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.

 

Workshop on “Green Revolution in Eastern India: Constraints, Opportunities and Way Forward”

Workshop in New Delhi

Eastern region of India, comprising Bihar, Chhattisgarh, Eastern Uttar Pradesh, Jharkhand, Odisha and West Bengal, accounts for more than 50 percent of nation’s food insecure and poor population. These states could not reap the benefits of Green Revolution which was exceedingly successful in accelerating agricultural production and productivity and reducing rural poverty levels. While the nation takes pride in achieving food self-sufficiency with a record production of 273 million tons and reducing the incidence of poverty from 53 percent in 1977/78 to 21.4 percent in 2011/12, the reality is that the eastern states are quite a distance away from reaching the average national agriculture productivity levels and in mitigating poverty and hunger.

As these states were largely bypassed from the High Yielding Varieties (HYV) seeds and other such technologies and continue to have poor agriculture productivity levels, the Government has embarked upon a major mission, popularly known as BGREI-Bringing Green Revolution to Eastern India. The main focus of this bold initiative has been to augment land productivity as agriculture is the main source of livelihood and employment for majority of rural population in the region.

To understand how this important initiative of the government can be taken forward, the Indian Council for Agricultural Research (ICAR), International Food Policy Research Institute (IFPRI) and the Tata Cornell Institute for Agriculture and Nutrition (TCI) jointly organised a national conference during October 9-10, 2017. The conference was attended 150 delegates. Eminent economists, agricultural scientists and policy makers shared their views on macro as well as micro issues that have been holding back agricultural growth in the Eastern states. The participants deliberated upon several aspects viz. technological, land use, institutional, climate change and risk, investments, food security and migration to find appropriate strategies that would help the Eastern states in unleashing their potential.

Dr Harsh Kumar Bhanwala, Chairman, National Bank for Agriculture and Rural Development (NABARD), attributed low agricultural productivity in the eastern region to small size of land holdings and inadequate rural infrastructure. He laid emphasis on diversification of agriculture by the small farmers to harness the opportunities in horticulture and fisheries activities and income gains. He suggested formation of Farmer Producer Organizations (FPOs) or Aggregators who can provide easy market access to farmers for their produce.

Dr Trilochan Mohapatra, Secretary, Department of Agricultural Research Education (DARE) and Director General, ICAR, highlighted a strong need to bring convergence in policies and efforts from planning to implementation which can help in bringing green revolution in the eastern region. An increased spending on agriculture Research and Development (R&D) and improving extension services can go a long way in increasing crop productivity.

Dr P K Joshi, Director IFPRI-South Asia, IFPRI reiterated that India’s eastern region suffers from natural calamities and is largely rainfed. However, it offers numerous opportunities like utilization of rice fallows, cultivation of non-food crops including fruits-vegetables, and their value addition in processing industry. To harness these opportunities, it is important that these states bridge the yield gaps and have climate smart agriculture. He also emphasised to treat agriculture as an agri-business profession whereby entrepreneurship should be promoted among the farmers. In doing so, business models that are best suited for this region should be explored with adequate financial support by the lending agencies and banks.

The conference concluded with some key recommendations-

  • Technological development is critical for accelerated and sustainable agricultural development in the region. Special focus need to be given on adoption of improved seed varieties, System of Rice Intensification (SRI), farm mechanization and conservation agriculture.
  • Reforms are needed in inputs delivery chain (seed, fertilizer etc) and promotion of rental markets (farm machinery, irrigation, land) to ensure optimal land and water use.
  • Institutional reforms are required in improving agricultural marketing, financing, insurance and formation of FPOs/cooperatives.
  • Increase in infrastructural investment by the government in areas such as irrigation, cold chain, reefer vans and other logistics, roads and other transport mechanisms for high value perishable commodities is the need of the hour.

Presentations

Flickr

Op-ed article

Loan waiver is not the solution

Since Independence, one of the primary objectives of India’s agricultural policy has been to improve farmers’ access to institutional credit and reduce their dependence on informal credit. As informal sources of credit are mostly usurious, the government has improved the flow of adequate credit through the nationalisation of commercial banks, and the establishment of Regional Rural Banks and the National Bank for Agriculture and Rural Development. It has also launched various farm credit programmes over the years such as the Kisan Credit Card scheme in 1998, the Agricultural Debt Waiver and Debt Relief Scheme in 2008, the Interest Subvention Scheme in 2010-11, and the Pradhan Mantri Jan-Dhan Yojana in 2014.

It is encouraging to see a robust increase in institutional credit from ₹8 lakh crore in 2014-15 to ₹10 lakh crore in 2017-18. Of this, ₹3.15 lakh crore is meant for capital investment, while the remaining is for crop loans, according to the Ministry of Agriculture and Farmers Welfare. Actual credit flow has considerably exceeded the target. The result is that the share of institutional credit to agricultural gross domestic product has increased from 10% in 1999-2000 to nearly 41% in 2015-16.

Clamour for loan waiver

While the flow of institutional farm credit has gone up, the rolling out of the farm waiver scheme in recent months may slow down its pace and pose a challenge to increasing agricultural growth. The Uttar Pradesh government has promised a ₹0.36 lakh crore loan waiver covering 87 lakh farmers, whereas the Maharashtra government has announced it’s writing off ₹0.34 lakh crore covering more than 89 lakh farmers. The demand for a loan waiver is escalating in Punjab, Karnataka, and other States. This clamour is only poised to increase as the 2019 general election comes closer.

There is a serious debate on whether providing loans to farmers at a subsidised rate of interest or their waiver would accelerate farmers’ welfare. At the global level, studies indicate that access to formal credit contributes to an increase in agricultural productivity and household income. However, such links have not been well documented in India, where emotional perceptions dominate the political decision quite often. A recent study by the International Food Policy Research Institute reveals that at the national level, 48% of agricultural households do not avail a loan from any source. Among the borrowing households, 36% take credit from informal sources, especially from moneylenders who charge exorbitant rates of interest in the 25%-70% range per annum. More importantly, the study using the 2012-13 National Sample Survey-Situation Assessment Survey (schedule 33) finds that compared to non-institutional borrowers, institutional borrowers earn a much higher return from farming (17%). The net return from farming of formal borrowers is estimated at ₹43,740/ha, which is significantly greater than that of informal sector borrowers at ₹33,734/ha. Similarly, access to institutional credit is associated with higher per capita monthly consumption expenditures.

A negative relationship between the size of farm and per capita consumption expenditure (a proxy for income) further underscores the importance of formal credit in assisting marginal and poor farm households in reducing poverty. Indeed, access to formal institutional credit also tends to enhance farmers’ risk-bearing ability and may induce them to take up risky ventures and investments that could yield higher incomes. Going by the NSS schedule 18.2 (debt and investment), rural households’ investments in agriculture grew at a high rate of 9.15% per annum between 2002 and 2012. While 63.4% of agricultural investments are done through institutional credit, landless, marginal and small farmers’ investment demand is met through informal sources to the tune of 40.6%, 52.1%, and 30.8%, respectively. Statistics show that nearly 82% of all indebted farm households (384 lakh) possess less than two hectares of land compared to other land holders numbering 84 lakh households. Those residing in the less developed States are more vulnerable and hence remain debt ridden.

Not helping farmers’ welfare

Clearly, a major proportion of farmers remain outside the ambit of a policy of a subsidised rate of interest, and, for that matter, of loan waiver schemes announced by respective State governments. In other words, this sop provides relief to the relatively better off and lesser-in-number medium and large farmers without having much impact on their income and consumption. This anomaly can be rectified only if the credit market is expanded to include agricultural labourers, marginal and small land holders. It is, therefore, important to revisit the credit policy with a focus on the outreach of banks and financial inclusion.

Second, the government along with the farmers’ lobby should desist from clamouring for loan waivers as it provides instant temporary relief from debt but largely fails to contribute to farmers’ welfare in the long run. To what extent this relief measure can help bring farmers out of indebtedness and distress remains a question. This is because farmers’ loan requirement is for non-agricultural purposes as well, and often goes up at the time of calamity when the state offers minimal help. If governments are seriously willing to compensate farmers, they must direct sincere efforts to protect them from incessant natural disasters and price volatility through crop insurance and better marketing systems.

Third, it should be understood that writing off loans would not only put pressure on already constrained fiscal resources but also bring in the challenge of identifying eligible beneficiaries and distributing the amount.

The report of the Committee on Doubling of Farmers’ Income, Ministry of Agriculture and Farmers Welfare, has rightly suggested accelerating investments in agriculture research and technology, irrigation and rural energy, with a concerted focus in the less developed eastern and rain-fed States for faster increase in crop productivity and rural poverty reduction. Additional capital requirements estimated for 20 Indian States are ₹2.55 lakh crore (₹1.9 lakh crore on irrigation and rural infrastructure by State governments and ₹0.645 lakh crore by the farmers) at 2015-16 prices by 2022-23. Public and private investments are required to grow at an annual rate of 14.8% and 10.9% in the next seven years. A diversion of money towards debt relief, which is in fact unproductive, will adversely impinge on state finances, may dissuade lending by the banks, and hence prove counterproductive to the government’s broader mandate of doubling farmers’ income by 2022-23.

Anjani Kumar and Seema Bathla are agricultural economists at IFPRI and Jawaharlal Nehru University, New Delhi, respectively. This piece was originally published in The Hindu 

Why eastern India needs a Green Revolution

Women Farmers in field, Nalanda District, Bihar. Source: (flickr) Divya Pandey, IFPRI

Eastern India is waiting for Green Revolution to improve food security and reduce poverty. A large fraction of the population in this part of the country is dependent on agriculture for food and livelihood security. The region is home to the highest density of rural poor in the world and poverty is high among agricultural laborers and sub-marginal farmers cultivating less than 0.5 ha land. Despite several government efforts in the past, eastern India still lags when it comes to agricultural development. Though the region has the best of soils in the country and an abundance of water, sunshine and labor, agricultural performance is appears to be of subsistence level only.

The majority of farming families in this region are poor; increasing their net returns from agriculture is essential to reduce poverty. However, the returns from agriculture are significantly lesser in eastern India compared to, say, the north-western states. For example, average net returns from paddy are 5-7 times lower in Bihar than that in Haryana and Punjab. The crop yields are low and almost stagnating in eastern India compared to the north-western and other parts of the country. For example, average yield of rice is around 2-2.5 tons/ha in Bihar (and similar in other states) compared to 5 tons/ha in Haryana and 6 tons/ha in Punjab. In the case of wheat, the yield is around 2.5 tons/ha in Bihar—significantly below the national average and much below the yield levels in Punjab and Haryana (4.5-5 tons/ha).

High population pressure on land, combined with relatively low crop-yields, results in lower average per capita income for farm households in the region. The average annual farm incomes in eastern states are also nearly half of the national average. The region is also highly vulnerable to climate change and thus suffers from high inter-year crop yield variability, making agriculture more vulnerable to climate extremes such as droughts and floods. For example, during 2009, a drought year, paddy yields in Bihar dropped by nearly 15% compared to normal year yields, leading to serious social and economic impacts. A similar situation played out in other eastern states, too; however, in north-western states like Haryana and Punjab, the yields were similar to that in normal years. Therefore, the major policy challenge is to promote sustainable intensification of agriculture to make agriculture more profitable and resilient to climate change.

IFPRI conducted some surveys in major states of India to map the adoption of improved varieties of crops and new technologies. Surveys from the eastern states show that most farmers there continue to use 25-30 years-old seed varieties with low yield potential and high susceptibility to biotic and abiotic stresses. Further there is negligible adoption of conservation agriculture (CA) technologies (zero tillage, laser land leveller, etc). In contrast, Punjab and Haryana are adopting the latest varieties and technologies. Non-availability and lack of knowledge are reported to be the important constraints in adopting modern varieties and technologies. Lack of a legal framework for land leasing was also stated to be a constraint in adopting the latest technologies and committing investment to development of farm assets. Global experiences reveal that legalised land leasing improves efficiency and reduces poverty.

Despite all constraints, in recent years, agriculture in eastern India has begun to transform, but the pace needs to be accelerated by reforming policies, institutions, and markets and by developing agri-infrastructure. Diversification of agriculture in eastern India towards high-value produce is the next step forward to increase farmer’s income. There is enormous scope for dairy, horticulture and fisheries in eastern India. An integrated-farming-system approach can generate additional incomes for farmers along with higher crop and water productivity. Research shows integrated farming system is the most reliable way of obtaining high incomes to the farmers. It would need investment in developing physical and financial infrastructure such as agro-processing, rural warehouses, cold storages, cold chains, and financing institutions.

Market availability is yet another factor to consider. In the absence of suitable marketing facilities in the region, most farmers sell their surplus at non-remunerative prices soon after harvests. In addition, marketing and the ability to negotiate a good price for produce is severely constrained. Therefore, adequate facilities need to be created in rural areas through public–private partnership to provide price advantage, reduce transaction costs and give access to efficient input- and output-markets. The region also has experienced low investment in agriculture development, especially on land, water, markets and extension services in comparison to other parts of India. IFPRI research shows that encouraging private investment in irrigation development will trigger agricultural growth in the region.

The success of all efforts will rely on how farmers are consolidated through self-help groups or farmer-producer organisations or cooperatives to take advantage of economies-of-scale.

Finally, a comprehensive approach by integrating technologies, policies, institutions and agri-infrastructure is necessary to usher in a new green revolution, in eastern India this time.

This piece was originally published in Financial Express.

 

SAFANSI Roundtable: A Focus on Government Action for Nutrition in South Asia

High-level summary: The event will draw on the latest evidence and experience from current nutrition-sensitive and nutrition-specific programs, and will explore the implications for acting at scale with such interventions, including financing, return on investment, communication, advocacy, monitoring and evaluation dimensions. 

Date: September 7-8, 2017 | Kathmandu, Nepal |Hotel Yak and Yeti

Objective:  Advance multi-stakeholder and multi-sectoral national and subnational efforts to address nutrition as a priority and scale up nutrition efforts together.  Additionally, address budgeting for nutrition at the regional, country and subnational level, including domestic, public and private financing.

Outcome: Key public sector, business, donor and civil society decision makers raise the profile of nutrition in their home countries and find effective ways to work together.

Participants: A mixed group of policy and program planners, and nutrition experts, working with the following institutions:

  • The target participants are Chairs (or designated senior staff) of Planning Commissions at the national and subnational levels, or equally senior government officials who are responsible for addressing malnutrition for their government.
  • Speakers/panelists should be drawn from government ministries, relevant research organizations, civil society, donor organizations, and private sector.
  • Additional invitations will go to:
    • Policy makers/Politicians
    • Civil Society and Nutrition Focused Organizations (SUN, SNV, Nutrition International (NI), GAIN, etc.)
    • Donor organizations (DFID, EC, DFAT, USAID, etc.)
    • Relevant UN organizations (UNICEF, WFP, WHO, FAO, UNDP)
    • International and regional NGOs (SUN, LANSA, GFAR, SAARC, etc.)
    • Research institutions (LANSA, IFPRI, etc.)

More details

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