Maharashtra’s farmers in Vidarbha continue to wallow in distress—farmer suicides continue unabated. Dr Sudhir Goel, IAS, 1982 cadre, is Chief Additional Secretary, Agriculture, Maharashtra, who has been doing a lot of relief work with farmers in the region and elsewhere. Born in June 1955, Dr Goel has varied experience in a gamut of government departments including energy, urban development and agriculture. Dr Goel shared with Ground View his perceptions on farmer distress, farm economics, cotton seed price hikes and progress in research on genetically modified (GM) food crops.
Farmers in India are distressed mainly because they are not organized. About 83% of the land holdings in India are marginal or small—out of about 120 mn farmers, some 100 mn are small or marginal (with less than five hectares of land holdings), and they are unorganized. Almost 35% of the tractors sold in Maharashtra are confiscated by banks and relatively small and marginal farmers are at the mercy of the monsoons and middlemen. Wastage of perishables like fruits and vegetables is an estimated 18-40%, which hurts producers and consumers. This leads to low returns for growers and volatility in availability and prices for consumers. Having said that, only 35% of farmer suicides have been authenticated to be due to farm distress.
The fragmented agricultural marketing value chain and the large number of intermediaries is leading to wastage, low returns for producers and higher prices for consumers. Organized retail (though only 3% of the retail market) is doubling its share every three years or so and is likely to play an increasingly important role in influencing the nature of agricultural markets in the coming decade. A game changer on the horizon is the proposed national food security legislation, which will require the sourcing of huge volumes of food from domestic producers. Traditional production and supply arrangements are unlikely to prove adequate in meeting challenges posed by these two major developments. Maharashtra has issued 160 licences (the highest in India) that enable companies to directly procure from farmer groups, bypassing middlemen. The pace of farmer engagements is improving, but it is not encouraging. A Tata Chemicals-Rallis India joint venture has immense opportunity on offer in branded retailing of pulses, much like Amul (Amul earned revenues of Rs180 bn in FY14—a six-year CAGR of 23%). About a 59% increase in milk-procurement price led to 46% growth in our milk procurement, driving growth. Dr Goel is spearheading many Private-Public engagements and states about 51 corporate groups have partnered in such initiatives the names include Rallis, HUL, Jain Irrigation, ADM Foods, Nuziveedu and Kaveri Seeds (among others).
The implementation of NREGA (National Rural Employment Guarantee Scheme—a central government scheme that guarantees 100-day employment in a year to every household) undoubtedly has led to a shortage of agricultural labour and about 15% CAGR in the wage bill over FY08-14. Agriculture GDP is heavily weighted in favour of high-value produce (horticulture, animal husbandry, dairy, poultry and fish products)—as much as 75% of the value of agricultural GDP is contributed by such produce mainly because they are not as labour intensive as other produce. Thus a creative and collaborative effort can result in unleashing the immense potential that Indian agriculture can offer and farm input suppliers can play a role here. The benefit of higher MSP is negated by a rise in input costs—consequently, farm profits have not advanced over the past four consecutive years.
Indian yields are low but productivity has improved immensely over the past decade. Among other things, the use of hybrid varieties, better irrigation, balanced nutrient application and the right mix of pesticide sprays have brought about this improvement. Farmers must be empowered to use high-end equipment, which is missing today. The government has approved only genetically modified (GM) cotton crops, which has led to about a 30% jump in cotton yields. Maharashtra has very recently cleared field trials of five GM crops—brinjal, maize, rice, chickpea and cotton. But it is the prerogative of the central government to approve or disapprove of the use of GM crops, based on trial results.
Hybrid seed prices in India are market-determined and there are no controls. As for BT cotton – Maharashtra, AP (undivided) and Gujarat have introduced a Seed Act to control and approve the upper limit for BT cotton seed retail prices. Given the increase in production costs (primarily labour) and handling charges, the seed industry is demanding a revision in cotton seed prices (last revised in FY11) and a view on this is overdue. Maharashtra, being a seed consuming state and not a producing state, is not incentivized to raise cotton-seed prices. However, if higher seed prices are approved in Gujarat or Andhra Pradesh the supply of hybrid seeds to Maharashtra may be interrupted,thus there exists an indirect compulsion to raise prices—this is what we infer.
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