation in traditional crops –Food self-sufficiency achieved –Accounts for 35% of rice procurement in India Relentless pressure on natural resources –Declining water tables –Unsustainable rice cropping Excessive use of inputs –Fertilizers, pesticides, water, electricity Newer pressures from trade liberalization –Prices, quality, sanitary and phytosanitary (SPS) measures Rising rural unemployment Decline in rural per capita incomes Inadequate access to formal credit Poor rural and marketing infrastructure Profound disquiet in rural areas –AP has dubious distinction of highest farmer suicides –High levels of out-migration to urban areas –Highest incidence of child labor Chandra Babu Naidu’s Government voted out of power in 2004

9. Annual compound growth rates of agriculture sub-sectors and GDP, Andhra Pradesh (1993-94 prices)

10. Diets trending away from basic cereals

11. Mapping HVCs

12. Share of high value commodities: Andhra Pradesh to All India

14. Composition of the value of agricultural production by level of diversification; Andhra Pradesh, 1999-2001 (1980-82 prices)

15. Districtwise HVC share in total value: Andhra Pradesh, Distribution by HVC share Change in share, 1982 to 2001

16. Indicators High (Zone 1) Medium (Zone 2) Low (Zone 3) Population density (No./KM 2 )319291236 Urban population (%)3722 No. of small land holders (%)828478 Irrigated area (% to GCA)345936 Feed availability (t/livestock unit) 1.32.01.6 Rainfall (mm)7931031847 Selected indicators by level of diversification; Andhra Pradesh, 2001.

17. Income from HVCs - Kurnool, AP: 2002-03 (household survey) Rainfed Irrigated

18. Employment effects of HVCs, AP, 2002-03 household survey (average)

19. Factors determining diversification : All HVCs, Vegetables and Poultry meat & eggs: Tobit model results, 1999-2001

20. HVCs: Challenging policy terrain Marketing –Domestic –Export Processing Contract farming –Case study: Gherkins Credit Infrastructure

21. Price spread: selected markets, Andhra Pradesh, 2004 Vegetables Fruits

22. Agri-Export Zones (AEZ) in Andhra Pradesh

23. Share of food processing industry by type: Andhra Pradesh

24. Contract farming: a new frontier

25. Distribution of priority sector credit Andhra Pradesh 2003-04 Crop sector Priority sector

26. Distribution of credit by diversification zones, Andhra Pradesh, 2003-04

27. Policy Interventions

28. Pro-HVC policy interventions Pricing water Building efficient marketing networks –Implement Model Marketing Act –Dismantling government monopoly Increasing investments in infrastructure – Roads, cold storage, bulk coolers –Foster improved linkages between rural-urban markets Emphasizing vertical integration thru’ contract farming –Increase enforceability –Harness private sector innovations in food processing and marketing Adding value thru’ processing –Simplify procedures for setting up food processing industries Enhancing access to formal credit –Expand crop/rainfall insurance schemes Enabling public-private partnerships –Extension