Innovative ways to increase farm income

Indian agriculture is at a crossroads, with a number of challenges and enormous opportunities. The key challenges are small and declining landholdings, price volatility and climate risks. Growing demand for food in the domestic and global markets offers huge opportunities. The question is, how can we harness opportunities and overcome constraints to raise farmer incomes, especially small and marginal farmers? As many as 86% of the holdings in India are small and marginal, with less than 2 hectares of land. Several new programmes and schemes have been launched by the government to increase farm income. There are several mega flagship programmes, including the Pradhan Mantri Krishi Sinchayee Yojana, Soil Health Card scheme and Pradhan Mantri Fasal Bima Yojana. This year, the Union budget has also fulfilled a long-standing demand of farmers to fix minimum support prices at 50% above production cost. All these programmes will enhance farmer incomes if implemented effectively.

Photo: Ramesh Pathania/Mint

However, it appears that the implementation part is on a business-as-usual basis. As usual, control is with the government rather than focusing on effective engagement of the private sector. To accomplish the expected benefits, especially for small farmers, there is a need to develop innovative institutional arrangements for converging investment, aggregating production and consolidating markets. We are proposing a few “business-not-as-usual” areas to develop institutional arrangements so that small farmers can participate in these programmes and share the benefits of emerging opportunities.

The foremost requirement is investment in activities which create productive assets. The agriculture sector needs huge investment to transform and become more attractive and remunerative. Research reveals that compared to other sectors, investment in agriculture contributes more to reducing poverty. This is because the majority of the population lives in rural areas and is dependent on agriculture.

The last three Union budgets had various programmes to step up investment in the agriculture sector. However, more is needed to make it efficient, competitive and sustainable. There are three possible options to supplement government investment: (1) Converge various region-wise government schemes into one umbrella programme. This will check duplication of efforts and reduce administrative costs. (2) More incentives may be given to corporate social responsibility (CSR) initiatives for agricultural development schemes. Many corporate houses are already contributing in rural areas but the amount is meagre in the agriculture sector. We may develop a kitty of CSR funds for agriculture by allocating a fraction of overall CSR spending by individual corporate houses for agricultural development. Corporate houses may be incentivised and recognized for their contributions. (3) Pilot public-private partnerships (PPPs) in developing agri-infrastructure. India has an excellent track record of PPPs in developing infrastructure, which benefits rural areas as well as the agriculture sector. However, we have not tried PPPs to create agri-infrastructure, such as agricultural markets, warehouses, cold storage, cold chains, irrigation delivery and extension services. These will supplement the government’s investment in agriculture. The government may also prioritize where more resources are to be allocated. For example, in commercial areas, the private sector is present and, therefore, the government may give low priority to such areas. In areas where agriculture is at a subsistence level, the government needs to accord high priority.

The role of start-ups offers huge potential in the agriculture sector that is yet to be harnessed. The prime minister has said that start-ups can establish laboratories for soil testing and food commodity certification. There are ample lucrative opportunities that may bring farmers and start-ups together to enhance farmer incomes. The government has launched the e-NAM platform in most mandis. However, these are mostly operated by traders, as the small and marginal farmers have a tiny marketable surplus. Also, they cannot participate in the existing available warehouses, cold storage, and futures market. Therefore, there is a need to create institutional arrangements that will aggregate their produce for marketing and storage. We can draw lessons from the stock market, where a small investor purchases mutual funds rather than going directly to the share market. The mutual funds are operated by professionals. We need professionals who can develop commodity and region-wise clusters of farmer groups for marketing, storage and participation in the futures market. These professionals can participate in e-NAM on behalf of farmers. Similarly, there are opportunities for start-ups for agri-packers and movers, door delivery of inputs, services and agro-advisory. A small farmers’ agribusiness consortia (SFAC) can take the lead in developing appropriate institutional arrangements to attract agribusiness start-ups for such initiatives, which will help smallholders to take advantage of government programmes.

It is, therefore, pertinent to develop innovative institutions in a new paradigm to increase farmer incomes. We need to take up some pilots that can be subsequently scaled up—depending on the lessons learnt—to cover the majority of smallholder farmers. Failing that, ongoing efforts will not yield the desired results.

P.K. Joshi is the Director-South Asia, International Food Policy Research Institute, New Delhi. This article was originally published in  liveMint

What Happens when Scientists Design Soil Health Cards for Farmers

The Ministry of Agriculture in India is placing all bets on the 86 million USD Soil Health Card Scheme to provide nutrient recommendations to farmers based on soil health tests, with the expectation that it promotes balanced nutrient management practices. The Soil Health Card (SHC) scheme was launched by the Government of India in 2015. Under the scheme, the government has mandated the provision of SHCs to every farmer at an interval of two years (previously three years). These cards contain soil test results and crop-wise recommendations of nutrients and fertilisers required for the individual farmer to help them improve productivity through judicious use of inputs. These results are based on soil tests that are being conducted on a grid basis - samples are drawn in a grid of 2.5 ha in irrigated area and 10 ha in rain- fed area with the help of GPS tools and revenue maps. About 100 million cards have been printed and distributed to farmers across the country, with the counter increasing with every passing second (PIB, 2017). These results are presented to farmers in dual-coloured single-side printed A4 sheets (here).

Photo Credits: Dakshinamurthy Vedachalam, CIMMYT

Do farmers understand these cards?
In 2017, researchers on the CSISA project undertook several focus group discussions with farmers in Bihar and Odisha, to seek answers to the following questions. Are farmers able to:
i) understand the card
ii) trust it to provide accurate information and finally,
iii) change nutrient application behaviour as per the recommendations provided in the cards (we ask these questions in one-to-one surveys with farmers who are then brought together for FGD’s)
With a total of 21 FGD’s involving more than 100 farmers, and 5 Key Informant Interviews in the states of Bihar and Odisha, we conducted user tests of the present form of the SHCs. Those farmers who had received the cards had kept them in safe custody after having received them and had only taken those out on the day of our interactions when they were informed they were requested to carry those to the meeting place in the village. The interactions lasted for about an hour with questions directed towards assessing the usefulness, attractiveness, comprehensives, relevancy and persuasiveness of the cards.

What do we find?
There were two major barriers to comprehension of the SHCs – even for the most well-read respondents (most of whom had studied at least until the primary grade and one of whom was an MBA) in our sample. Both logical and lexical semantics were misplaced in the cards, with information relevant more for the scientists than for the farmers. The present cards are more technical than user-friendly and contain more information than is needed for action with the result that lack of relatable visuals and crowded texts are driving away any attention from the relevant information contained in the cards.

Too scientific
Farmers were often unable to distinguish between the different sets of tables mentioned on the card. The fonts were found to be too small and most farmers faced difficulty in reading the text in less than 8-point size fonts. Respondents were not familiar with all nutrients and micronutrients listed on the cards. For example, the soil results table in the present table begins with details about their soil’s Ph, EC and OC content – all three of which was gibberish for them in the local language. With a little probing and assisted reading, some farmers could follow and identify the nutrients listed further, albeit with local reference terms.
In both the states, we found a mix of cards in English. Hindi and Oriya languages and where there were translations, they were mostly phonetic translations of the English words. For example, Ph (which is the numeric scales used to specify the acidity or basicity of a solution) in English was represented as /f/ in the local language. Literal translations of some of the most common nutrients restricted the interpretation for those farmers who could read but not comprehend. Some farmers could infer the values mentioned, with prompts from our end. They read the recommended values of nutrients very carefully, after being explained.
For those who could not read, it is a different story altogether.
Recommendations for input application were of nutrients (and not the final fertilizer name that is prepared from these combinations), which not more than a handful of farmers in our sample understood. Nitrogen was inferred as Urea while Potash was inferred as DAP by the respondents– in reality, they are only components of the overall fertilizer. Such interpretation can be very risky for most farmers who are unable to distinguish between nutrients and fertilizers.

Not from my field!
The lack of site-specificity of the test results was an overpowering determinant of the lack of trust the respondents had in the results provided on the card as well as the recommendations provided therein. When the values were in the range of their existing practices, recommendations were perceived as correct. Whereas, when the values were different from their expectations or practices (particularly in Odisha where the urea recommendations were almost twice of their present application rates in the villages we went to), the immediate response was to discard the recommendations in lieu of the fact that soil samples were not taken from their respective fields.

The first step to prompt action is to generate understanding. If farmers do not understand the content, there is little value addition of the program. As a result, we took some efforts towards redesigning the SHCs to simplify the contents and to also make it more attractive for the relevant audience by using more visuals. Visuals help overcome language barriers, and hence should be the focus of a scheme that aims to reach out to the masses. With the assistance of development communications professionals, we redesigned the present cards, reduced the total amount of text and increased the font size of the texts, used symbols to represent levels (low, medium and high) and added several illustrations (such as pictures of fertiliser blends) to inform the less educated. These new designs were retested over 2 rounds in Bihar, in coordination with the Bihar Agricultural University (BAU), Sabour. Several iterations were also made in the new designs to account for suitable colours and clearer symbols. A final design, that farmers found attractive and easy to understand was submitted to the BAU for all their SHC work moving ahead. This new design was also launched by the Union Minister of Agriculture, Shri Radha Mohan Singh on the 24th February 2018.
These cards are expected to be distributed to several hundred farmers under the University’s program area and our follow up steps in this regard are to undertake an assessment of the receiver’s experiences with the new cards, their interpretability and its eventual impacts on nutrient application behaviour. Further research and more concrete evidence on the usability of these SHCs will help inform the policymakers of the relevant changes that are needed to be made in the national Soil Health program to encourage greater adoption.

Vartika Singh is Project Manager in the Environment, Production and Technology Division of IFPRI and Sujata Ganguly is Research Consultant with International Maize and Wheat Improvement Center (CIMMYT).

Policy Dialogue- Innovations in Ensuring Remunerative Prices (MSP) to Farmers: Challenges and Strategies & Launch of Global Food Policy Report 2018

Azadpur Mandi-Wholesale Market, New Delhi, India. Source: (Flickr)/ Vaishali Dassani, IFPRI

International Food Policy Research Institute (IFPRI), jointly with the National Academy of Agricultural Sciences (NAAS), and the ICAR- National Institute of Agricultural Economics and Policy Research (ICAR-NIAP), is organizing a Policy Dialogue on Innovations in Ensuring Remunerative Prices (MSP) to Farmers: Challenges and Strategies on Friday, March 23, 2018 at the NASC Complex, Pusa, New Delhi. 

This theme is selected in view of the recent budget speech by the Finance Minister to fix the Minimum Support Prices (MSPs) at 50 percent higher than the production cost, and develop effective mechanisms to ensure remunerative prices to the farmers. Increasing MSP at 50 percent higher than the production cost was long awaited demand by the farmers. The moot issue is how to implement the higher MSP for all the crops. It is in this context, this policy dialogue is planned to develop alternative and feasible options, so that farmers get remunerative prices.

The event will also be marked by the release of the Global Food Policy Report 2018.  The report looks at the impacts on food security and nutrition of greater global integration – including the movement of goods, investment, people, and knowledge – and the threat of current antiglobalization pressures. The report will be launched by Dr Shenggen Fan, Director General IFPRI along with other reputed dignitaries.

More details about the launch event can be found here.


Budget 2018: Higher MSPs are Welcome, Bring Cheers to Farmers

On expected lines, the Budget 2018-19 aimed at strengthening agriculture and rural economy. Agriculture deserves serious attention as roughly half of the population is dependent on it for food security and livelihood opportunities. During the last few months, we have witnessed farmers’ agitation silently spreading across all the states. Budget 2018 has very well packaged various provisions for making agriculture more efficient, sustainable and resilient. The key pillars to strengthen the agri sector—improved technologies, appropriate policies, effective institutions and required infra—are well reflected in Budget 2018.

Budget 2018: This will build resilience to agriculture by reducing production risks due to droughts. (Reuters)

The most significant one is accepting the long-pending demand of the farmers on minimum support prices (MSP), by fixing it 50% higher than the production cost. This was one of the recommendations of the National Farmers’ Commission, and farmers were demanding for its implementation. It is an important step, as farmers rarely get the benefits of higher retail prices. Often traders collude around MSP and procure at much less prices than the retail, by keeping a large share of higher prices. In the new regime, even if the traders collude, it will be at higher prices and will not be transmitted to retail, as these prices are determined by supply and demand. Announcing higher MSP is not enough unless it is procured at that price or effective mechanisms are in place to compensate farmers in the event of fall in farm harvest prices below MSP.

In the past, farmers responded to government policies, which led to the record production of foodgrains, horticultural crops and milk. With exception of rice, wheat and sometime pulses, oilseed and potato, the government is not procuring at MSP even if the farm harvest prices fell. We have witnessed in the past that in the absence of adequate mechanisms, the prices of majority of food commodities steeply fell and adversely affected farm incomes.

This is contrary to the target of doubling farmers’ income by 2022. It is welcoming that the FM has mandated the NITI Aayog to develop mechanisms to compensate farmers when prices fall below MSP. Recently, the MP government launched a new scheme, Bhavantar Bhugtan Yojana (price-deficit financing scheme), to hedge price risk of eight commodities. This scheme needs to be replicated in other states to discourage farmers for distress sale and ensure MSP. Feasibility of other mechanisms, namely warehouse receipt, futures trading, and export/import, may be tried so that farmer is protected from price risks. Another key part of Budget 2018 is developing 22,000 gramin agricultural markets, and linking them with e-NAM. At present, e-NAM is linked with the existing APMC markets.

Farmers, having no access to APMC markets, are deprived of e-NAM benefits. The proposal of developing gramin markets will have far-reaching implications, including farmers in remote areas will now have access to markets. In the past, developing agricultural markets were ignored that made our marketing system inefficient and fragmented with long supply chains. The traders often exploit farmers in the absence of markets. Access to markets will benefit farmers, especially small and marginal, who have less marketable surplus and high transaction costs. They will realise better prices and their marketing costs will come down significantly. The move will also generate employment opportunities for rural youth and induce input markets, especially seed.

Union Budget 2018 has provision to strengthen FPOs and women self-help groups. Since the agriculture sector in India is dominated by smallholders, aggregating them is necessary to harness economies-of-scale in production, processing and marketing. The FPOs and self-help groups need to be linked with the proposed new food parks for processing and marketing. This institutional innovation will (i) transform agriculture into agri-business profession; (ii) realise better prices due to collective bargaining power; (iii) promote agro-processing; and (iv) generate employment opportunities. It is a welcome step that the FPOs established on the pattern of cooperatives, and having transactions less than Rs 100 crore, will now be exempted from income tax. This will also encourage many start-ups to promote FPOs for production, processing and marketing.

Financing agriculture is of paramount significance to adopt improved technologies, make provision for irrigation, and go for farm mechanisation. Provision for agricultural credit has gone up from Rs 10 lakh crore to Rs 11 lakh crore. Now fisheries and dairy farmers can also avail the benefits of kisan credit card. This will further boost the dairy and fisheries sectors. In addition, aquaculture development fund and animal husbandry development fund have been created. Budget 2018 has further strengthened the Prime Minister Irrigation Scheme by allocating Rs 2,600 crore for groundwater development in 96 most deprived districts for assured irrigation.

This will build resilience to agriculture by reducing production risks due to droughts. Studies have clearly shown that groundwater development helps in accelerating agricultural growth, increasing farm incomes and reducing poverty, especially in low-income and deprived regions. Overall, Budget 2018 is pro-agriculture, which must cheer farmers, especially small and marginal ones.

P K Joshi is Director South Asia, International Food Policy Research Institute. This piece was originally published in The Financial Express

Nepal Vegetable Seed Study: Household Survey

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Farmer tending to a field at Sunsari District, Nepal. Credit: Divya Pandey, IFPRI

This study contains data that were collected to assess the status of vegetable seed production across Nepal. The data contains information from 600 households from 20 districts in Nepal. This dataset provides an in-depth look at vegetable seed systems and market in Nepal. The data collected includes information on household demography; land utilization, plots cultivated and inputs used; risk preference; consumption and expenditure; household income and assets; shocks; and agricultural credit. Information on the types of vegetables grown and farmers’ knowledge concerning the vegetable seeds they utilize for production is also included.

Access dataset

See companion dataset on Retailer Survey

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