The agriculture sector is one of the mainstays of the Indian economy. Therefore, there are great expectations of the sector from the new finance minister for the upcoming Budget. There are several issues to be addressed right from doubling farmer’s income, to structural reforms to make it a profitable business.
New age farming practices has to be at the center of all agricultural reforms. In most of the cases, farmers do not get beyond 20-30 % share in the profits, due to commoditised approach to farm produce. Organic farming has the potential to change the face of agriculture in India today. Currently, we have 1.2 million ha of land under organic production, which comprises only 0.7% of total area under cultivation. This produces around 1.24 million tons of organic produce. The global organic production market is currently valued at $82 billion.
However the Indian market is quiet nascent amounting to only 0.66 billion. There is a huge opportunity for India in organic farming. However, regulations, production and markets should be aligned for India to fully realise its potential. Government could play a key role in boosting this by helping farmers switch over to organic farming from the conventional method. The government needs to increase the funds from ₹200 crores to around ₹1,500 crores to target 0.5 million farmers through partial support from government during the 3 year conversion phase.
Innovation is key to give the farming sector a new lease of life. Government should focus on promoting entrepreneurship, developing and incubating startups, look at new business models to bring about a transformation in the sector. Policy reforms such as removal of angel taxation has been a supportive step to develop the ecosystem. Further sops like extended tax holidays, rebate on bank loans, creation of venture capital funds etc can be undertaken for supporting the startups to come at par with the mainstream businesses. Further, each state needs to develop incubation and start up infrastructure for supporting the innovators coming from small towns/ schools/ colleges. Creation of a corpus fund of ₹500 crores for such initiatives can help develop an institutional mechanism for the startup ecosystem across the country.
Depleting ground water resources is a major area of concern for the sector. The total ground water resources of India stood at 433 billion cubic meter/ year in 2016. Surprisingly, our ground water usage is more than the combined ground water use of U.S. and China put together. Around 60% of irrigated agricultural land is dependent on groundwater usage only. As per a study done by NASA, the groundwater levels in India is depleting at a rate of 1 feet with every 3 years which is a grave concern for the future of agriculture.Therefore, the sector needs sustained focus on replenishing ground water resources and creation of irrigation facilities for efficient use of water by the farming community. The existing Pradhan Mantri Krishi Sinchai Yojna (PMKSY) needs to be strengthened for creation of the necessary irrigation infrastructure.
Small farmers often face logistics and storage issues. Currently, we do not have adequate integrated pack houses, refer trucks, bulk and distribution centers and ripening chambers. Therefore, farmers are not able to sell their products in distant markets. Due to this lack of infrastructure, we lose close to ₹13 billion in the post-harvest phase.Initiatives to create distribution hubs, dedicated rail connectivity, pack houses and market access needs to be undertaken for resolving this issue. Further, we need to invest in mainstreaming alternate technologies such as passive cooling for reducing wastage and minimising transit losses. Passive cooling is better than the conventional active cooling as it reduces fuel consumption, has a low carbon footprint and lower operational cost. An investment of ₹2000 crores may be required to create the necessary infrastructure and technology interventions for movement of perishable produce from farm gate to distant markets.
To address a lot of these issues, it’s imperative to invest in agricultural research and development, for a sustainable growth of the sector. Currently, India spends only 0.30% on research, most of which is driven by government-aided institutes. There is minimal participation from the private sector. Government must therefore focus on strengthening the policy framework to enable the participation of private players and attract investments.
Views are personal. The author is leader – food and agriculture, PwC India