Revealing Trends in Investment in Ag Research & Extension

Cross-posted from the FSP India website written by Jaspreet Aulakh

Photo Credit: Flickr (P. Casier/CGIAR)
Photo Credit: Flickr (P. Casier/CGIAR)

In an article published in European Journal of Development Research, “Public Investment in Agricultural Research and Extension in India,” Pramod Kumar Joshi, Praduman Kumar, and Shinoj Parappurathu examine the spatial and temporal dimensions of agricultural research and extension (R&E) investments with emphasis on returns on investment in major states in India. The article concluded that investments in R&E should increase to meet the future growth challenges in the Indian agriculture sector.

The authors map the temporal and spatial changes in investment in R&E with emphasis on returns to investment in major states of India. They track past patterns of public spending on Research & Development (R&D) in terms of efficiency and explore variation in public spending on R&D across states.  They also estimate the returns to R&D spending and test if the states that spend more achieve higher Total Factor Productivity growth (TFP). TFP growth is estimated using factors such as research and extension stock created over the years, infrastructure and the quality of natural resources, which is later used to calculate Value of Marginal Product (VMP) and the Internal Rate of Return (IRR).

Interesting trends surfaced from the data. R&E increased not only in absolute terms but also as a share of GDP and the Green Revolution has been due to effective R&E investment. The R&E system of India has played a significant role in changing country’s status from food-importing to food-secure in relatively short time. The investment in agricultural research, which was equivalent to 0.30 percent of total GDP in agriculture in 1980/1981, increased to 0.52 percent in 1990/1991 and 0.77 percent in 2010/2011.

The share of research in total R&E investment increased from 65 to 82 percent from the period of 1961-1970 to 2001-2010, but the share of extension declined from 35 percent to 18 percent. This illustrates that research and extension did not follow parallel trends in the spending over time. This can have important policy implications, as lower relative allocations to extension could retard the flow of new knowledge from labs to field and the returns accrued from higher research investment could be underutilized.

Another important inference from the study was that relative shares to priority sub-sectors of agricultural and allied sectors has shifted considerably over time. Investments in R&E in the crop sector and fisheries have increased while investments in R&E for the livestock sector have decreased. The investment in soil and water R&E has remained unpredictable. In addition, different states’ shares of aggregate R&E have been reduced while the central government’s share has increased over the past decade.

The study also reveals that investment in extension has considerably reduced over the years, and the gap between research and extension investment has been widening as well. The intensity of investment in R&E (i.e., total investment per unit cropped area/population) varies considerably across Indian states, with a difference of 1:20 between the lowest-intensity of investment and high intensity of investment.  High disparity in TFP and wide variations in VMP and IRR have been observed across different states and the actual returns on these investments depend on TFP and growth.  For example, while Himachal Pradesh, Haryana and Assam have had high investment intensity, this has not translated to higher productivity.  In conclusion, it is important to identify the agriculture areas which are important for future investments in R&E and this should be strategically directed and balanced among different agricultural sectors so that growth is not compromised in the future.

Pulses: Supply Side Dynamics

Cross-posted from the FSP India website written by Rachel Kohn

Pulses: Source (flickr) Adam Jones
Pulses: Source (flickr) Adam Jones

India is both the largest producer and consumer of pulses in the world, with production and consumption preferences within the country varying by region. In terms of cultivation, for example, the country had 72 percent of the total global area of pigeon peas, 68 percent of the global area of chickpeas, and around 37 percent of the global area of lentils in 2012  (according to FAOSTAT), which accounted for 61, 68, and 20 percent (respectively) of global production. Meanwhile, since the Green Revolution in the 1960s, the reduction in the variability of paddy and wheat yields coupled with no comparable change for pulses led to diversion of land from pulses to those crops.  There is a persistent supply-demand gap when it comes to pulses. Resource-rich farmers tend to grow crops like paddy, wheat, cotton, and sunflower, while pulses continue to be produced mostly by small-scale and marginal farmers under rainfed conditions. A recent IFPRI Discussion Paper by Kalimuthu Inbasekar, Devesh Roy, and P. K. Joshi, “Supply-side dynamics of chickpeas and pigeon peas in India,” examines the evolution of pulses in India between 1950 and 2011 and provides insight into how policy can support the industry for pulses.

Mapping out the dynamics of chickpea and pigeon peas over time, across states (grouped into six zones based on geographical location), and within states at the district level (for a number of states), the authors were able to place these areas into specific groups and evaluate the movement in pulses in response to changes such as the Green Revolution, the economic reforms of 1991, and the trade spikes since 2000.  They also tested econometrically for factors affecting area allocated to pulses relative to competing crops using fixed-effects estimation.  They take advantage of state and year fixed effects as well as  including time-specific rainfall.  The empirical model focuses on conditions such as rain dependence, technological improvements like mechanization, and economic availability of labor.  The outcome variable measures intensity of pulses cultivation relative to the competing crops.

Previous studies found that as infrastructure developed and incomes rose, the country’s move to liberalize imports in pulses had a significant effect on pulses production and enforced the geographical decoupling of production and consumption of pulses in India.  At the same time, the yields in pulses were not increasing due to a lack of high-yielding and short-duration varieties and competition.  The authors note that the availability of infrastructure and inputs has hurt the pulses sector but mainly through the allocation of less land to pulses as increased mechanization and irrigation lead to the conversion of these lands to other remunerative crops.

The authors also found that pulses-producing districts were characterized by rainfed conditions, absence of irrigation, and absence of alternative profitable crops. “Pulses predominantly cultivated in the marginal and rainfed region under resource-starved conditions need an entirely different approach to increasing area, production, and productivity,” write the authors. As such, while it is important to address problems of rainfed areas, policymakers must ensure they will not lead to displacement of pulses from these regions as they are key to India’s pulses production.

Read More

Role of Import on Price of Pigeon Pea in India

Raising the Pulse Profit

Risk-Management Increases Resilience in the Face of Drought

Cross-posted from the FSP India website written by Jaspreet Aulakh

Nalanda District, Bihar Source (Flickr): Divya Pandey, IFPRI
Nalanda District, Bihar
Source (Flickr): Divya Pandey, IFPRI

Shocks of any form can be have a more pronounced effect in the developing countries like India where half of the population is engaged in agriculture, and the occurrence of droughts can deplete of productive assets, aggravate food insecurity, and entrench people further into poverty. During a drought year, studies show income falls by an estimated 25-60 percent while the per capita poverty rate rises by 12-33 percent.  In a new study to be published in October 2015, Pratap S. Birthal, Digvijay S. Negi, Md. Tajuddin Khan and Shaily Agarwal argue that drastic shifts in the drought management strategy from crisis management to risk management has improved the resiliency of Indian agriculture. Using rice, a water-intensive crop, to test risk-tolerance, the authors find a small decline (2.5 percent) in rice production in 2009-2010 over the previous level despite the rainfall deficit of more than 20 percent. They attribute this resilience to improvements in water management, technological advances in crop breeding, as well as the development of infrastructure and institutions engaged in delivery of advisory services, information, and inputs.

Read more

Food Safety in Dairy: Evidence of Peer Effects

Milk Distributor in Pune, Maharashtra. Source: (Flickr) Vinay Kumar, IFPRI
Milk Distributor in Pune, Maharashtra. Source: (Flickr) Vinay Kumar, IFPRI

The dualistic (formal and informal) dairy sector in India—characterised by poor infrastructural facility for procurement, processing, transportation, and marketing—provides a lot of scope for malpractice. The very first national survey on adulteration of milk by the Food Safety and Standards Authority of India, conducted in 2011, found that 70 percent of the sample did not conform to the mandated quality standards. Out of 33 states and union territories, it was found that in seven states, 100 percent of the sample did not comply with the standards. Contaminants like urea, starch, formalin, and detergent, along with water, were used as adulterants. Even in the national capital, Delhi, around 70 percent of the sample did not conform. These figures clearly indicate the lack of enforcement of food safety laws leading to low food safety in the country.

If there is regulatory failure, an alternative is to try and ensure food safety through demand pull by the consumers. This would then put pressure on the suppliers to guarantee food safety or face a punitive market response. In order for this channel to work, consumers need to be informed about what food safety entails and how to access safe food. One of the possible ways in which such information is available to consumers is through their social networks. Literature has shown both positive and negative influences of social networks on health related decisions (for example in becoming a smoker as well as in quitting it). But regarding food safety awareness and practices there seems to be little research on the role of social networks.

A recent IFPRI discussion paper titled “Peer Effects in the Valuation of Attributes and Practices for Food Safety: Findings from the Study of Dairy Consumers in India” presents the evidence of peer effects in the valuation of food safety related attributes and practices adopted for mitigating risks among dairy consumers in India.

The study uses primary survey data conducted in the Pune and Pimpri-Chinchwad districts of Maharashtra. While looking for peer effects, peer groups were defined based on age, gender, income level, and occupation. Exploiting the multi-dimensionality of food safety as an attribute the study adopts an empirical strategy that can account for individual level unobserved characteristics (such as latent knowledge regarding food safety). There were several unobserved factors that could confound these peer effects in valuation and practices related to food safety. First, there could be individual consumer’s innate health and hygiene consciousness that is particularly important in explaining valuation and choice outcomes related to food safety. Secondly, peer groups being individual specific and invariant across the different attribute valuations, sources of exogenous effects (observed and unobserved) could also be confounders and need to be accounted for. Additionally, individual unobserved characteristics could also play a role in selection bias arising from group selection.

The paper shows that if an endogenous social effect is established for a given consumer, at the same time period, the variation in her valuation over different traits of food safety (such as pasteurization and certification) is correlated with the variation in the average valuation of her peers of the same traits. As a test of robustness, the same exercise was repeated for different practices of food safety in dairy, for example boiling, checking for labels, and certification.

The study finds that, in the case of food safety, the peer group’s valuation and the practices that it follows to mitigate food safety risks seem to bear strongly on the individual’s valuation, behaviours, and choices. Paper finds evidence of significant peer effects in overall, which can be very useful for devising food safety polices.

Read More: Op-ed in Economic Times

Maggi just Skims the Surface

Who Access Assets?

Konark Sikka is an intern with IFPRI-South Asia office

Women Farmer from Krishnagiri in Tamil Nadu, India. Source (flickr): Pallavi Rajkhowa/IFPRI
Women Farmer from Krishnagiri in Tamil Nadu, India. Source (flickr): Pallavi Rajkhowa/IFPRI

Gender disparities within farming communities still exist when it comes to household assets. A growing number of studies show that to ensure food security and nutritional security in a household, equal distribution of assets is necessary. Resolving this disparity would not only improve the lives of women farmers, but also in turn lead to more development and growth.

Based on a recent study on rice farmers in Uttar Pradesh, an IFPRI paper on Understanding Men’s and Women’s Access to and Control of Assets and the Implications for Agricultural Development Projects looks into the interplay of access to assets among men and women, and offers strategies to increase women’s control and access over key agricultural assets.

Owing to traditional social norms ingrained in society, men are the title holders for the land and the primary recipients in the case of inheritance. This means that the government provides benefits to the male, freezing out women from valuable opportunities to train themselves and receive farm inputs.

Ownership of dairy animals is also unequal, with animals reported as either owned by the husband or—in rare cases mostly in lower caste communities—jointly owned. Meanwhile, when it comes to ownership of machinery or post-harvest equipment, the study showed women were not owners and hence benefited almost nil from agricultural innovations.

An analysis of the adoption of technology also showed a difference between higher caste women and lower caste women:  women from lower castes make up most of the labor for production and post-harvest work, but their membership in farmer organizations, and access to training and credit sources is minimal.

The authors conclude that, despite some promising signs such as an increase in joint ownership of farmland and dairy stock, there are still a lot of disparities between the access to assets for men and women.  They identify a number of actions that could improve situation, including:

1.  instituting effective extension and education systems to enable women to get trained so that they can increase their sources of income;
2. reaching out to women with guidance and training through NGOs and self-help groups, in collaboration with government organizations,        to help improve their access to assets; and
3. involving more women farmers in participatory field experiments to increase their access to improved seeds and knowledge on how to better      manage their crops and natural resources.

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