KARMM

Setback in Agricultural Productivity

A new modified agricultural model to help bridge the gap between demand and supply

Team DetailsKundan Jaiswal

Ankit KumarRiya Rachel Simon

Medha AnandMarut Pattanaik

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SOWING PROSPERITY

Agriculture contributes only 21% of the total GDP, but it’s importance goes beyond this indicator. Over 70%of population depend on rain-fed agriculture for their livelihood. However, there has been a constantdecline in the contribution of agriculture towards the growth in total GDP.

Background

Looking back in time, India has had a sharp rise inagriculture due to the Green Revolution during the70s. This led to agriculture being self sustainableleading to a increased demand for rural labour, thus,reducing poverty and bringing down the food prices.

Current Scenario

Indian population majorly thrives on agriculture. But by theend of the decade it won’t be able to cope up with thegrowing demands. This calls for modernising andencouraging Indian agriculture, as a profit makingoccupation, so that it upholds the economy too.

India has around 9.6% of it’s total area covered in water.Comparing it with the world average of 4.4%, there is nodoubt that India has enormous potential in terms ofresources.

As of 2007, India had 60.5% of its land area classified asagricultural land, over 88% of which was arable.

Going by statistics, India has enough resources at itsdisposal when it comes to agriculture. And, even then thereis decline in agricultural productivity. This clearly points outimproper and inefficient usage of the resources at hand.

Source: Worldstat Info

2

25

5517

3058

15

0%

20%

40%

60%

80%

100%

% Workforce % Contribution to GDP

Workforce vs. Contribution to GDP

Services Industries Agriculture

Source: Census 2011

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INITIAL STAGE - Input

• Land FragmentationHierarchical division of land and current land holding policies lead to division of available land area.

• Availability of Quality Planting MaterialsUnavailability of quality seeds and hence, the use of conventional methods of farming also affects the amount and quality of produce.

• Optimal Use of Water ResourceInsufficient irrigation facilities and water availability round the year.

INTERMEDIATE STAGE - Process

• Lack of AwarenessInadequate publicity and awareness of modern farming techniques and tools.

• Gap between R&D and its ImplementationDelay and inefficient transfer of modern techniques from lab to field.

• Crop Pattern & DiversificationImproper cropping pattern and diversification is there.

FINAL STAGE - Output

• Wastage of Grains and other Perishable ProductsLack of decent and hygienic storage techniques.

• Inefficient Distribution SystemLack of proper distribution system of food grains leads to wastage cause of traditional storage methods.

• Value AdditionEnd products can be converted into processed or dry food items to increase value of food items rather than being wasted in storage.

The declining contribution of the agricultural sector towards the total GDP is a serious cause for concern in a country where the economy solely depends on agriculture.

Leveraging the current policies and building of farmer societies.Key Features

• Formation of regional farmer co-operative societies including farmers from the concerned region.

• Marketing hubs at village level.

• Community Farming: Farmers with small land holdings should come together to cultivate crops in a combined area.

• Profit sharing between farmers on the basis of initial land holding.

• Increased private investments in this sector by inviting National and International MNCs.

Government involvement and a volunteer based model to impart general awareness and education on modern farming techniques.

Implementation

• Initiatives to form co-operative societies by financing micro-credits with low interest rates. Proper implementation of schemes, like RuPay KCC and Smartcards.

• Research labs in each region, so as to facilitate research based on local conditions, like temperature, humidity, etc.

• Volunteers to impart training on use of modern farming tools - seeders, power drills, tillers - and better fertilizers.

• Buyer-Seller meets for proper marketing.

Increased involvement of both Government and the private sector and a volunteer based network.

Advantages over Existing System

• The scheme is expected to have a large impact with a lower cost, due to direct involvement of the private sector.

• Utilization of efficient skills – including volunteers for education and awareness.

• Creating a more competitive market with competitive sources of funding by involving MNCs and the like.

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Bridging the gap between demand and supply with a new agricultural model, built by leveraging the already existing system.

Proposed Intervention

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CO-OPERATIVE SOCIETIES

Funds

• Farmer Training• Agricultural Information

Centres• Research & Development

• Storage facilities• Distribution• Market Tie-ups

Members/Farmers

Labourers(MGNREGA)

GovernmentVolunteer

Base

Private SectorGovernment

Sector (NABARD)

Overview of the proposed plan

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Detailed functions of the suggested farmer co-operative societies.

• Input facilities to farmers for performing agricultural activities.

• A community revolving fund for farmers to avail loan and payback with low interest. This extra interest amount can be utilised by them, in case of crisis situations.

Finance:

• Purchase of modern agricultural tools, like threshers, harvesters, reapers, and so on.

• Use of the tools by farmers on a rotation basis, so as to minimise initial investment.

Agro-service Centres:

• Storage centres along with sorting and grading units. Storage centres should maintain proper database.

• Storage done as per negotiable warehouse receipt system, which will enable them to get loans against the crops stored.

• Proper temperature and atmosphere should be maintained inside the storage centres. Use of food grain management sensors should be implemented.

Agro-storage Centres:

• Direct tie-ups of these societies with the market and Multi National Companies dealing with retail sectors.

• No involvement of middlemen, thus increasing the value of crops while keeping costs low.

Market Tie-ups:

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Role of Government in the Proposed Scheme

Encourage formation of these societies by financing low interest loans with more repayment time, so as to make farmers independent of private moneylenders.

Different funding sources should be created to provide maximum financial help to farmer groups.

Oversee the volunteer based training and awareness camps so as to maintain uniformity among societies.

Boost research and development facilities all over the country depending on local conditions.

Procurement and distribution of crops produced by these societies.

Regulation of Minimum Support Prices keeping in mind interest of farmers, inflation and world prices.

Efficient distribution of stored products so as to avoid spoilage.

Provide labour facilities under the existing MGNREGA scheme to these societies.

Provision for subsidised fertilizers and better quality planting materials.

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Proposed Changes in Existing Policies and Other Requirements

Private investments in the agricultural sector to be increased.

Mending the present APMC – Agricultural Produce Marketing Committee – and abolishing mandi taxes, to facilitate a

competitive market for farmers.

Implementing Unified Law and lowering taxes on sales and transportation of agricultural goods to raise demands.

Target foreign buyers of high value ethnic foods, as opposed to commodity exports.

Pesticides to be replaced by modern pheromones based pest traps.

Introduction of genetically modified crops (BT crops) productivity.

Increase support for agriculture when world prices are high. Current scenario suggests that India’s support for agriculture rises

when world prices are low (1980s & 1998-2002), support falls when the world prices go up (mid 1990s). Counter-cyclical

support should be avoided.

Public spending on productivity enhancing investments be encouraged, as opposed to spending on subsidies.

Quality of grains and other food items in storage be monitored regularly by using modern technology (ARM Processors) so as

to minimise direct human involvement which is cumbersome.

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The proposed agricultural model will not require any major additional funding from the Government other than the currently existing schemes.

Initial investment in setting up of co-operative societies.Financial linkages be developed with different schemes, in order to start the aforesaid societies or co-operatives.

Organisation costMinimum requirements as basic system already exists. Remaining leverage is proposed to be done by voluntary base,

including imparting education and spreading awareness.Infrastructural development of modern agricultural tools.

This part can be minimised by developing modern indigenous tools of agriculture, with low maintenance costs, for different crops. Maintaining the tools, equipment and centres.

Maintenance costs include regular inspection of the facilities and tools along with any repair and service that they will require in time.Funding for setting up of hi-tech storage facilities.

Starting up of Agro-service centres and storage centres at regional/ community level would need a considerable amount of investment.

Proposed sources of funding includes the existing NABARD schemes- like PODF, regional rural and co-operative banks along with raising money through private sector.We propose a funding partnership between the government and private sector for the volunteer base and also for the Research and Development facilities.

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Large scale multiplication of the proposed model is assumed to have an influence on the agricultural sector and in turn, the entire farming community.

Impact and Scale

More land for a single crop along with better quality seeds and funding leads to considerable increase in productivity.

Awareness and education about modern methods and tools improves quality and quantity of produce.

Improved rural infrastructure.

Modern irrigation techniques, like drip irrigation, helps saving the depleting water table.

Lesser uncertainty in trade costs leads to increased competition but decreased price risks.

Improvised and hygienic storage systems reduce the wastage of grains. Along with this, a better distribution and marketing

leads to reduction in spoilage of perishable items.

Sustainability

Sustainability of the proposed model depends on the level of acceptance and also on how efficiently it is implemented.

If done properly, it should be a self sustainable model in near future, with agriculture generating enough funds to support the industry as well as the GDP.

As the cost at which government buys crops from farmers will increase, they will become a bit more independent, thus, investing more money into agriculture and hence, making it self sustainable.

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The proposed model will face various challenges and risks during implementation

Challenges and Risks

• Government or private sectors do not see the

viability of this modified model.

• Farmers do not realise the necessity of modern

tools and continue with conventional methods

of farming.

• Volunteer enrolment is minimum and lacks

interest and motive.

• Difficulty in integrating with and modifying

already existent schemes.

Mitigation Factors

A public-private partnership model.

Funding from various self-sustainable funding

models.

Advertising/Awareness campaigns at a large

scale.

Tie-ups with various industries.

Tie-ups with various NGOs to help facilitate the

volunteer model.

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Appendix

References

Water Management and Irrigation, Planning Commission of India (online material)

NABARD Initiatives

World Bank Data Bank

India: Priorities for Agriculture and Rural Development (http://web.worldbank.org)

5 steps to boost Indian agriculture (http://www.rediff.com/money/2004/may/03spec.htm)

Statistical Yearbook India 2012, Ministry of Statistics and Programme Implementation

Department of Agriculture and Cooperation, Ministry Of Agriculture, Government of India

(http://agricoop.nic.in)

Yojana (online archives, http://www.yojana.gov.in)

Census 2011, VMW Analytics Service Data