Major issues in agricultural development

Some of the major issues in agricultural development are discussed as under.

i) Land issues

Indian agriculture is dominated by small and marginal holders. Such small holdings are not only uneconomical but also the root cause of many difficulties in the way of agricultural development. Unregistered cultivators, tenants and tribal cultivators who do not have land titles face difficulties in accessing institutional credit and other facilities. This calls for registration of actual cultivators, tenants and women cultivators on priority basis. There is also a need to free the lease market to ensure availability of land for cultivation to the marginal and small farmers. The land rights of tribals should also be protected. There is ample scope for further redistribution of land when waste and cultivable lands are taken into account. Considering the fact that about 42 percent of the agricultural workers are female, the future assignment of land should take women into consideration while making land redistribution. Two major considerations for any land reform are

i) security of tenure for tenants for the period of contract and

(ii) the right of the land owner to resume land after the period of contract is over.

ii) Subsidies and investment

Though subsidies are effective in pushing agricultural growth to a certain extent, it is important to make sure that they do not become a permanent feature of any economy. The availability of subsidized inputs during the Green Revolution period has led to indiscriminate use of inputs. This in turn has led to degradation of land, and water, adverse NPK ratio in soil, wasteful use of water, soil salinity, pollution, excessive use of electricity,
etc. Moreover, the benefits of such subsidies have been reaped mainly by the farmers of irrigated area leading to large regional disparities. The present system of fertilizer subsidy is irrational, and has become counter-productive.

Fertilizer is sold at almost the same controlled price throughout the country. However, because the nitrogenous fertilizers are subsidized more than the potassic and phosphatic fertilizers, the subsidy tends to benefit more the crops and regions which require higher use of nitrogenous fertilizer as compared to the crops and regions which require higher application of potassic and phosphatic fertilizers. The imbalance in the use of nitrogen–
phosphorus– potassium (NPK) brought about by distortions in price ratio in favour of nitrogenous fertilizer is creating serious problem of soil degradation and adversely affecting productivity.

iii) Irrigation and water management

Water is the main input in agriculture. India is endowed with abundant water resources and the second largest irrigated area in the world, however, the contribution of water towards productivity in agriculture is very low. To cite a single example, cotton farmers in Tamil Nadu consume approximately seven times as much water and generate about 1/5th the yield as their counterparts using extensive cultivation and furrow irrigation methods in
California. That means that the productivity of each litre of water used for cotton cultivation in California is 35 times higher than in Tamil Nadu. Agriculture In India around 40 percent of the country’s cultivated area is irrigated. The irrigation potential of the country has not been exploited fully. Rain-fed areas constitute about 60 percent of the net sown area of the country. The decline in the public investment in irrigation is an important reason for not being able to use the irrigation potential to its full capacity. Capacity utilization of ground water resources also depends on the availability of electric power for pumping water. Rain-fed agriculture is characterized by low productivity due to low input use. A large majority of the rural poor in the developing countries live in the rain-fed areas.

Considering the importance of water in farming, conservation of surface and groundwater for appropriate recharging of groundwater has become imperative.

iv) Agricultural credit

Agricultural credit plays an important role in augmenting use of agricultural law for cultivation, adoption of technology in agriculture and also use of HYV seeds. Ironically, informal credit which is too costly to repay still occupies an important place than the institutional credit. One of the reasons for rural indebtedness and farmers’ suicide is credit from money lenders.

The public policies for agricultural credit should aim to reduce the role of informal sector credit. Some of the hurdles created in expanding credit in rural areas include:

i) Narrowing of branch network in rural areas.
ii) Fall in credit deposit ratios in rural areas.
iii) Disproportionate decline in agricultural credit to vulnerable groups specially small and marginal farmers.
iv) Political interference like loan wavers leading to sickness of some of the formal credit institutions.

v) Risk and insurance in agriculture

Farmers are generally exposed to two types of risk – yield risk and price risk. The yield risk is mainly attributed to the vagaries of nature and price risk is owing to price volatility. In order to shield the farmers from either or both the risks, agricultural insurance assumes significant importance. The importance of Agricultural insurance is widely accepted all over the globe.

In most economies governments assume significant role towards protection of the farmers against all type of risks. The private companies also have an important role in public private partnership mode. As a business proposition, agricultural risk insurance is associated with high loss ratios and hence subsidization plays a crucial role. It is difficult, if not impossible, to ensure 100 percent coverage, either in terms of farmers or area. In the case of Spain, for instance, subsidization is to the extent of 45% of the programme and
private insurance companies are made to work as a group under a statesponsored lead agency, so that the state can control pricing of the product.

Generally speaking, this is true even in the case of USA, where formulation of risk insurance policy is essentially a responsibility of the individual states.

vi) Research and extension Agriculture

There is a large gap between the yields in the research station and the farmers’ field. The yields of most of the crops have almost stagnated showing no or very little increase over the years. This shows that the Indian agriculture has reached a technology fatigue. There has not been any major breakthrough in yield improvement especially because of the low allocation of funds to the Indian agricultural research system. There is a need to reorganize the priorities in the Indian agricultural research system by emphasizing on the
needs of rainfed areas which cover nearly 60 percent of cultivated area.

Adequate priority should also be given to emerging challenges particularly post harvest, marketing and environmental conservation. Since private sector participation in agricultural research is limited to profitable crops and enterprises taken up by resource rich farmers, the public sector research has to increasingly address the problems facing the resource poor farmers in the less-endowed regions. There is also a need to have biotechnological research suited to different locations of the country.

vii) Diversification and food security

There has been diversification of Indian diets wherein, the hi-value products have caught the fancy of the rapidly increasing middle-class population of the country. Increase in per capita income, increasing urbanization, increasing number of working women in urban India are largely responsible for diet diversification in India. There has been an increase in the per capita consumption of fruits and vegetables and edible oils. Diversification does
not mean just diversification in agriculture related activities. Adequate importance should also be given to allied activities like animal husbandry and fisheries. Not only does the livestock sector contribute to more than 5 percent of the GDP but also engages many of the rural women in major livestock related activities. Specifically in Indian context where the ownership of livestock is more evenly distributed with landless labourers and marginal farmers, the development of this sector is important for the balanced development of the rural economy.

Recent trends that have raised concern regarding food security, farmers’ income, and poverty are:
• Slowdown in growth.
• Widening economic disparities between irrigated and rain-fed areas.
• Increased vulnerability to world commodity price volatility following trade liberalization. This had an adverse effect on agricultural economies of regions growing crops such as cotton and oilseeds.
• Uneven and slow development of technology.
• Inefficient use of available technology and inputs.
• Lack of adequate incentives and appropriate institutions.

viii) Marketing

Since many farmers in most of the developing countries are small and marginal farmers, the produce of individual farmers is in such small quantities that it becomes difficult for them to market such small amounts. They also face problems in getting inputs, credit and marketing. In such economies where small scale agriculture is widespread, contract farming arrangements are particularly useful. In India, contract farming is going on in several agricultural crops, however; it is not backed by an efficient legal system.

There is a need to strengthen contract farming arrangements to strengthen small farmers. To avoid any kind of exploitation of the farmers, an effective legal mechanism needs to be in place. The real challenge is to organize the small and marginal farmers for marketing and linking them to more profitable high-value agriculture.

ix) Soil Health Card

Testing of the soil is one of the important aspects to raise productivity of various types of agricultural products. Because of lack of soil testing productivity of many areas are low in certain category crops . Certain soil varieties are suitable to specific category of agricultural product. Therefore from the time to time soil testing is required for raising agricultural productivity and farmers’ income. The soil health card issued by government
of India is a laudable one.

x) Effect of Globalization on Agriculture

With the opening up of the economy, the domestic agriculture is subjected to competition from products of other countries specially those of developed countries where agriculture is highly subsidized. There have been many instances in the recent past when the domestic prices of many commodities have gone higher than the international prices. To compete in the international market, there is a need to adopt both yield increasing and cost cutting technologies.

The ongoing negotiations on Agreement on Agriculture in the WTO provide the developing countries with the opportunity to rectify some of the inadequacies in the agreement. The developing countries are likely to benefit if the developed countries reduce agricultural subsidies. The overall trade distorting subsidies given by the developed countries need to be reduced to provide a level playing ground to all the countries.

xi) Agribusiness

Agriculture in the basic sense of produce of the field is hardly remunerative to the farmer. In other words, agricultural operations must now mark a shift in approach from being merely a field harvesting of crops to local mandi disposal operations to demand driven activity with an increased focused on processing and value addition. Value addition is to be created through diversification of use of produce and emphasis on quality production. Bold
measures now need to be taken to encourage agri-business and industries based on agricultural produce so that producer gains significantly in returns.

xii) Agriculture and Climate Change

The unimpeded growth of greenhouse gas emissions is raising the earth’s temperature. The consequences include melting glaciers, more precipitation, more and more extreme weather events, and shifting seasons. The accelerating pace of climate change, combined with global population and income growth, threatens food security everywhere. Agriculture is extremely vulnerable to climate change. Higher temperatures eventually reduce yields
of desirable crops while encouraging weed and pest proliferation. Changes in precipitation patterns increase the likelihood of short-run crop failures and long-run production declines. Although there will be gains in some crops in some regions of the world, the overall impacts of climate change on agriculture are expected to be negative, threatening global food security.

Populations in the developing world, which are already vulnerable and food insecure, are likely to be the most seriously affected.