Ramesh Singh Summary: Agriculture & Food Management- 1 - Indian Economy for UPSC CSE

Food Philosophy of India

• The First Phase: This phase continued for the first three decades after Independence. The main aim and the struggle of this phase were producing as much foodgrains as required by the Indian population, i.e., achieving physical access to food.
• The Second Phase: The Supreme Court intervened after a PIL was filed by the People's Union for Civil Liberties (PUCL) and a national level Food for Work Programme came up (to be merged with the National Rural Employment Guarantee Scheme). The courts took the governments on task if food grains rot either in godowns or destroyed in oceans to manage market price for the food grains, or if the Centre had to go for exporting wheat at very low price.
• The Third Phase: By the end of the 1980s, world experts started questioning the very way world was carrying on with different modes of production. Agricultural activity was one among them which had become hugely based on industries (chemical fertilizers, pesticides, tractors, etc.). All developed economies had declared their agriculture to be an industry.

Land Reforms

Phase-I
Land reforms in India had three objectives similar to the other economies which opted for it in the past: 

• Removing institutional discrepancies of the agrarian structure inherited from the past which obstructed increasing agricultural production, such as, the size of agricultural holding, land ownership, land inheritance, tenancy reforms, abolition of intermediaries, introduction of modern institutional factors to agriculture, etc.
• The other objective of the land reforms in India was related to the issue of socioeconomic inequality in the country. The high inequality in land ownership not only had a its negative economic impact on the economy.
• The third objective of land reforms in India was highly contemporary in nature, which did not get enough socio-political attention—it was the objective of increasing agricultural production for solving the inter-related problems of poverty, malnutrition and food insecurity.

Reasons for Failure of Land Reforms

• Land in India is considered a symbol of social prestige, status and identity unlike the other economies which succeeded in their land reform programmes, where it is seen as just an economic asset for income-earning.
• Lack of political will which was required to affect land reforms and make it a successful programme.
• Rampant corruption in public life, political hypocrisy and leadership failure in the Indian democratic system.

Phase-II

• The second phase of land reforms can be traced in the process of economic reforms. Economic reforms exposed the economy to the new and emerging realities, such as, land acquisition and leasing, food-related issues and the agricultural provisions of the World Trade Organization (WTO).
• A scheme the Digital India Land Records Modernisation Programme (DILRMP), is being run as a central sector scheme aimed at moving from presumptive title.
• The programme has been slow and uneven across states—to speed up the process lessons may be taken from some state initiatives such as the Bhoomi Project in Karnataka, the Rajasthan Urban Ceiling Act 2016 and the use of blockchain technology to prevent property fraud in Andhra Pradesh. 

Pre Independence

• Under the British Raj, the farmers did not have the ownership of the lands they cultivated, the landlordship of the land lied with the Zamindars, Jagirdars etc.
• Several important issues confronted the government and stood as a challenge in front of independent India.
  • Land was concentrated in the hands of a few and there was a proliferation of intermediaries who had no vested interest in self-cultivation.
    • Leasing out land was a common practice.
  • The tenancy contracts were expropriative in nature and tenant exploitation was almost everywhere.
  • Land records were in extremely bad shape giving rise to a mass of litigation.
  • One problem of agriculture was that the land was fragmented into very small parts l for commercial farming.
    • It resulted in inefficient use of soil, capital, and labour in the form of boundary lands and boundary disputes.

Post Independence

• A committee, under the Chairmanship of J. C. Kumarappan, was appointed to look into the problem of land. The Kumarappa Committee's report recommended comprehensive agrarian reform measures.
• The Land Reforms of the independent India had four components:
  • The Abolition of the Intermediaries
  • Tenancy Reforms
  • Fixing Ceilings on Landholdings
  • Consolidation of Landholdings.
• These were taken in phases because of the need to establish a political will for their wider acceptance of these reforms.

Tenancy Reforms

• After passing the Zamindari Abolition Acts, the next major problem was of tenancy regulation.
  • The rent paid by the tenants during the pre-independence period was exorbitant; between 35% and 75% of gross produce throughout India.
• Tenancy reforms introduced to regulate rent, provide security of tenure and confer ownership to tenants.
  • With the enactment of legislation (early 1950s) for regulating the rent payable by the cultivators, fair rent was fixed at 20% to 25% of the gross produce level in all the states except Punjab, Haryana, Jammu and Kashmir, Tamil Nadu, and some parts of Andhra Pradesh.
• The reform attempted either to outlaw tenancy altogether or to regulate rents to give some security to the tenants.
• In West Bengal and Kerala, there was a radical restructuring of the agrarian structure that gave land rights to the tenants.
• Issues: In most of the states, these laws were never implemented very effectively. Despite repeated emphasis in the plan documents, some states could not pass legislation to confer rights of ownership to tenants.
  • Few states in India have completely abolished tenancy while others states have given clearly spelt out rights to recognized tenants and sharecroppers.
  • Although the reforms reduced the areas under tenancy, they led to only a small percentage of tenants acquiring ownership rights.

Agriculture Holdings

• The 10th Agriculture Census 2015-16 was released by the Government in October 2018.
• The major highlights of the Census are as given below (all comparisons made in reference to the last and the 9th Census 2010-11):
  (i) The total area under farming fell from 159.6 million hectares (Mha) to 157.14 Mha.
  (ii) Small and marginal farmers (owning less than two hectares) account for 86.2 per cent of all farmers in India, but own just 47.3 %of the crop area. In comparison, semi medium and medium land holding farmers (owning between 2-10 hectares) account for 13.2 % of all farmers, but own 43.6% of crop area.
  (iii) The proportion of small and marginal farmers grew from 84.9 per cent to 86.2 per cent, while the total number of operational holdings grew from 138 million to 146 million.
  (iv) The number of small and marginal farms rose by about 9 million during the period.
  (v) The small and marginal farmers (around 126 million in number) own about 74.4 Mha of land —or an average holding of just 0.6 hectares each—jrot enough to produce surpluses which can financially sustain their families, explaining the rising distress in Indian agriculture.

Green Revolution

Components of the Green Revolution

• The HYV Seeds: These seeds were popularly called the 'dwarf variety of seeds. With the help of repeated mutations, Mr. Borlaug had been able to develop a seed which was raised in its nature of nutrients supplied to the different parts of the wheat plant—against the leaves, stem and in favour of the grain.
• The Chemical Fertilizers: The seeds were to increase productivity provided they got sufficient level of nutrients from the land.
• The Irrigation: For controlled growth of crops and adequate dilution of fertilizers, a controlled means of water supply was required. It made two important compulsions—firstly, the area of such crops should be at least free of flooding and secondly, artificial water supply should be developed.
• Chemical Pesticides and Germicides: As the new seeds were new and non-acclimatised to local pests, germs and diseases than the established indigenous varieties, use of pesticides and germicides became compulsory for result-oriented and secured yields.
• Chemical Herbicides and Weedicides: To prevent costlier inputs of fertilisers not being consumed by the herbs and the weeds in the farmlands, herbicides and weedicides were used while sowing the HYV seeds.
• Credit, Storage, Marketing/Distribution: For farmers to be capable of using the new and the costlier inputs of the Green Revolution, availability of easy and cheaper credit was a must.
• Socio-economic Impact: Food production increased in such a way (wheat in 1960s and rice, by 1970s) that many countries became self-sufficient and some even emerged as food exporting countries.
• Ecological Impact: The most devastating negative impact of the Green Revolution was ecological. When the issues related with it were raised by the media, scholars, experts and environmentalists, neither the governments nor them asses were convinced. But a time came when the government and other government agencies started doing studies and surveys focused around the ecological and environmental issues.

Impact of Green Revolution in India

• Green Revolution has remarkably increased Agricultural Production. Foodgrains in India saw a great rise in output. The biggest beneficiary of the revolution was Wheat Grain. The production increased to 55 million tonnes in the early stage of the plan itself. 
• Not just limited to agricultural output the revolution also increased per Acre yield. Green Revolution increased the per hectare yield in the case of wheat from 850 kg per hectare to an incredible 2281 kg/hectare in its early stage.
• With the introduction of the Green revolution, India reached its way to self-sufficiency and was less dependent on imports. The production in the country was sufficient to meet the demand of the rising population and to stock it for emergencies. Rather than depending on the import of food grains from other countries India started exporting its agricultural produce. 
• The introduction of the revolution inhibited a fear among the masses that commercial farming would lead to unemployment and leave a lot of the labour force jobless. But the result seen was totally different there was a rise in rural employment. The tertiary industries such as transportation, irrigation, food processing, marketing, etc created employment opportunities for the workforce.
• The Green Revolution in India majorly benefited the farmers of the country. Farmers not only survived but also prospered during the revolution their income saw a significant rise which enabled them to shift from sustenance farming to commercial farming.

Besides the positive impact, the revolution had a gloomy side too.  Some of the negative effects of the Green Revolution are stated below:

• Retardation of agricultural growth due to inadequate irrigation cover, shrinking farm size, failure to evolve new technologies, inadequate use of technology, declining plan outlay, unbalanced use of inputs, and weaknesses in credit delivery system.
• Regional dispersal of the evolution created regional inequalities. The benefits of the green revolution remained concentrated in the areas where the new technology was used. Moreover, since the revolution for the number of years remained limited to wheat production, its benefits were mostly accrued only to wheat-growing areas.
• Interpersonal inequalities between large and small-scale farmers. The new technologies introduced during the revolution called for substantial investments which were beyond the means of a majority of small farmers. Farmers having large farmlands continued to make greater absolute gains in income by reinvesting the earnings in farm and non-farm assets, purchasing land from the smaller cultivators, etc.

Cropping Patterns

• The set and combination of crops which farmers opt for in a particular region, in their farm practices, is cropping pattern of the region.
• Multiplicity of cropping systems has been one of main features of Indian agriculture and it is attributed to rainfed agriculture and prevailing socio-economic situations of the farming community.
• These decisions with respect to choice of crops and cropping systems are further narrowed down under influence of several other forces related to infrastructure facilities, socio-economic and technological factors, all operating interactively at the micro-level.
• These factors are :
  (i) Geographical factors: Soil, landforms, precipitation, moisture, altitude, etc
  (ii) Socio-cultural factors: Food habits, festivals, tradition, etc.
  (iii) Infrastructure factors: Irrigation, trans-port, storage, trade and marketing, post-harvest handling and processing, etc.
  (iv) Economic factors: Financial resource base, land ownership, size and type of landholding, household needs of food, fodder, fuel, fibre and finance, labour availability, etc.
  (v) Technological factors: Improved varieties of seeds and plants, mechanisation, plant protection, access to information, etc.

Animal Rearing

• The economics of animal rearing plays a very vital role in the country. The agriculture sector in India is predominantly a mixed crop-livestock (animals, birds and fishes ) farming system.
• Animal rearing has always remained an integral part of it. Animal rearing (which includes rearing of cows, camels, buffaloes, goats, pigs, ships, etc.), besides directly contributing to the national income and socio-economic development.
  (i) Dairy Sector: India ranks first in the world in milk production with a production of around 190 million tonne and the per capita availability (pea) of 394 grams (world pea is 296 grams) by the end of 2018-19.
  (ii) Pig Rearing Scheme: This scheme is aimed to assist farmers/land less labourers/co-operatives and the tribals particularly in the North-Eastern states by rearing pigs under stall fed condition for quality pork production and organised pork marketing in rural areas and semi-urban areas.
  (iii) Animal Health: With the improvement in the quality of livestock through launching of extensive cross-breeding programmes, the susceptibility to various diseases, including exotic diseases has increased. In order to reduce morbidity and mortality, efforts are being made by the state / UT governments to provide better health care through polyclinics/veterinary hospitals/dispensaries/first-aid centres including mobile veterinary dispensaries.

Food Management

(i) Minimum Support Price

• Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices — a guarantee price to save farmers from distress sale.
• The MSPs are announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP, 1985). The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
• In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.

(ii) Market Intervention Scheme
The Market Intervention Scheme (MIS) is similar to MSP, which is implemented on the request of state governments for procurement of perishable and horticultural commodities in the event of fall in market prices.

(iii) Procurement Prices In 1966-67

• The Government of India announced a 'procurement price' for wheat, a bit higher than its MSP (the purpose being security of food procurement for requirement of the PDS).
• The MSP was announced before sowing, while the procurement price was announced before harvesting—the purpose was to encourage farmers to sell a bit more and get encouraged to produce more.

(iv) Issue Price

• The price at which the government allows offtake of foodgrains from the FCI (the price at which the FCI sells its foodgrains).
• The FCI has been fetching huge losses in the form of food subsidies. The food grains procured are transported to the godowns of the FCI located across the country (counted in the buffer stock). 
• From here they head to the sale counters—to the TPDS or Open Market Sale.

(v) Economic Cost of Foodgrains

• The economic cost of foodgrains consists of three components, namely the MSP including central bonus (the price paid to farmers), procurement incidentals, and the cost of distribution.
• The government set up a High Level Committee (HLC) in 2015 (Shanta Kumar as its Chairman) to suggest inter-alia restructuring or unbundling of the FCI with a view to improve its operational efficiency and financial management.

(vi) Open Market Sale Scheme

• The FCI has been undertaking sale of wheat at pre-determined prices (reserve prices) in the open market from time to time, known as the Open Market Sale Scheme (OMSS).
• This is aimed at serving the following objectives :
  (i) To enhance market supply of foodgrains;
  (ii) To exercise a moderating influence on open market prices.
  (iii) To offload surplus stocks.

Price Stabilisation Fund

The Government of India, by late March 2015, launched the Price Stabilisation Fund (PSF) as a Central Sector Scheme to support market interventions for price control of perishable Agri horticultural commodities.

Buffer stock

• Buffer stock refers to a 'reserve' of commodity to offset price fluctuations and unforeseen emergencies.
• Introduced in 1969 (4th Plan, 1969-74), under it, Government of India maintains a buffer stock of selected food grains (wheat and rice) in the Central Pool for —
  (i) Meeting the prescribed minimum buffer stock norms for food security.
  (ii) Monthly release of food grains for supply through Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS).
  (iii) Meeting emergency situations arising out of unexpected crop failure, natural disasters, etc.
  (iv) Price stabilisation or market intervention to augment supply so as to help moderate the open market prices.

Decentralised Procurement Scheme
The decentralised procurement (DCP) scheme was operationalised by the government in 1997 (together with the Centre and some of the states also procure foodgrains from the farmers, locally).

• Under this scheme, the designated states procure, store and also issue food grains under the TPDS.
• The difference between the economic cost of the states and the central issue price (CIP) is passed onto the states by the Government of India as subsidy.
• Government took two steps— firstly, a limit was put on its procurement from the states paying bonus over and above the MSP upto the needs of TPDS and Other Welfare Schemes, and secondly, FCI stopped taking part in MSP operations in the case of non-DCP states declaring bonus.

Farm Subsidies

Farm subsidies form an integral part of the government's budget. In the case of developed countries, the agricultural or farm subsidies compose nearly 40 percent of the total budgetary outlay, while in India's case it is much lower (around 7.8% of GDP) and of different nature.

• Direct farm subsidies: These are the kinds of subsidies in which direct cash incentives are paid to the farmers in order to make their products more competitive in the global markets.
• Indirect farm subsidies: These are the farm subsidies which are provided in the form of cheaper credit facilities, farm loan waivers, reduction in irrigation and electricity bills, fertilizers, seeds and pesticides subsidy as well as the investments in agricultural research, environmental assistance, farmer training, etc. These subsidies are also provided to make farm products more competitive in the global market.

Food Security 

• India attained self-sufficiency in food by late 1980s, though food security still evades the country.
• Food security means making food available at affordable price sat all times, to all, without interruptions
• Though India's GDP growth has been impressive and the agricultural production has also increased over the past few decades, hunger and starvation still persist among the poorer sections of the population.
• Two important things need attention regarding India's food security:
  (i) Around 23 percent of India's population is BPL and a greater portion.
  (ii) There is a strong correlation between stability in agricultural production and food security. Volatility in agricultural production impacts food supplies and can result inspikes in food prices, which adversely affect the lowest income groups of the population.

PDS & Food subsidy

PDS

• The Public Distribution System strives to ensure food security through timely and affordable distribution of food grains to the BPL population as this section cannot afford to pay market prices for their food.
• This involves procurement of foodgrain at MSP by the Government, building up and maintenance of food stocks, their storage, and timely distribution, making food grains accessible at reasonable prices to the vulnerable sections of the population.

Food subsidy
Food subsidy comprises of

• Subsidy provided to FCI for procurement and distribution of food grains under NFSA (National Food Security Act), other welfare schemes (OWS) and maintaining their strategic reserve.
• subsidy provided to States for undertaking 'decentralized procurement'. The acquisition and distribution costs of food grains for the central pool together constitute the economic cost.

Agriculture Marketing

• India's agri market is presently regulated by the Agricultural Produce Market Committee (APMC) Act enacted by the state governments.
• There are about 2,477 principal regulated agri markets and 4,843 sub-market yards regulated by the respective APMCs in India.
• This Act notifies agricultural commodities produced in the region such as cereals, pulses, edible oilseed, fruits and vegetables and even chicken, goat, sheep, sugar, fish, etc., and provides that first sale of these commodities can be conducted only under the aegis of the APMC through the commission agents licensed by the APMCs set up under the Act.
• The scope of the Essential Commodities Act, 1955 (EC Act) is much broader than the APMC Act. It empowers the central and state governments concurrently to control production, supply and distribution of certain commodities, including pricing, stock-holding and the period for which the stocks can be kept and to impose duties.
• The APMC Act on the other hand, controls only the first sale of the agricultural produce.
• Apart from food-stuffs which are covered under the APMC Act, the commodities covered under the EC Act generally are drugs, fertilisers, textiles and coal.

Model Contract Farming Act

The Model Agriculture Produce & Livestock Contract Farming and Services (Promotion & Facilitation ) Act, 2018 was released by the Government in May 2018.
Salient features of the Act are as given below:

• Contract farming to be outside the ambit of APMC Act.
• Farmers have been considered weaker in case of contract farming.
• Other than contract farming, it covers all 'services contracts' related to pre-production, production and post-production.
• Contracted produce covered under crop and live stock insurance.
• No permanent structure can be developed on farmers' land or premises.
• No right, title of interest of the land shall vest in the sponsor (i.e., the contact farmer).
• If farmers authorise, FPOs (Farmer Producer Organizations), FPCs (Farmer Producer Companies) can be contract farmers.
• The entire pre-agreed quantity of agri produce to be bought by the contact farmer.
• RARC (Registering and Agreement Recording Committee) or an officer to be appointed for online registration of the contract agreement (at district, block and taluka levels).
• CFFG (Contract Farming Facilitation Group) to be set up to promote contract farming (at village and panchayat levels).
• To settle disputes an accessible and simple mechanism to be set at lowest level possible.
• In structure, the Act is facilitative and promotional rather than being regulatory.

Agriculture and Food Management

• The Agriculture sector experienced buoyant growth in the past two years, accounting for a sizable 18.8% (2021-22) in Gross Value Added (GVA) of the country registering a growth of 3.6% in 2020-21 and 3.9% in 2021-22.
• Minimum Support Price (MSP) policy is being used to promote crop diversification.
• Net receipts from crop production have increased by 22.6% in the latest Situation Assessment Survey (SAS) compared to the SAS Report of 2014.
• Allied sectors including animal husbandry, dairying and fisheries are steadily emerging to be high growth sectors and major drivers of overall growth in the agriculture sector.
• The Livestock sector has grown at a CAGR of 8.15% over the last five years ending 2019-20.
• Government facilitates food processing through various measures of infrastructure development, subsidised transportation and support for formalisation of micro food enterprises.
• India runs one of the largest food management programmes in the world.
• Government has further extended the coverage of the food security network through schemes like PM Gareeb Kalyan Yojana (PMGKY).