Agriculture in India is not a viable option given fragmented landholdings (average landholding size is 1.08 hectares), rain-fed agriculture (around 50 per cent), climate change, lower disbursement of institutional credit to farmers, high cost of cultivation, and exploitation by various agents.
Besides, the Minimum Support Price (MSP) model in India resulted in skewed cropping pattern and other adverse implications, namely, unbridled exploitation of groundwater, soil alkalinity and chemicalisation of farming. Hence, the following policy initiatives may come handy.
Input credit to farmers: Input subsidy to farmers may be given on seeds, pesticides, and fertilisers so that MSP can be phased out gradually. Besides, labour from MGNREGS may be provided to farmers, especially the small and marginal, to reduce their cost of cultivation. Before phasing out MSP, empowerment of farmers should be a prerequisite, by strengthening the Farmer Producer Organisation (FPO) model through formation of federations, which will ensure their collective bargaining power and achievement of economies of scale.
Convergence of SHGs and FPOs: By taking a cue from the self-help group model, the concept of FPO was introduced in 2003. Though a few FPOs such as Sahyadri Farms, Yogeswara and Maha FPC Federation are successful in certain pockets, they are yet to take off on a pan-India basis. Data show more than two-thirds of FPOs are in seven States: Maharashtra, Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Haryana, Bihar and Karnataka. Therefore, there is a need to converge SHGs and FPOs as done in some parts of Uttar Pradesh. For instance, mango orchards may be looked after by farmers right from ‘roots to fruits’; SHG women, preferably from the respective families, may process the mangoes for pickles, jelly, juice, etc.
Diversification of crops: India has been importing edible oil, pulses, cashew and spices, losing precious foreign exchange in the process. On the other hand, the country is exporting water-guzzling crops like rice, wheat and sugar, which has ecological costs. To ensure food, nutritional and financial security to the farmers, diversifying to crops such as millets, pulses, oil seeds, and spices may be incentivised. The FPOs may be trained in commodity derivatives to market their produce without resorting to distress sale.
Focus on exports: Indian farmers may be encouraged to grow commercial crops in order to obtain remunerative prices through exports. For this, agricultural value chains may be developed by following the ‘One District One Product’ model.
Access to institutional credit: As per a report on FPOs from Azim Premji University, 919 FPOs received financial assistance of ₹403 crore in FY 2021-22 from various credit agencies with an average loan size of just ₹43.85 lakh. This loan amount is inadequate since their average size is more than 750 members in most of the cases. As more than half of formal credit is granted to other than small and marginal farmers, it is imperative to improve access to low cost institutional credit to this group.
Seamless market linkages: A few FPOs supply to e-commerce retailers such as JioMart, Grofers, Big Basket, etc., either directly or through agri start-ups. This may be complemented by crafting a marketing strategy through procurement of agri-produce at farm-gate in all districts through the public-private partnership model.
The writer is Director, Centre for Agri-Business Management, MANAGE, Hyderabad. Views are personal