1 Emerging Trends in Indian Agriculture: Challenges, Possibilities and SolutionsVijay Paul Sharma, Chairman Commission for Agricultural Costs and Prices (CACP) Ministry of Agriculture & Farmers Welfare Government of India

2 Presentation Outline Overview of Trends and Patterns in Indian Agriculture: Major Drivers Key Challenges & Opportunities in Indian Agriculture Policy Options and Strategies to Accelerate Agricultural Growth

3 EMERGING TRENDS IN INDIAN AGRICULTURE

4 Performance of AgricultureRecord Production in Cereals – Million Tonnes Pulses – 22.4 Million Tonnes Oilseeds – 32.5 Million Tonnes Record Production of Horticulture Crops Fruits – 92.8 Million Tonnes Vegetables – Million Tonnes Source: DAC&FW

5 Performance of AgricultureLivestock Sector Largest Milk Producer – Million Tonnes Fish Production 2nd Largest Producer (10.8 Million Tonnes) Agri-Exports – ₹2.35 Lakh Crores Growth in GVA from Agriculture & Allied Sectors – 4.9% in (0.7% in )

6 Structural TransformationStill Single Largest Employer in the Economy????? Employs about half of Workforce 138.3 Million Farming Households Source: CSO (2014)

7 Changing Composition of Indian Agriculture: Rising Importance of High-Value Sub-Sectors

8 VALUE OF OUTPUT FROM AGRICULTURETE TE High-Value: From <40% to about 50% Source: CSO (2016)

9 Major Drivers of Change: Demand-Supply

10 Drivers of Change Higher Disposable Income Technology & InfrastructureRising Demand for High-Value Agri. Products Higher Disposable Income  Expenditure on Non-Food Items Drivers of Change Changing Demographics 2/3rd Population <35 yr ing Urbanization Technology & Infrastructure Increasing Trade Opportunities

11 Composition of Consumer Expenditure: RuralSource: NSSO (2013)

12 Composition of Consumer Expenditure: UrbanSource: NSSO (2013)

13 Diversification of Indian Diets: Rural ConsumersHigh-Value: From <40% to >50% Source: NSSO (2013)

14 Diversification of Indian Diets: Urban ConsumersHigh-Value: From about 50% to >60%

15 Expanding Agricultural Trade OpportunitiesSource: GoI (2017)

16 MAJOR CONSTRAINTS FACING INDIAN AGRICULTURE

17 Major Constraints/IssuesLow Value-Addition & Poor Post-Harvest Infrastructure ing & Fragmenting Farms Competition for Land Major Constraints/Issues Rising Imports of Edible Oils & Pulses Low Prices Availability of Labor & Rising Wages Poor Access to Technology, Inputs, Services & Markets Land Tenure Systems Lack of Irrigation Facilities High Risks; Low Productivity; High Yield Gaps Climate Change?? Institutional Bottlenecks

18 Marginalization of Farms & Swelling Bottom: Challenge of Linking Smallholders with Modern Markets/Food Chains Av. Size (ha): Source: GoI (2014)

19 Farm Size: Economic ViabilitySource: GoI (2014)

20 Competition for Land: Agriculture & Non-Agri. UsesSource: MOA&FW

21 Lack & Inefficient Use of Irrigation FacilitiesLow Coverage of Irrigation (48%) Maharashtra (18%); Jharkhand (15%) Punjab (99%), Haryana (89%) Inefficient Use of Water Resources Low Cropping Intensity - 141% <120% in Odisha, Jharkhand, Chhattisgarh >185% in Punjab, Haryana, West Bengal Source: GoI (2016)

22 Low Growth & High Fluctuations in AgricultureSource: CSO (2017)

23 LOW YIELDS & HIGH YIELD GAPS: Role of Technology & Extension Services

24 High Yield Gaps - Wheat Source: ICAR & DAC&FW

25 High Yield Gaps - Gram Source: ICAR & DAC&FW

26 High Yield Gaps - Tur Source: ICAR & DAC&FW

27 High Yield Gaps – Rapeseed & MustardSource: ICAR & DAC&FW

28 LACK OF AWARENESS ABOUT MSPs & QUALITY NORMS (FAQs)

29 Low Awareness about MSPLess Coverage of Procurement Operations (Few States/Crops) Market Prices < MSP in some Crops/ Regions Source: NSS Report No.573: Some Aspects of Farming in India,

30 Paddy & Wheat Production & Procurement: TE2016-17Rice State Share (%) in Proc as % of Prod. Prod. Proc. WB 14.3 5.3 12.0 UP 11.8 6.6 18.5 Punjab 10.7 26.9 83.0 Odisha 7.2 9.7 44.7 A.P. 7.0 11.1 52.0 Bihar 6.4 3.9 19.9 Chhattisgarh 6.1 11.0 59.5 TN 6.0 2.3 12.4 Assam 4.9 0.1 0.6 Haryana 8.1 68.5 MP 3.6 2.8 26.2 TG 3.2 8.3 85.6 Karnataka 2.9 1.5 Jharkhand 0.3 3.8 All India 100.0 32.9 State Share (%) in Proc as % of Prod. Prod. Proc. UP 28.2 6.1 6.4 MP 19.1 21.8 33.9 Punjab 17.1 41.6 72.1 Haryana 12.0 25.3 62.2 Rajasthan 10.3 5.1 14.6 Bihar 4.9 0.0 All India 100.0 29.6 Source: FCI (2017)

31 Rice Price Trends: Prices Below MSP in Eastern StatesSource:

32 Market Prices Below MSP: TurSource:

33 Market Prices Below MSP: MustardSource:

34 Rising Imports of Pulses & Edible Oils

35 Issues in Capital Formation & Agricultural CreditSlow Down in Capital Formation in Agriculture Declining Share of Public Investment Significant  in Credit Flow to Agriculture (Rs Lakh Crore in to 9.6 Lakh Crore in Interest Subvention Scheme – Crop Loans Only Declining Share of Investment Credit Regional and Inter-Farm Inequalities

36 Decline in Gross Capital Formation (at 2011-12 Prices)Source: CSO (2016)

37 Share of Public & Private Sector in Capital FormationSource: CSO (2016)

38 Share (%) of Crop Loan & Term Loan in Agricultural CreditSource: NABARD (2017)

39 Agency-Wise Share (%) of Credit Flow to AgricultureSource: NABARD (2017)

40 DRIVERS OF GROWTH IN FARM INCOME

41 Doubling Farmers IncomeImprove Crop Productivity: Technology & Extension Reduce Cost of Cultivation: Rational Utilization of Inputs  Cropping Intensity (141%) Irrigated Area & Efficiency (48%) Remunerative Prices to Farmers Reduce Post-Harvest Losses & Wastages Diversification to Farm (Horticulture, Livestock, Fisheries) & Non-Farm Activities Value-Addition & Agro-Processing Divert Surplus Labour from Agriculture: Skill Building

42 III. POLICY INSTRUMENTS FOR AGRICULTURAL DEVELOPMENTThe Four Pillars

43 The Four Pillars of Agri. DevelopmentTechnology Institutions Infrastructure Incentives Strong R&D HYV Seeds Fertilizers Farm Machinery Irrigation Water Management Value-Addition Post-harvest Management ………….. Extension Services Land Reforms Rural Financial Institutions Risk Management Instruments Market Information & Intelligence Investment Basic Rural Infrastructure Roads, Power, Communication Irrigation Post-Harvest & Market Dev Agro- processing ……….. Price Policy: MSP, Proc. & PDS Subsidies: Inputs & Services Trade Policy ……………. INNOVATIONS

44 Recent Initiatives Focus on Irrigation and Water ManagementPradhan Mantri Krishi Sinchai Yojana (PMKSY): Har Khet Ko Pani; Per Drop More Crop (Micro-Irrigation), Water Conservation, AIBP Improve Crop Productivity & Increase Cropping Intensity Improving Soil Productivity: Soil Health Card Scheme Need to Promote Balanced Use of Fertilizers (N:P:K) & Micro-Nutrients Risk Management Pradhan Mantri Fasal Bima Yojna (PMFBY): Low Premium & More Coverage; 40% of Cropped Area to be Covered

45 Recent Initiatives Organic Farming: Paramparagat Krishi Vikash Yojana(PKVY) Agricultural Market Sector Reforms APMC Act Amendments – Establishment of Private Mandis; Delisting of Perishables; Contract Farming, Direct Producer-Consumer Linkages; Unified Single License and Single Point Levy of Market Fee e-National Agriculture Market (e-NAM) Dairy Processing and Infrastructure Development Fund: Corpus of Rs. 8,000 crores over 3 years

46 Recent Initiatives Increased Flow of Credit to AgricultureTarget for : Rs. 10 Lakh Crore Interest Subvention Scheme for Crop Loans National Food Security Mission Rice, Wheat, Pulses, Jute, Sugarcane, Cotton, Coarse Cereals; 60% Allocation for Development of Pulses National Mission on Oilseeds & Oil Palm (NMOOP) Mission for Integrated Development of Horticulture Digital Agriculture: Use of ICT - Kisan Call Centres, DD Kisan Channel, Radio, …….

47 POLICY PRIORITIES TO ACCELERATE GROWTH

48 Policy Priorities Improve Crop ProductivityIncrease in Public Investment in Agri. R&D, Extension, Rural Infrastructure, Post-harvest & Market Infrastructure including Storage & Processing Bridge Yield Gaps Accelerating Pace of Reforms in Laws related to Land Markets and Marketing of Agri. Products Promotion of Farmers’ Organization/Groups, SHGs Effective Price & Procurement Policy Create Awareness about MSP & Quality Norms Effective Participation of States - Decentralized Procurement Effective Use of Price Stabilization Fund Scheme

49 Policy Priorities Rationalization of Pricing of InputsIrrigation Water, Power, and Fertilizers (Imbalanced use of N:P:K and Micro-nutrient Deficiency) Address Distributional aspects of Agri. Credit Access to Small and Marginal Farmers & Poorer Regions Strengthen Rural Branch Network Significant Regional and Inter-class Inequalities Better Targeting of Input Subsidies – Without hurting Small and Marginal Farmers

50 Thank you !