Helping Indian Farmers
Aaditya Mattoo, Deepak Mishra and Ashish Narain, in the Times of India, on the problem and solution for Indian agriculture:
So, here’s the paradox: the hard-working Indian farmer — one of the world’s low-cost producers — is unable to compete globally.What is hobbling the Indian giant? A recent World Bank study finds that the biggest problems for India’s horticulture lie outside the sector rather than within it…
Remedying bottlenecks from farm to market is arguably a higher priority than raising farm productivity. Consider this: 20 per cent higher yields will only lower the final price by less than three percentage points.In contrast, a 20 per cent reduction in transportation costs alone will reduce final prices by as much as 10 percentage points.
In fact, without more efficient logistics, increasing production — through subsidised credit, power and fertilisers — can lead to gluts that hurt rather than help farmers. [TOI]
The main problem with India is its woeful infrastructure. By infrastructure, I mean “hard” as well as “soft” infrastructure.To see what is really infrastructure, please visit China. If we had such big roads, roadworthy trucks that move at over 100 Km/hr seamlessly over the myriad flyovers and expressways (on one ride of over 200 Kms from Hefei to Tongling, I did not encounter even one signal, only overpasses and underpasses so that you can continue to move at 100-120 Km/hr non stop)transportation efficiency can easily increase by 30%. Secondly, if we had sufficient “soft” infrastructure, that is a single VAT based tax system, where the paper payments are really limited, all transactions by “smart cards” or through banks, there won’t be many bottlenecks in moving goods from place to place. This adds another 20 % to the efficiency easily (just look at the number of trucks parked at various check-nakas all over the country). Not to the reduction of corruption because of this system.
This infrastructure, is what makes China a powerhouse for manufacturing, we can be the same, if we improved the infrastructure. And the same good infrastructure can be used very efficiently by farmers to move produce faster to market.If payments were bank based by electronic means, less opportunities for middlemen to skim off the farmer’s incomes…. and so on…
Comment by Mandar — April 26, 2007 @ 8:13 am
Infrastructure is one problem. The second problem is the massive fragmentation of Indian farms resulting in very low economies of scale. With the passage of time ancestral land has divided over generations and the typical Indian farm is extremely small now. I dont have the exact numbers, but I believe that a typical indian farm is about one-two acres in size vs a few hundred acres in the US. The overheads have to be spread over a smaller lot resulting in unsustainable economies of farming. So while the average farmer is quite poor, entrepreneurs and companies farming over large lots seem to be doing quite well. And I really have no idea what the solution to this problem can be
Comment by Guhan — April 26, 2007 @ 6:39 pm
Currently the Indian farming sector employs 40 to 50% of total work force which is a huge strain on the economy. More than 90% of the farming land is still dependent on the unpredictible monsoon rains which inturn increases the risk of productivity/returns causing huge turmoil in the lifes of the farmers. It is time to move the work force to other sectors like manufacturing or smaller cottage industries to bring more stability to the economic well being of the working population. Here are couple of sugestions:
- Education (Mostly ITI based so that farming community can have an alternative income source than compelled to do farming.)
- Tax based or any other incentives to manufacturing companies to setup plants at suburban/ rural areas helping less fortunate farmers to an alternative work option.
- Infrastructure impovements.(Privatise the roads and have minimal tolls to use them. This will atleast help some transportation delays to decrease.)
- I don’t know if there is a Land sealing Act still in effect which basically was used to remove the Zamindari system. If it does, may be its time to revisit it just so that each farmer can have more land to make some profit.
My last thought is: unless you bring economic stability to the working population you cannot dream of a stable economy for a country.
Comment by Punarvasu — April 27, 2007 @ 3:06 am
Imagine if India had 300,000,000 accountants working away without the benefit of calculators, computers or software.
Would subsidizing the cost of pencils and paper be the solution proposed to keep them toiling away 19th century style?
900,000 American farmers produce about the same agricultural output as India’s 300,000,000 farmers.
Seems like India can either buy some tractors and add 299,000,000 ex-farmers to their welfare rolls, or focus on building sectors of the economy that will offer lots of high-paying jobs in the future and leave the farmers alone.
Comment by alphie — April 27, 2007 @ 11:12 am
About alphie’s comment above, I had written a short story imagining if IT was run like farming: link.
It’s kind of one-sided, but captures my understanding of the agriculture sector right now.
Sorry if that seemed like advertising :D
Comment by Pramod Biligiri — April 27, 2007 @ 12:26 pm
This OFFTOPIC…but will somebody please educate this character. I started a post, but then got too angry, and started ranting. Thanks. You will be doing the world a favour. (Shame we can\\\’t do much about the NYTimes article this links to…
http://www.theotherindia.org/economy/the-ultimate-subsidy.html
Comment by Phoenix — April 27, 2007 @ 8:42 pm
I think the problem is that farmers are not given their due. The whole thing has to go with balance. The farmers hardly anything else to live on. There has to be proper rehab plan of some sort. To worsen the situation, govt pays peanut to the farmers and sell the land at higher prices, or give the land to big companies at subsidy. It seems like a huge scam.
Read this story, it is quite an eye opener.
http://chandigarhland.org/
Comment by Amandeep Sapra — May 2, 2007 @ 8:56 am
Well…..this is something……aren’t we missing a point here…….ours is a largely and hugely populated country which is dogged by lethargic labour which is interested in working only for earning two square meals ( a stnadard sentence which 96% indians use to tell why they work)….to become efficient we have to really understand the nature of indian farmers….they are too tired and lethargic to work and toil like their counterpart in US or China……well still we are able to feed a billion indians…whatever two square meals it means.!!!!
Comment by Starlight — May 5, 2007 @ 5:28 pm
Economy of Scale wold tilt in favour of agrarian-economies where large-tracts of land would be harvested by effective-farming techniques and hooked to world-class consumer delivery supply-chains.(TRANSLATION: Big corporate (or) entrepreneur managed contract-farming done with an up-to-date farming techniques and harvests sold to efficient retail–supply chains like Reliance, Mittal-Walmarts. Innovative/Creative small/medium farms is always an exception anywhere). This would certainly happen to our farming in the next 5-10 yrs. Eventually this is inevitable for any capitalistic economy integrated into world through WTO.
What would happen to small and midsize farming community who had been prcatising farming using traditional low-yield techniques on small tracts and relying on thier harvest for decades?
This is where our federal policies and 5/10 yr plans should kick-in to plan and support a smooth transition of this community to other sectors where jobs/business opportunities being created would be serving this huge-block of farming community. How skillfull is our federal stewards in doing this is going to dictate the level of civil-unrest that has to be managed by our country in the next 1-2 decades.
Comment by Krishna Moturi — May 29, 2007 @ 12:54 am
[...] INDIA: Helping indian farmers: [...]
Pingback by Agenda & Objectives: « Siva Moturi’s Policy Critique Blog — August 1, 2007 @ 3:08 am
Last 60 years we are talking about agricultural growth. Government has made many efforts for updradion of agricultural land and growth ,irrigation facilities and green revolution which was brought about for the improvment of seeds . When we talk about the manufacturing sectors it taken a sharp growth . Again talking about the service sector , it has boomed in the economy . We are always recongised
as financial boom and bpo boom , stock market boom in all over the country . But what about the agricultural sector . Is industrialist looking at our condition of agriculture .
somebody has rightly said that
1 . businessman - profit
2 . enterpreneure - innovator his own product
3 economist - good suggestions but lots of critism -critism .
Comment by lakshmi — August 20, 2007 @ 8:19 pm
I think aricultural sector is greatly negelected in india . When we speak about agriculture , the main advantage of our coutry is that whether there is up and downs in the market and industries , we are safe at aricultural side .The reseaon is that
India is mainly an agricultural country . We get main resourses from agriculture and also raw materails.
Today , there is an improvement in the agriculture example :Introduction of the multi exchange technology in commodity market .
On the other hand cost and prices are very high ,especially the susidies . In India the subsidies are high but in ohter countries their is low subsidies .
I also agree with the point mention by guhan about infrastructure . Ivestment are made in infrastructure but they are delayed because of political pressure.
Comment by lakshmi — September 27, 2007 @ 5:07 pm
Whatever way farmers are helped, as long as they are not educated it is difficult to improve agriculture standard. Moreover, we need a land reformation: the average land owned by a poor farmer can not afford for modern technologies in his day to day farming activity.
Comment by gsee — October 17, 2007 @ 8:58 am
Hi gsee,
I’m really curious about Indian farmer demographics. If an average farmer is very poor how does a company like eChopal http://www.echoupal.com/ grow? I was looking at their website and it looks like it takes $5K US to setup an operation in a single village and at this point they span 11,000 villages.
Cheers,
Comment by Olive — October 18, 2007 @ 10:02 am
I think there are many factors that devide farmers in a western culture to that of ones in India. One cannot compare farming in one country to another. The structures are totally different, the cultures are different, the peoples expectations are different, the currency is different and God knows what else is different. A farmer in one country can be earning $1000 in a week in once country and another farmer doing the same ammount of work can be earning $100 in a week or even less.
Even though we all live in the 21st century we are really not in the same century in the sense. We are not in the same economic standards and the same working structures and the same human rights and working rights and all the other standards that are imposed in a western society. So in short one cannot compare how farms are yeilding one country to that of others. The climate also plays a big part in determining what crops will grow this year.
India should not compete with any country but only with itself. They should aim to better themselves against figures from previous years but at the same time making sure the structures that are put forward don’t jeopardise future generation crop yields.
Some farming practices can destroy the land for many years to come through the usage of western fertilisers and that is only one factor that needs to be sighted for future generations.
Western society and to an extend lot of developing countries are waking up to the fact of keeping the land fertile for future generations.
Comment by John — December 13, 2007 @ 8:07 pm
One question that is difficult to answer is how much justifiable is the presence of private sector in our agricultural sector? My family has an agricultural background. Farming is no more considered to be a dignified job in the villages. Youth are running towards the nearest city. The villagers usually want themselves in secondary or tertiary occupation with fixed incomes. For them, a teacher is equivalent to a manager and B.Ed to MBA.
Considering the agricultural crisis, this comes as a no surprise to any of us. With the increse risk in the agriculture due to various reason, farmers have lost their intrest and hopes. And that is quite reasonable- taking risk is not farmers’ but an entrepreneurs’ business. Therefore to a great extent private participation is necessary in this field even if they are exploitative in nature.
Comment by Chetan N — December 21, 2007 @ 6:38 pm
The story on agriculture reads same after 50 years of planning and investments. The economic text books 50 years ago cited same reasons for poor state of agriculture in India. Has nothing really changed ? I feel so sad. I felt people like sharad pawar could make some difference. My hope was perhaps misplaced. My point is that we are at such a low level of performance in farm productivity that any improvement should look really dramatic and we really cannot go down further. But I do see this happening. And we continue to blame population growth as we did in the past. Am I too pessimistic ?
Comment by suresh raje — June 17, 2008 @ 9:18 pm