28 PRODUCTS REGISTERED AS GEOGRAPHICAL INDICATIONS Date Location : 09 : New Nov 2006 Delhi

Darjeeling tea is among the 28 Indian products registered with the Geographical Indications (GI) Registry. (Darjeeling tea has been registered twice in the GI Registry). The other products are: Pochampally Ikat (Andhra Pradesh); Chanderi saree (Guna, Madhya Pradesh); Kotpad Handloom fabric (Koraput, Orissa); Kota Doria (Kota, Rajasthan); Kancheepuram silk (Tamil Nadu); Bhavani Jamakkalam (Erode, Tamil Nadu); Mysore Agarbathi (Mysore, Karnataka); Aranmula Kannadi (Kerala); Salem fabric (Tamil Nadu); Solapur terry towel (Maharashtra); Mysore silk (Karnataka); Kullu shawl (Himachal Pradesh); Madurai Sungudi (Tamil Nadu); Kangra tea (Himachal Pradesh); Coorg Orange (Karnataka); Mysore betel leaf (Karnataka); Nanjanagud banana (Karnataka); Mysore sandalwood oil (Karnataka); Mysore sandal soap(Karnataka); Bidriware (Karnataka); Channapatna toys & dolls (Karnataka);Coimbatore wet grinder (Tamil Nadu); Mysore rosewood inlay (Karnataka); Kasuti embroidery (Karnataka); Mysore traditional paintings (Karnataka) and Orissa Ikat(Orissa). A Geographical Indications Registry with all India jurisdiction operates in Chennai, as per the Geographical Indication of Goods (Registration and Protection) Act 1999. Under the Act, agricultural, natural or manufactured goods originating or manufactured in the territory of a country, or a region or locality in that territory, where a given quality, reputation or other characteristic of such goods is essentially attributable to its geographical origin and in cases where such goods are manufactured goods, one of the activities of either production or of processing or preparation of the goods concerned takes place in such territory, region or locality, are registrable as Geographical Indications. Whether a particular product is registrable or not is determined by the Registrar of Geographical Indications, on receipt of the application. Geographical Indications registration gives to the registered proprietor and its authorised users, the legal right to the exclusive use of the GI and also the right to obtain relief in case of its infringement. Exclusion of unauthorized persons from misusing GI would ensure that genuine products of the rightful producers are marketed. **************

EXIM Policy
EXIM Policy is the export import policy of the government that is announced every five years. It is also known as the Foreign Trade Policy. This policy consists of general provisions regarding exports and imports, promotional measures, duty exemption schemes, export promotion schemes, special economic zone programs and other details for different sectors. Every year the government announces a supplement to this policy. The EXIM Policy of 2002-2007(External website that opens in a new window) emphasized the importance of agricultural exports and announced measures like the setting up of agri export

zones, removal of procedural restrictions and marketing cost assistance. Agri Export Zones are considered the most important creation of this policy -

Agri Export Zones(External website that opens in a new window)

Agri Export Zones were formed as a result of this policy. These zones are meant to promote agricultural exports from the country and provide remunerative returns to the farming community regularly. They are to be identified by the State Government, which would evolve a comprehensive package of services to be provided by all State Government agencies, State Agriculture Universities and all institutions and agencies of the Union Government for intensive delivery in these zones. Corporate sector companies with proven credentials would be encouraged to sponsor new agri export zones or take over already notified agri export zones. Services that would be managed and coordinated through this scheme include the provision of pre/post harvest operations, plant protection, processing, packaging, storage and related research and development. APEDA will supplement, within its schemes and provisions, the efforts of State Governments for facilitating exports. Click here for a list of the Agri Export Zones. After, a change of government at the centre, a new EXIM Policy of 2004 - 2009(External website that opens in a new window) was announced. This policy came up with export promotional measures such as Towns of Export Excellence, Target Plus, Free Trade and Warehousing Zones and the Vishesh Krishi Upaj Yojana. Here are details on these schemes:
a. Towns of Export Excellence - Here, towns in specific areas that produce goods

of Rs.250 crores and above in the handloom, agriculture, handicraft and fisheries sector will be notified as Towns of Exports Excellence on the basis of their potential for growth in exports. They will be granted this recognition to maximize their potential, enable them to move higher in the value chain and tap new markets. b. Target Plus - In this scheme, exporters who have attained a large increase in growth of exports would be allowed duty free credit based on incremental exports substantially higher than the general actual export target fixed. Rewards will be granted according to a tiered approach. For incremental growth of over 20, 25 and 100 per cent, the duty free credits would be 5, 10 and 15 per cent of Free on Board (FOB) value of incremental exports. c. Vishesh Krishi Gram Udyog Yojana - It aims to promote exports of fruits, vegetables, flowers, fruits, and other value-added products. This year it has been expanded to include soybean and coconut oil as well as food preparations such as soups. Plus, the benefit of the scheme has been extended to 100 per cent export-oriented units. The Annual Supplement of 2007 to the Foreign Trade Policy of 2004-2009 (221 KB)(PDF file that opens in a new window) - The government has exempted service tax on services rendered abroad and charged on exports from India. Similarly, service tax on services rendered in India but utilized by exporters would be exempted or remitted. For diversifying exports to tap unexplored markets, the focus market scheme has been expanded to include 16 new countries.

New items such as barley, oats, soybean, cigar/cheroots, bovine fats and copra have been included as focus products. To encourage agro-processing, status holders would be rewarded with duty credit scripts equal to 10 per cent of the value of agricultural exports, provided they use them for duty redemption on imports of cold storage and reefer vans.

Highlights of New Foreign Trade Policy 2009 - 2014

Higher Support for Market and Product Diversification Technological Upgradation EPCG Scheme Relaxations Support for Green products and products from North East Status Holders Stability/ continuity of the Foreign Trade Policy Marine sector Gems & Jewellery Sector Agriculture Sector Leather Sector Tea Pharmaceutical Sector Handloom Sector EOUs Thrust to Value Added Manufacturing DEPB Flexibility provided to exporters Waiver of Incentives Recovery, On RBI Specific Write off Simplification of Procedures Reduction of Transaction Costs Directorate of Trade Remedy Measures

DEPB Scheme upto December 2010. To encourage value addition in our manufactured exports and towards this end, have stipulated a minimum 15%. 100% export oriented units for one additional year till 31st March 2011. The Government seeks to promote Brand India through six or more Made in India shows to be organized across the world every year.

Foreign Trade Policy is to help exporters for technological upgradation export sector infrastructure, Towns of Export Excellence and units located therein would be granted additional focused support and incentives. To encourage production and export of green products through measures such as phased manufacturing programme for green vehicles, zero duty EPCG scheme and incentives for exports. e-Trade project would be implemented in a time bound manner to bring all stake holders on a common platform. Additional ports/locations would be enabled on the Electronic Data Interchange over the next few years. Incentive available under Focus Market Scheme (FMS) has been raised from 2.5% to 3%. Incentive available under Focus Product Scheme(FPS) has been raised from 1.25% to 2%. 26 new markets have been added under Focus Market Scheme. These include 16 new markets in Latin America and 10 in Asia-Oceania. 153 ITC(HS) Codes at 4 digit level Product classified for Market Linked Focus Product Scheme (MLFPS)

Focus Product Scheme benefit extended for export of green products; and for exports of some products originating from the North East. To accelerate exports and encourage technological upgradation, additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports. Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of Income Tax Act, has been extended for the financial year 2010-11 in the Budget 2009-10. In Tea Sector Minimum value addition under advance authorisation scheme for export of tea has been reduced from the existing 100% to 50%.

DTA sale limit of instant tea by EOU units has been increased from the existing 30% to 50%. EOUs will now be allowed CENVAT Credit facility for the component of SAD and Education Cess on DTA sale.

Time limit of 60 days for re-import of exported gems and jewellery items, for participation in exhibitions has been extended to 90 days in case of USA. Duty Free Import of samples by exporters, number of samples/pieces has been increased from the existing 15 to 50. Exemption for up to two stages from payment of excise duty in lieu of refund, in case of supply to an advance authorisation holder (against invalidation letter) by the domestic intermediate manufacturer. Reduce transaction costs, dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorisation scheme for deemed supplies. Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years.

Higher Support for Market and Product Diversification 1. 2. 3. 4. 5. Incentive schemes under Chapter 3 have been expanded by way of addition of new products and markets. 26 new markets have been added under Focus Market Scheme. These include 16 new markets in Latin America and 10 in Asia-Oceania. The incentive available under Focus Market Scheme (FMS) has been raised from 2.5% to 3%. The incentive available under Focus Product Scheme(FPS) has been raised from 1.25% to 2%. A large number of products from various sectors have been included for benefits under FPS. These include, Engineering products (agricultural machinery, parts of trailers, sewing machines, hand tools, garden tools, musical instruments, clocks and watches, railway locomotives etc.), Plastic (value added products), Jute and Sisal products, Technical Textiles, Green Technology products (wind mills, wind turbines, electric operated vehicles etc.), Project goods, vegetable textiles and certain Electronic items. Market Linked Focus Product Scheme (MLFPS) hasbeen greatly expanded by inclusion of products classified under as many as 153 ITC(HS) Codes at 4 digit level. Some major products include; Pharmaceuticals, Synthetic textile fabrics, value added rubber products, value added plastic goods, textile madeups, knitted and crocheted fabrics, glass products, certain iron and steel products and certain articles of aluminium among others. Benefits to these products will be provided, if exports are made to 13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand). MLFPS benefits also extended for export to additional new markets for certain products. These products include auto components, motor cars, bicycle and its parts, and apparels among others. A common simplified application form has been introduced for taking benefits under FPS, FMS, MLFPS and VKGUY. Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) schemes is being provided. Technological Upgradation 10. To aid technological upgradation of our export sector, EPCG Scheme at Zero Duty has been introduced. This Scheme will be available for engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products (subject to exclusions of current beneficiaries under Technological Upgradation Fund Schemes (TUFS), administered by Ministry of Textiles and beneficiaries of Status Holder Incentive Scheme in that particular year). The scheme shall be in operation till 31.3.2011.

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11. Jaipur, Srinagar and Anantnag have been recognised as Towns of Export Excellence for handicrafts; Kanpur, Dewas and Ambur have
been recognised as Towns of Export Excellence for leather products; and Malihabad for horticultural products. EPCG Scheme Relaxations 12. To increase the life of existing plant and machinery, export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced to 50% of the normal specific export obligation.

13. Taking into account the decline in exports, the facility of Re-fixation of Annual Average Export Obligation for a particular financial year
in which there is decline in exports from the country, has been extended for the 5 year Policy period 2009-14. Support for Green products and products from North East

14. Focus Product Scheme benefit extended for export of green products; and for exports of some products originating from the North
East.

Status Holders 15. To accelerate exports and encourage technological upgradation, additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports. The duty credit scrips can be used for procurement of capital goods with Actual User condition. This facility shall be available for sectors of leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous metals in primary and intermediate form, automobiles & two wheelers, nuclear reactors & parts, and ships, boats and floating structures), plastics and basic chemicals (excluding pharma products) [subject to exclusions of current beneficiaries under Technological Upgradation Fund Schemes (TUFS)]. This facility shall be available upto 31.3.2011.

16. Transferability for the Duty Credit scrips being issued to Status Holders under paragraph 3.8.6 of FTP under VKGUY Scheme has been
permitted. This is subject to the condition that transfer would be only to Status Holders and Scrips would be utilized for the procurement of Cold Chain equipment(s) only. Stability/ continuity of the Foreign Trade Policy 17. 18. To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB) Scheme is extended beyond 31-12- 2009 till 31.12.2010. Interest subvention of 2% for pre-shipment credit for 7 specified sectors has been extended till 31.3.2010 in the Budget 2009-10.

19. Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of Income Tax Act, has been extended for the
financial year 2010-11 in the Budget 2009-10.

20. The adjustment assistance scheme initiated in December, 2008 to provide enhanced ECGC cover at 95%, to the adversely affected
sectors, is continued till March, 2010. Marine sector 21. Fisheries have been included in the sectors which are exempted from maintenance of average EO under EPCG Scheme, subject to the condition that Fishing Trawlers, boats, ships and other similar items shall not be allowed to be imported under this provision. This would provide a fillip to the marine sector which has been affected by the present downturn in exports.

22. Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for Status Holders has been
given to Marine sector. Gems & Jewellery Sector 23. 24. 25. To neutralize duty incidence on gold Jewellery exports, it has now been decided to allow Duty Drawback on such exports. In an endeavour to make India a diamond international trading hub, it is planned to establish Diamond Bourse (s). A new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification purposes has been introduced.

26. To promote export of Gems & Jewellery products, the value limits of personal carriage have been increased from US$ 2 million to US$ 5
million in case of participation in overseas exhibitions. The limit in case of personal carriage, as samples, for export promotion tours, has also been increased from US$ 0.1 million to US$ 1 million. Agriculture Sector

27. To reduce transaction and handling costs, a single window system to facilitate export of perishable agricultural produce has been
introduced. The system will involve creation of multi-functional nodal agencies to be accredited by APEDA. Leather Sector 28. Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses, subject to payment of 50% of the applicable export duty.

29. Enhancement of FPS rate to 2%, would also significantly benefit the leather sector.
Tea 30. 31. Minimum value addition under advance authorisation scheme for export of tea has been reduced from the existing 100% to 50%. DTA sale limit of instant tea by EOU units has been increased from the existing 30% to 50%.

32. Export of tea has been covered under VKGUY Scheme benefits.
Pharmaceutical Sector 33. Export Obligation Period for advance authorizations issued with 6-APA as input has been increased from the existing 6 months to 36 months, as is available for other products.

34. Pharma sector extensively covered under MLFPS for countries in Africa and Latin America; some countries in Oceania and Far East.
Handloom Sector

35. To simplify claims under FPS, requirement of Handloom Mark for availing benefits under FPS has been removed.
EOUs 36. EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing 75%, without changing the criteria of similar goods, within the overall entitlement of 50% for DTA sale. To provide clarity to the customs field formations, DOR shall issue a clarification to enable procurement of spares beyond 5% by granite sector EOUs. EOUs will now be allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards. During this period of downturn, Board of Approvals (BOA) to consider, extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs.

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40. EOUs will now be allowed CENVAT Credit facility for the component of SAD and Education Cess on DTA sale.
Thrust to Value Added Manufacturing 41.

To encourage Value Added Manufactured export, a minimum 15% value addition on imported inputs under Advance Authorization Scheme has now been prescribed.

42. Coverage of Project Exports and a large number of manufactured goods under FPS and MLFPS.
DEPB

43. DEPB rate shall also include factoring of custom duty component on fuel where fuel is allowed as a consumable in Standard InputOutput Norms. Flexibility provided to exporters 44. Payment of customs duty for Export Obligation (EO) shortfall under Advance Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit of Duty Credit scrips. Earlier the payment was allowed in cash only. Import of restricted items, as replenishment, shall now be allowed against transferred DFIAs, in line with the erstwhile DFRC scheme. Time limit of 60 days for re-import of exported gems and jewellery items, for participation in exhibitions has been extended to 90 days in case of USA.

45. 46.

47. Transit loss claims received from private approved insurance companies in India will now be allowed for the purpose of EO fulfillment
under Export Promotion schemes. At present, the facility has been limited to public sector general insurance companies only. Waiver of Incentives Recovery, On RBI Specific Write off

48. In cases, where RBI specifically writes off the export proceeds realization, the incentives under the FTP shall now not be recovered
from the exporters subject to certain conditions. Simplification of Procedures 49. To facilitate duty free import of samples by exporters, number of samples/pieces has been increased from the existing 15 to 50. Customs clearance of such samples shall be based on declarations given by the importers with regard to the limit of value and quantity of samples. To allow exemption for up to two stages from payment of excise duty in lieu of refund, in case of supply to an advance authorisation holder (against invalidation letter) by the domestic intermediate manufacturer. It would allow exemption for supplies made to a

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manufacturer, if such manufacturer in turn supplies the products to an ultimate exporter. At present, exemption is allowed upto one stage only.

51. Greater flexibility has been permitted to allow conversion of Shipping Bills from one Export Promotion scheme to other scheme.
Customs shall now permit this conversion within three months, instead of the present limited period of only one month. 52. To reduce transaction costs, dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorisation scheme for deemed supplies. At present, the duty free imported goods could be taken only to the manufacturing unit of the authorisation holder or its supporting manufacturer. Disposal of manufacturing wastes / scrap will now be allowed after payment of applicable excise duty, even before fulfillment of export obligation under Advance Authorisation and EPCG Scheme. Regional Authorities have now been authorised to issue licences for import of sports weapons by renowned shooters, on the basis of NOC from the Ministry of Sports & Youth Affairs. Now there will be no need to approach DGFT(Hqrs.) in such cases. The procedure for issue of Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years. This will solve the problems faced by the medical devices industry. Automobile industry, having their own R&D establishment, would be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum, which are not manufactured in India.

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57. Acceding to the demand of trade & industry, the application and redemption forms under EPCG scheme have been simplified.
Reduction of Transaction Costs 58. No fee shall now be charged for grant of incentives under the Schemes in Chapter 3 of FTP. Further, for all other Authorisations/ licence applications, maximum applicable fee is being reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs.75,000 (for EDI applications). To further EDI initiatives, Export Promotion Councils/ Commodity Boards have been advised to issue RCMC through a web based online system. It is expected that issuance of RCMC would become EDI enabled before the end of 2009. Electronic Message Exchange between Customs and DGFT in respect of incentive schemes under Chapter 3 will become operational by 31.12.2009. This will obviate the need for verification of scrips by Customs facilitating faster clearances. For EDI ports, with effect from December 09, double verification of shipping bills by customs for any of the DGFT schemes shall be dispensed with. In cases, where the earlier authorization has been cancelled and a new authorization has been issued in lieu of the earlier authorization, application fee paid already for the cancelled authorisation will now be adjusted against the application fee for the new authorisation subject to payment of minimum fee of Rs. 200. An Inter Ministerial Committee will be formed to redress/ resolve problems/issues of exporters.

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64. An updated compilation of Standard Input Output Norms (SION) and ITC (HS) Classification of Export and Import Items has been
published. Directorate of Trade Remedy Measures 65. To enable support to Indian industry and exporters, especially the MSMEs, in availing their rights through trade remedy instruments, a Directorate of Trade Remedy Measures shall be set up.

www.indiaagronet.com India Agriculture resource centre India Agriculture News, India Agriculture Jobs, Indian Agriculture information, India commodity news, Indian Agriculture classifieds, India Agriculture project

reports Agriculture Policy: Vision 2020 Indian Agricultural Research Institute, New Delhi India has made impressive strides on the agricultural front during the last three decades. Much of the credit for this success should go to the several million small farming families that form the backbone of Indian agriculture and economy. Policy support, production strategies, public investment in infrastructure, research and extension for crop, livestock and fisheries have significantly helped to increase food production and its availability. During the last 30 years, Indias foodgrain production nearly doubled from 102 million tons in the triennium ending 1973 to nearly 200 million tons (mt) in the triennium ending (TE) 1999. Virtually all of the increase in the production resulted from yield gains rather than expansion of cultivated area. Availability of foodgrains per person increased from 452 gm/capita/day to over 476 gm/capita/day, even as the country's population almost doubled, swelling from 548 million to nearly 1000 million. Increased agricultural productivity and rapid industrial growth in the recent years have contributed to a significant reduction in poverty level, from 55 percent in 1973 to 26 percent in 1998. Despite the impressive growth and development, India is still home to the largest number of poor people of the world. With about 250 million below the poverty line, India accounts for about one-fifth of the worlds poor. Child malnutrition extracts its highest toll in this country. About 25% children suffer from serious malnutrition. More than 50 percent of the pre-school children and pregnant women are anemic. The depth of hunger among the undernourished is also high. India has high population pressure on land and other resources to meet its food and development needs. The natural resource base of land, water and bio-diversity is under severe pressure. The massive increase in population (despite the slowing down of the rate of growth) and substantial income growth, demand an extra about 2.5 mt of foodgrains annually, besides significant increases needed in the supply of livestock, fish and horticultural products. Under the assumption of 3.5% growth in per capita GDP (low income growth scenario), demand for foodgrains (including feed, seed, wastage and export) is projected in the year 2020 at the level of 256 mt comprising 112mt of rice, 82mt of wheat, 39mt of coarse grains and 22mt of pulses. The demand for sugar, fruits, vegetables, and milk is estimated to grow to a level 33mt, 77mt, 136mt and 116mt respectively. The demand for meat is projected at

9mt, fish 11mt and eggs 77.5 billion (Table 1). Future increases in the production of cereals and non-cereal agricultural commodities will have to be essentially achieved through increases in productivity, as the possibilities of expansion of area and livestock population are minimal. To meet the projected demand in the year 2020, country must attain a per hectare yield of 2.7 tons for rice, 3.1 tons for wheat, 2.1 tons for maize, 1.3 tons for coarse cereals, 2.4 tons for cereal, 1.3 tons for pulses, 22.3 tons for potato, 25.7 for vegetables, and 24.1 tons for fruits. The production of livestock and poultry products must be improved 61% for milk, 76% for meat, 91% for fish, and 169% for eggs by the year 2020 over the base year TE 1999. Average yields of most crops in India are still rather low.

Emerging Trends The agriculture sector recorded satisfactory growth due to improved technology, irrigation, inputs and pricing policies. Livestock, poultry, fisheries and horticulture are surging ahead in production growth in recent years and will have greater demand in the future. Industrial and service sectors have expanded faster than agriculture sector resulting in declining share of agriculture in national accounts. Despite the structural change, agriculture still remains a key sector, providing both employment and livelihood opportunities to more than 70 percent of the country's population who live in rural areas. The contribution of small farmers to the national and household food security has been steadily increasing. The water availability for agricultural uses has reached a critical level and deserves urgent attention of all concerned.

India has high population pressure on land and other resources to meet its food and development needs. The natural resource base of land, water and biodiversity is under severe pressure. Food demand challenges ahead are formidable considering the non-availability of favourable factors of past growth, fast declining factor productivity in major cropping systems and rapidly shrinking resource base.

Vast uncommon opportunities to harness agricultural potential still remain, which can be tapped to achieve future targets. There are serious gaps both in yield

potential and technology transfer as the national average yields of most of the commodities are low, which if addressed properly could be harnessed.

Concentration was on enhanced production of a few commodities like rice and wheat, which could quickly contribute to increased total food and agricultural production. This resulted in considerable depletion of natural resources and the rainfed dry areas having maximum concentration of resource poor farmers remained ignored, aggravating problems of inequity and regional imbalances. This also led to a high concentration of malnourished people in these rainfed, low productive areas. This era also witnessed rapid loss of soil nutrients, agro-biodiversity including indigenous land races and breeds.

The agriculture policy must accelerate all-round development and economic viability of agriculture in comprehensive terms. Farmers must be provided the necessary support, encouragement and incentives. It must focus both on income and greater on-farm and off-farm job and livelihood opportunities.

Main Issues

In national priority setting, the following recurring and emerging issues for sustainable agricultural development and poverty alleviation must be considered:

(i) Population pressure and demographic transition; (ii) Resource base degradation and water scarcity;

(iii) Investment in agriculture, structural adjustment and impact on the poor;

(iv) Globalization and implication on the poor;

(v) Modern science and technology and support to research and technology development; and

(vi) Rapid urbanization and urbanization of poverty, and deceleration in rural poverty reduction.

In addressing the above issues, a policy statement on agriculture must take note of the following uncommon opportunities:

Conservation of natural resources and protection of environment.

Vast untapped potential of our soil and water resources, and farming systems

Technology revolution especially in the areas of molecular biology, biotechnology, space technology, ecology and management.

Revolution in informatics and communication and the opportunity of linking farmers, extension workers and scientists with the national and international databases

Vision

The Agriculture Policy document must articulate a clear vision on following few basic parameters of the agricultural sector around which a policy framework must be developed.

Organization of agriculture: A clear long-term vision where inter-sectoral linkages are explicit.

Sustainability and natural resource management: Prescription must lie in the domain of political economy. Otherwise, allocating funds for watershed development, agroforestry, soil conservation, and so on will not produce desired results.

Institutional change: Policy document must spell out new approaches and new institutions free from the shackles of bureaucratic and self-help framework.

Investment priorities: There is a need to develop a consensus on investment themes, priorities and policies. Policy document must lend strength to the claim for greater investment in rural areas, and also re-examine its programmes in the light of complementarities.

Incentives: Document must articulate a clear vision on the incentive

framework.

Risk management

Challenges, Policies and Strategies

Enhancing Yield of Major Commodities

Yield of major crops and livestock in the region is much lower than that in the rest of the world. Considering that the frontiers of expansion of cultivated area are almost closed in the region, the future increase in food production to meet the continuing high demand must come from increase in yield. There is a need to strengthen adaptive research and technology assessment, refinement and transfer capabilities of the country so that the existing wide technology transfer gaps are bridged. For this, an appropriate network of extension service needs to be created to stimulate and encourage both top-down and bottom-up flows of information between farmers, extension workers, and research scientists to promote the generation, adoption, and evaluation of location specific farm technologies. Ample scope exists for increasing genetic yield potential of a large number of vegetables, fruits as well as other food crops and livestock and fisheries products. Besides maintenance breeding, greater effort should be made towards developing hybrid varieties as well as varieties suitable for export purposes. Agronomic and soil researches in the region need to be intensified to address location specific problems as factor productivity growth is decelerating in major production regimes. Research on coarse grains, pulses and oilseeds must achieve a production breakthrough. Hybrid rice, single cross hybrids of maize and pigeonpea hybrids offer new opportunities. Soybean, sunflower and oil palm will help in meeting future oil demands successfully. Forest cover must be preserved to keep off climatic

disturbances and to provide enough of fuel and fodder. Milk, meat and draught capacity of our animals needs to be improved quickly through better management practices.

Integrated nutrient management: Attention should be given to balanced use of nutrients. Phosphorus deficiency is now the most widespread soil fertility problem in both irrigated and unirrigated areas. Correcting the distortion in relative prices of primary fertilizers could help correct the imbalances in the use of primary plant nutrients -nitrogen, phosphorus, and potash and use of bio-fertilizers. To improve efficiency of fertilizer use, what is really needed is enhanced location-specific research on efficient fertilizer practices (such as balanced use of nutrients, correct timing and placement of fertilizers, and, wherever necessary, use of micronutrient and soil amendments), improvement in soil testing services, development of improved fertilizer supply and distribution systems, and development of physical and institutional infrastructure.

Arresting deceleration in total factor productivity: Public investment in irrigation, infrastructure development (road, electricity), research and extension and efficient use of water and plant nutrients are the dominant sources of TFP growth. The sharp deceleration in total investment and more so in public sector investment in agriculture is the main cause for the deceleration. This has resulted in the slowdown in the growth of irrigated area and a sharp deceleration in the rate of growth of fertiliser consumption. The most serious effect of deceleration in total investment has been on agricultural research and extension. This trend must be reversed as the projected increase in food and non-food production must accrue essentially through increasing yield per hectare. Recognising that there are serious yield gaps and there are already proven paths for increasing productivity, it is very important for India to maintain a steady growth rate in total factor productivity. As the TFP increases, the cost of production decreases and the prices also decrease and stabilise. Both producer and consumer share the benefits. The fall in food prices will benefit the urban and rural poor more than the upper income groups, because the former spend a much larger proportion of their income on cereals than the latter. All the efforts need to be concentrated on accelerating growth in TFP, whilst conserving natural resources and promoting ecological integrity of agricultural system. More than half of the required growth in yield to meet the target of demand must be met from

research efforts by developing location specific and low input use technologies with the emphasis on the regions where the current yields are below the required national average yield.

Literacy had a positive and significant relation with crop productivity and a strong link exists between literacy and farm modernisation. A recent study (Kumar and Mittal, 2000), has shown that literacy emerged as an important source of growth in adoption of technology, use of modern inputs like machines, fertilisers, and yield. Recognising that in the liberalised economic environment, efficiency and growth orientation will attract maximum attention. Literacy will play a far more important role in the globalised world than it did in the past. Contribution of literacy, through TFP, will be substantial on yield growth and domestic supply. As future agriculture will increasingly be science-led and will require modern economic management, high return to investment on education is expected.

The investments that are good for agricultural growth-technology and its dissemination, rural infrastructure (roads), education and irrigation - amount to a 'win-win' strategy for reducing rural poverty by also increasing the non-farm economy and raising rural wages. Creating infrastructure in less developed areas, better management of infrastructure and introduction of new technologies can further enhance resource productivity and TFP. Generation and effective assessment and diffusion of packages of appropriate technologies involving system and programme based approach, participatory mechanisms, greater congruency between productivity and sustainability through integrated pest management and integrated soil-water-irrigation-nutrient management, should be aggressively promoted to bridge the yield gaps in most field crops. Besides this, efforts must be in place to defend the gains and to make new gains particularly through the congruence of gene revolution, informatics revolution, management revolution and eco-technology.

Many observers have expressed concern that technological gains have not occurred in a number of crops, notably coarse cereals, pulses and in rainfed areas. Recent analysis on TFP growth based on cost of cultivation data does not prove this

perception (Table 2). In all the 18 major crops considered in the analysis, several states have recorded positive TFP growth. This is spread over major cereals, coarse grains, pulses, oilseeds, fibres, vegetables, etc. In most cases, in the major producing states, rainfed crops also, showed productivity gains. There is thus strong evidence that technological change has generally pervaded the entire crop sector. There are, of course, crops and states where technological stagnation or decline is apparent and these are the priorities for present and future agricultural research. Farming system research to develop location specific technologies and strategy to make grey areas green by adopting three-pronged approach - watershed management, hybrid technology and small farm mechanisation will accelerate growth in TFP. It is necessary to enlarge the efforts for promoting available dry land technologies. Promoting efficient fertiliser practices, improving soil-testing services, strengthening distribution channel of critical inputs specially quality seed and development of physical and institutional infrastructure will help resource-poor farmers.

Bridging Yield Gaps: Vast untapped potential in the yield exists for all crops in most of the states accounting for more than three-fourths of crop area. Emphasis must be given to the states in which current yield levels are below the national average yield. Bihar, Orissa, Assam, West Bengal and Uttar Pradesh are the priority states accounting for 66% of rice area which need emphasis on bridging yield gaps to attain target demand and yield growth. For wheat we must focus mainly on Uttar Pradsh, Madhya Pradesh, Bihar and Rajasthan accounting for 68% of wheat area. For coarse cereals, major emphasis must be given to Rajasthan, Maharashtra, Karnataka, Madhya Pradesh, Andhra Pradesh and Uttar Pradesh. To meet the demand for pulses greater emphasis is needed in almost all the states with particular focus on Madhya Pradesh, Maharashtra, Rajasthan, Gujarat, Andhra Pradesh, Karnataka and Uttar pradesh which have three-fourths of total pulse area. The target growth in pulse yield from these states annually must be 6 per cent; otherwise the nation will experience shortage of pulses for all times to come. The task of attaining self sufficient in pulses production looks difficult without area expansion and irrigation. In cases of oilseeds greater emphasis is needed on Andhra Pradesh, Madhya Pradesh, Rajasthan, Maharashtra, Karnataka, West Bengal and Uttar Pradesh to increase the yield by about 4 per cent. The possibilities of developing processing industry for extracting edible oils from non-oilseeds commodities, like rice bran etc, needing to be explored. The introduction of palm cultivation for oil production may release pressure on traditional oilseeds crops to meet future edible

oil demand. In case of sugarcane, research and development efforts are to be strengthened in Uttar Pradesh and Bihar to increase the yields per hectare by about 4% per annum. The demand for sugar can also be met by developing mini sugar mills so that substantial sugarcane production can be diverted from Khandsari to sugar production. This may also help release some sugarcane area to other crops. Cotton crop requires greater yield improvement emphasis on 81 per cent of the cotton area in Maharashtra, Gujarat and Andhra Pradesh.

Water for Sustainable Food Security India will be required to produce more and more from less and less land and water resources. Alarming rates of ground water depletion and serious environmental and social problems of some of the major irrigation projects on one hand, and the multiple benefits of irrigation water in enhancing production and productivity, food security, poverty alleviation, as mentioned earlier, are well known to be further elaborated here: In India, water availability per capita was over 5000 cubic metres (m3) per annum in 1950. It now stands at around 2000 m3 and is projected to decline to 1500 m3 by 2025. Further, the quality of available water is deteriorating. Also, there are gross inequalities between basins and geographic regions. Agriculture is the biggest user of water, accounting for about 80 percent of the water withdrawals. There are pressures for diverting water from agriculture to other sectors. A study. has warned that re-allocation of water out of agriculture can have a dramatic impact on global food markets. It is projected that availability of water for agricultural use in India may be reduced by 21 percent by 2020, resulting: in drop of yields of irrigated crops, especially rice, thus price rise and withdrawal of food from poor masses. Policy reforms are needed from now to avoid the negative developments in the years to come. These reforms may include the establishment of secure water rights to users, the decentralization and privatization of water. management functions to appropriate levels, pricing reforms, markets in tradable property rights, and the introduction of appropriate water-saving technologies. The needs of other sectors for water cannot be ignored. Therefore it is necessary that an integrated water use policy is formulated and judiciously implemented. Several international initiatives on this aspect have been taken in recent years. India should critically examine these initiatives and develop its country-specific system for judicious and integrated use and management of water. A national institution should

be established to assess the various issues, regulatory concerns, water laws and legislations, research and technology development and dissemination, social mobilization and participatory and community involvement, including gender and equity concerns and economic aspects. This institution should function in a trusteeship mode and seen as the flagship of a national system for sustainable water security.

Emphasis on Rainfed Ecosystem

Resource-poor farmers in the rainfed ecosystems practice less-intensive agriculture, and since their incomes depend on local agriculture, they benefit little from increased food production in irrigated areas. To help them, efforts must be increased to disseminate available dry land technologies and to generate new ones. It will be necessary to enlarge the efforts for promoting available dry land technologies, increasing the stock of this knowledge, and removing pro-irrigation biases in public investment and expenditure, as well as credit flows, for technologybased agricultural growth. Watershed development for raising yields of rainfed crops and widening of seed revolution to cover oilseeds, pulses, fruits and vegetables. Farming system research to develop location specific technologies must be intensified in the rainfed areas. Strategy to make grey areas green will lead to second Green Revolution, which would demand three-pronged strategy - watershed management, hybrid technology and small farm mechanisation.

Accent on Diversification of Agriculture and Value Addition

In the face of shrinking natural resources and ever increasing demand for larger food and agricultural production arising due to high population and income growths, agricultural intensification is the main course of future growth of

agriculture in the region. Research for product diversification should be yet another important area. Besides developing technologies for promoting intensification, the country must give greater attention to the development of technologies that will facilitate agricultural diversification particularly towards intensive production of fruits, vegetables, flowers and other high value crops that are expected to increase income growth and generate effective demand for food. The per capita availability of arable land is quite low and declining over time. Diversification towards these high value and labour intensive commodities can provide adequate income and employment to the farmers dependent on small size of farms. Due importance should be given to quality and nutritional aspects. High attention should be given to develop post-harvest handling and agro-processing and value addition technologies not only to reduce the heavy post-harvest losses and also improve quality through proper storage, packaging, handling and transport. The role of biotechnology in post-harvest management and value addition deserves to be enhanced.

Accent on Post-Harvest Management, Value Addition and Cost-Effectiveness

Post-harvest losses generally range from 5 to 10 percent for non-perishables and about 30 percent for perishables. This loss could be and must be minimized. Let us remember, a grain saved is a grain produced. Emphasis should therefore be placed to develop post-harvest handling, agro-processing and value-addition technologies not only to prevent the high losses, but also to improve quality through proper storage, packaging, handling and transport. With the thrust on globalization and increasing competitiveness, this approach will improve the agricultural export contribution of India, which is proportionately extremely low. Cost-effectiveness in production and post-harvest handling through the application of latest technologies will be a necessity. The agro-processing facilities should preferably be located close to the points of production in rural areas, which will greatly promote off-farm employment. Such centres of processing and value addition will encourage production by masses against mass production in factories located in urban areas. Agricultural cooperatives and Gram Panchayats must play a leading role in this effort. In doing so, the needs of small farmers should be kept in mind.

Increased Investment in Agriculture and Infrastructures

The public investment in agriculture has been declining and is one of the main reasons behind the declining productivity and low capital formation in the agriculture sector. With the burden on productivity - driven growth in the future, this worrisome trend must be reversed. Private investment in agriculture has also been slow and must be stimulated through appropriate policies. Considering that nearly 70 percent of India still lives in villages, agricultural growth will continue to be the engine of broad-based economic growth and development as well as of natural resource conservation, leave alone food security and poverty alleviation. Accelerated investment are needed to facilitate agricultural and rural development through:

Productivity increasing varieties of crops, breeds of livestock, strains of microbes and efficient packages of technologies, particularly those for land and water management, for obviating biotic, a biotic, socio-economic and environmental constraints;

Yield increasing and environmentally-friendly production and post-harvest and value-addition technologies;

Reliable and timely availability of quality inputs at reasonable prices, institutional and credit supports, especially for small and resource-poor farmers, and support to land and water resources development;

Effective and credible technology, procurement, assessment and transfer and extension system involving appropriate linkages and partnerships; again with an emphasis on reaching the small farmers;

Improved institutional and credit support and increased rural employment opportunities, including those through creating agriculture-based rural agro-processing and agro-industries, improved rural infrastructures, including access to information, and effective markets, farm to market roads and related infrastructure;

Particular attention to the needs and participation of women farmers; and

Primary education, health care, clean drinking water, safe sanitation, adequate nutrition, particularly for children (including through mid-day meal at schools) and women.

The above investments will need to be supported through appropriate policies that do not discriminate against agriculture and the rural poor. Given the increasing role of small farmers in food security and poverty alleviation, development efforts must be geared to meet the needs and potential of such farmers through their active participation in the growth process.

Government should facilitate and support community level action by private voluntary organizations, including farmers groups aimed at improving food security, reducing poverty, and assuring sustainability in the management of natural resources. In addition, governments should enhance efforts to ensure good nutrition and access to sufficient food for all through primary health care and education for all.

Modern biotechnology tools, genetic engineering, as well as conventional breeding methods are all expected to play important roles in the generation of higher

yielding, pest and stress resistant varieties of rice, wheat, maize and other cereal crops. The availability of genetic innovations in developing countries will depend on continued high levels of investments in agricultural research, both at the international and the national levels. Free and unhindered access to germplasm to breeders worldwide is absolutely crucial to the rapid dissemination and adoption of improved germplasm. This free movement and the dissemination of modern biotechnology innovations to developing countries are hampered by increased patent protection and private sector investments. There is an urgent need to address this problem of free access to technology in the future.

Increased attention will also have to be given to development of sustainable systems that protect the natural resource base. Recent evidence of resource degradation and declining productivity in some intensively cropped areas is of particular concern. Also population driven intensification of agriculture without the use of external inputs, is leading to a serious problem of mining soil fertility

Sustaining global food supplies will depend on continued high levels of investments in research and technology development. It is essential that research capacity has to be increased substantially. In addition to investments in research, infrastructure investments, particularly in irrigation, transport and market infrastructure development are equally important for sustaining the productivity and profitability of food crop production.

Mobilize the best of science and development efforts (including traditional knowledge and modern scientific approach) through partnerships involving national and international research institutions, NGOs, farmers' organizations and private sector in order to tackle the present and future problems of food security and production.

Donors and Government must urgently increase funding for agricultural

research targeted at the needs of the rural and urban poor, and every effort must be made to ensure the free flow of information, technology and germplasm so that a proper sustainable agriculture can be achieved.

Fighting Poverty and Hunger

Nearly one-fourth of India's population, 251 million out of nearly one billion, is below the poverty line. One hundred seventy millions of the poor, 68 percent, are rural and the remaining 32 percent are urban (Table 4). Number at the national level in rural area has decreased after 1983; the number of poor in the cities has been increasing. This is essentially due to migration of the destitute from villages to cities. There are serious implications of this trend on feeding the cities and food security of urban people, urban poverty and environment. A question may be asked as to whether the rural settings and opportunities could be improved for securing livelihood security and consequently rationalizing the migration to the cities.

An analysis of the incidence of rural poverty and hunger by farm size revealed that more than half of the landless people are poor. Poverty got significantly reduced from 54 percent in the landless group to 38 percent in the sub-marginal group (Table 5), suggesting that even a small piece of land, less than 1/2 hectare, can greatly reduce both poverty and hunger[1]. The incidence of hunger and poverty gets reduced as one is able to meet even part of his/her dietary energy requirement through growing his/her own food (Table 6). Studies show that even a small plot of one's own helps women to escape extreme poverty and deprivation. Land is the main asset for livelihood security.

Although several factors affect the extent and depth of poverty and hunger, some of them have overwhelming impacts under the Indian setting. These include, irrigation, farming system and literacy. Generally, there is higher concentration of poor, and hungry people in rainfed areas as compared with those in irrigated zones.

Even with 20 percent of the irrigation intensity, there is a sharp fall in the proportion of hunger and poverty and it remains there irrespective of further intensification of irrigation (Table 7). Evidences suggest that extensive irrigation will prove much more effective than to adding more and more water, and often wasting it along with the associated degradation of the natural resources. Such a policy will not only reduce poverty and hunger, but will also promote equity and environmental protection and natural resource conservation. An effective water policy and institutional support is needed to ensure judicious and equitable allocation, distribution and exploitation of water and water resources.

Livestock has the highest effect on reducing poverty and hunger. In rural India, 43 percent of the people who do not own even a single livestock are malnourished. Addition of one cattle or one buffalo to their assets reduces the hunger prevalence by 16 and 25 percentage points, respectively (Table 8). Only 14 percent of the people who owned one cattle and one buffalo were malnourished. In urban areas also, the addition of one cattle or one buffalo had significant impact on reduction of proportion of malnourished people.Livestock sector should also receive high priority with multiple objectives of diversifying agriculture, raising income and meeting the nutritional security of the poor farm households.

Literacy has a very high impact on poverty alleviation as well as on hunger reduction (Table 9). The illiterate people, whether urban or rural, are the most poor and malnourished. In urban areas the impact of literacy on poverty is the highest. Education, even above primary level, is extremely effective in reducing both poverty and hunger. Graduate and technical education is, of course, the most important instrument for reducing both poverty and hunger. But its impact is most visible on poverty reduction. Therefore, the education policy of the country must be geared to remove illiteracy as soon as possible, as 50 percent of our people are still illiterate. Free education up to 8th standard coupled with mid-day meal in the schools will go a long way in reducing both poverty and hunger and will thus help build a strong India. Further, this move will greatly reduce the violation of child labour laws and will offset some of the non-tariff restrictions imposed by developed countries on exports from developing countries on the grounds of use of child labour.

Accent on Empowering the Small Farmers

Contributions of small holders in securing food for growing population have increased considerably even though they are most insecure and vulnerable group in the society. The off-farm and non-farm employment opportunities can play an important role. Against expectation under the liberalized scenario, the nonagricultural employment in rural areas has not improved. Greater emphasis needs to be placed on non-farm employment and appropriate budgetary allocations and rural credit through banking systems should be in place to promote appropriate rural enterprises. Specific human resource and skill development programmes to train them will make them better decision-makers and highly productive. Human resource development for increasing productivity of these small holders should get high priority. Thus, knowledge and skill development of rural people both in agriculture and non-agriculture sectors is essential for achieving economic and social goals. A careful balance will therefore need to be maintained between the agricultural and non-agricultural employment and farm and non-farm economy, as the two sectors are closely inter-connected.

Raising agricultural productivity requires continuing investments in human resource development, agricultural research and development, improved information and extension, market, roads and related infrastructure development and efficient small-scale, farmer-controlled irrigation technologies, and custom hiring services. Such investments would give small farmers the options and flexibility to adjust and respond to market conditions.

For poor farm-households whose major endowment is its labour force, economic growth with equity will give increased entitlement by offering favourable markets for its products and more employment opportunities. Economic growth if not managed suitably, can lead to growing inequalities. Agrarian reforms to alleviate unequal access to land, compounded by unequal access to water, credit, knowledge

and markets, have not only rectified income distribution but also resulted in sharp increases in productivity and hence need to be adopted widely. Further, targeted measures that not only address the immediate food and health care requirements of disadvantaged groups, but also provide them with developmental means, like access to inputs, infrastructure, services and most important, education should be taken.

Identification of need-based productive programs is very critical, which can be explored through characterisation of production environment. We have to develop demand-driven and location-specific programs to meet the requirements of different regions to meet the nutritional security of most vulnerable population in the rural areas. Improved agricultural technology, irrigation, livestock sector and literacy will be most important instruments for improving the nutritional security of the farm-households. Watershed development and water saving techniques will have far reaching implications in increasing agricultural production and raising calorie intake in the rainfed areas. Livestock sector should receive high priority with multiple objectives of diversifying agriculture, raising income and meeting the nutritional security of the poor farm households. Need based and location-specific community programs, which promise to raise nutritional security, should be identified and effectively implemented. Expansion of micro credit programmes for income-generation activities, innovative approaches to promote family planning and providing primary health services to people and livestock and education should enhance labour productivity and adoption of new technologies. Development of the post-harvest sector, co-operatives, roads, education, and research and development should be an investment priority. A congenial policy environment is needed to enable smaller holders to take the advantage of available techniques of production, which can generate more incomes and employment in villages. For this poor farmer needs the support of necessary services in the form of backward and forward linkages. Small-mechanised tools, which minimise drudgery and do not reduce employment, but only add value to the working hours are needed to enhance labour productivity. Special safety nets should be designed and implemented for them. Can agricultural co-operatives internalise and galvanize these marginal and excluded people? Off-farm employment provided through co-operatives will go a long way in pulling them out of the state where poverty breeds poverty. Therefore, investment in the empowerment of the small landholders will pay off handsomely. Let us create rural centres of production and processing by masses through co-operatives or empowerment of Gram Panchayats to promote co-operatives. This will improve efficiency of input and output marketing and give higher income. There is need to

disseminate widely post-harvest handling and agro-processing and value addition technologies not only to reduce the heavy post-harvest losses but also improve quality through proper storage, packaging, handling and transport. Panchayati Raj institutions and co-operatives can play significant role in all these directions. Giving them power over the administration, as contemplated under the 73rd and 74th Amendment of the Constitution has not been implemented seriously so far in any of the states.

Disaster Management

The frequency and intensity of disasters such as floods, droughts, cyclones and earthquakes have increased in the recent years. The devastating earthquake in Gujarat has brought untold miseries to the whole state and caused a national disaster. Special effort should be made to develop appropriate technologies for increasing preparedness to predict and to manage the disasters. Effective and reliable information and communication systems, contingency planning and national and international mobilization of technologies and resources are a must. Experiences of other countries in prevention and management of the disasters should be shared.

Keeping Pace with Globalisation

The globalization of agricultural trade will bring to the fore access to markets; new opportunities for employment and income generation; productivity gains and increased flow of investments into sustainable agriculture and rural development. I believe that if managed well, the liberalization of agricultural markets will be beneficial to developing countries in the long run, It will force the adoption of new technologies, shift production functions upwards and attract new capital into the deprived sector. However, this will only come to pass if we are mindful of the interests of billions of small and subsistence oriented farmers, fisher-folk and forest dwellers in the short and medium tern. So far the magic of globalization has not been felt in India. During the past one-decade of liberalization certain trends such as deceleration of the growth rate of agricultural GDP, declaration in yield growth

rates, and low non-agricultural employment have emerged against expectations. As we globalize, however, it is imperative that we do not forget social aspirations for a more just, equitable and sustainable way of life. Trade agreements must be accompanied by operationally effective measures to ease the adjustment process for a small farmer in developing countries.

Exploiting Cyberspace

Information is power and will underpin future progress and prosperity. Efforts must be made to strengthen the informatics in agriculture by developing new databases, linking databases with international databases and adding value to information to facilitate decision making at various levels. Development of production models for various agro-ecological regimes to forecast the, production potential should assume greater importance. Using the remote sensing and GIS technologies, natural and other agricultural resource should be mapped at micro and macro levels and effectively used for land and water use planning as well as agricultural forecasting, market intelligence and e-business, contingency planning and prediction of disease and pest incidences. Table 1: Demand for Agricultural Commodities

Item

Achieved TE 1997-99 Area

Production Yield (Kg/ha) (Million (Million ha) tons) Rice 42.2 85.7 1903 Wheat 26.2 69.1 2582 Coarse cereal 30.7 30.4 1041 Cereal 99.1 185.2 1814 Pulses 21.7 13.8 608 Foodgrains 120.8 199.0 1595

Demand in 2020Yield target in (million tons) 2020 LIG HIG LIG HIG

112.4 82.3 38.9 233.6 22.3 255.9

111.9 79.9 37.3 229.0 23.8 252.8

2664 3137 1268 2357 1029 2119

2652 3045 1214 2311 1095 2092

Edible oil Potato Vegetables Fruits Sugarcane Gur Milk Meat Eggs number Fish

28.6 1.2 5.3 3.2 3.7 -

6.4 21.6 74.5 43.0 26.9 71.2 5.0 2873 5.3

269 17188 14204 13437 7006 -

10.8 27.8 135.6 77.0 32.6 115.8 8.8 7750 10.1

11.4 30.6 168.0 93.6 33.7 137.3 11.4 10000 12.8

379.7 22279 25673 24064 8788 -

399 24566 31812 29259 9088 -

Source: R.S.Paroda and Praduman Kumar (2000). Food Production and Demand in South Asia. Agril. Econ. Res. Rev. 13(1):1-24. LIG: Low income growth 3.5% per capita GDP growth HIG: High income growth 5.5% per capita GDP growth Demand includes export 4.7mt rice, 3.6 mt wheat, and vegetables 2.2 mt fruits 1.4mt And fish 0.49 mt.

Table 2: Total Factor Productivity trends for crops in selected states

Crop Paddy

TFP trend Increasing

No change

Declining Bihar, Karnataka, Madhya Pradesh

Wheat

Andhra Pradesh,Assam, Haryana Orissa, Punjab, Tamil Nadu, Uttar Pradesh, West Bengal Haryana, Punjab,Madhya Pradesh Rajasthan, Uttar Pradesh

Sorghum Pear millets Maize Barley Chickpea Black gram Moong Pigeon pea Groundnut Rapeseed Mustard Soyabean Sugarcane

Cotton

Jute Onion Potato

Andhra Pradesh,Madhya Pradesh, Maharashtra, Rajasthan Karnataka Gujarat, Haryana, Rajasthan Madhya Pradesh Rajasthan, Uttar Pradesh Uttar Pradesh Rajasthan Haryana Rajasthan, UttarMadhya Pradesh Pradesh Maharashtra Andhra Pradesh,Orissa Madhya Pradesh, Uttar Pradesh Madhya Pradesh Andhra Pradesh ,Orissa Rajasthan Madhya Pradesh Gujarat, Uttar Pradesh Andhra Pradesh ,Gujarat, Tamil Karnataka, Nadu Maharashtra, Orissa & Rajasthan, UttarAssam, Haryana Punjab Pradesh Madhya Pradesh Bihar Andhra Pradesh , Haryana, Karnataka, Maharashtra, Uttar Pradesh Gujarat, Haryana,Andhra Pradesh, Tamil Nadu Karnataka, Madhya Pradesh, Maharashtra, Punjab Assam, Bihar, West Bihar Bengal Maharashtra Himachal Pradesh Uttar Pradesh Himachal Pradesh

Source: IARI-FAO/RAP study (2001) based on cost of cultivation data, DES, GOI.

Table 3: Priority states for increasing national average yield of crops, India l Crops Target growth Per cent 2.35 2.22 1.36 0.43 2.00 4.34 4.28 2.51 & 2.11 1.11 3.78 3.07 Priority states Percent share of priority states in total crop area 66 68 82 47 60 83 72 76 74 83 74 51

Rice Wheat Sorghum Pear-millets Maize Chickpea Pigeon pea Groundnut Rapeseed Mustared Soyabean Cotton Sugarcane

BH, OR, AS, WB, UP UP, MP, BH, RJ MH, KN, MP, AP RJ BH, Up, MP, RJ MP, Rj, UP, MH MH, GJ, KN, AP, MP AP, GJ, KN, MH RJ, UP, MP, WB MP, RJ MH, GJ, KN, RJ, AP UP

Note: AP: Andhra Pradesh. AS: Assam. BH: Bihar. GJ: Gujarat. KN: Karnataka. MP: Madhya Pradesh. MH: Maharashtra. OR: Orissa RJ: Rajasthan. UP: Uttar Pradesh. WB:West Bengal.

Table 4. Number and percentage of population below poverty line in India

Rural Year No. of

% of

Urban No. of

% of

All India No. of % of

persons person persons 1973 1983 1993 1998 (million) 261 56 254 46 213 33 170 24 (million) 60 74 75 81

person 49 41 32 30

persons (million) 321 328 288 251

person 55 45 32 26

Source: IARI-FAO/RAP study (2001) based on 50th NSS round (1993-94)

Table 5. Incidence of hunger and poverty by farm size in rural India

Land class Land less <0.5 ha 0.5-1ha 1.0-2ha 2.0-4ha >4ha

Percent of population Hungry Poor 49 54 32 38 24 27 17 19 12 14 12 13

Source: IARI-FAO/RAP study (2001)based on 50th NSS Round(1993-94)

Table 6 Relationship between home produced calories and hunger and poverty in rural India Degree of home produced calories 0 < 25 percent 25-50 percent 50-75 percent >75 percent Percent of population Hungry Poor 49 41 36 34 26 25 23 20 17 29

Source: IARI-FAO/RAP study (2001)based on 50th NSS Round (1993-94)

Table 7. Impact of irrigation on alleviation of hunger and poverty in India

Irrigated area (%) Rainfed <20 20-50 50-80 >80

Percent of population Hungry Poor 33 35 20 22 22 23 18 24 19 26

Source: IARI-FAO/RAP study (2001)based on 50th NSS Round (1993-94)

Table 8. Impact of livestock on alleviation of hunger and poverty in India

Livestock None Cow Buffalo Cow & buffalo

Percent of population Rural Urban Hunger Poor Hunger 36 28 43 31 25 29 26 18 20 14 8 7

Poor 55 42 33 4

Source: IARI-FAO/RAP study (2001)based on 50th NSS Round (1993-94)

Table 9. Impact of literacy on alleviation of hunger and poverty in India

Literacy level

Percent of population Malnourished Below poverty level Rural Urban Rural Urban Zero 36 28 43 55 Below Primary Level 31 25 29 42 Above Primary Level 26 18 20 33 Graduate and 14 8 7 4 Technical Source: IARI-FAO/RAP study (2001)based on 50th NSS Round (1993-94)

[1] Energy intake below minimum energy requirement (kcal/person/day). Threefourth of recommended calories (2400/person/day) for rural India that is 1800 kcal/person/day is used the threshold level. An average individual has an intake below this level (the threshold) is undernourished because they do not eat enough to maintain health, body weight and to under take light activity.

Schizophrenia of agricultural policy Any discussion of GM crops must take place within the larger framework of the indispensable need to promote biodiversity and set up agricultural policies linked to this need, writes Sujatha Byravan. Write the author Sujatha Byravan GM Crops Biodiversity Send to a friend Printer friendly version

27 March 2010 - The last few weeks have indeed been colourful if not schizophrenic with regard to agricultural policy in India - a moratorium on Bt-brinjal, a steep rise in food prices, an international conference hailing biodiversity as pivotal to food security, and a proposed Memorandum of Understanding with the U.S. on agriculture cooperation and food security; the last item was kept under wraps and later announced as a fait accompli.

Activists, farmers, some scientists and many who are concerned about what they eat have been celebrating the moratorium promised by Environment Minister Jairam Ramesh in introducing Bt-brinjal into the Indian markets. Never mind that by all accounts the delay will be for a few months and we do not know what it means in the long term for farmers and consumers. Will there be more scientific tests? Who will conduct them and how will they be evaluated? Indeed, will postponing the introduction of Bt-brinjal improve matters or will we need another round of protests and consultations at the end of the moratorium period?

Further, what is the plan for other Bt-vegetables that are being field tested? Last week Monsanto announced that the pink bollworm has developed resistance to Cry1Ac, which is the Bt protein in Bollgard cotton. This has taken place in the past in other places including in the US and was to be expected. Under intense pressure, pests will develop resistance; this is 101 biology. Perhaps the annoucement is an inducement for farmers to start using Monsanto's second generation Bt-resistant cotton, the Bollgard II. The union government has announced that it will change the Genetic Engineering Approval Committee (GEAC), a statutory body under the Ministry of Environment and Forests (MoEF), to Genetic Engineering Appraisal Committee, whatever that might mean in real terms for the decisions it makes. Meanwhile, a proposal is being considered to take over authority from the MoEF. A draft bill to set up the Biotechnology Regulatory Authority of India (BRAI), will supposedly be tabled by the government in the budget session. It proposes to "regulate the research, transport, import, manufacture and use of organisms and products of modern biotechnology...in order to promote the safe use of modern biotechnology by enhancing the effectiveness and efficiency of regulatory procedures." India has not used the rights offered by the Biosafety Protocol, which already provides a significant degree of protection that this bill proposes to offer. Is this simply because agribusiness is opposed to the Protocol? Further, while the GEAC was under the MoEF, the new Authority will be under the Department of Biotechnology in the Ministry of Science and Technology. Thus, the agency charged with regulating the technology also has the responsibility of promoting it. It seems like India is trying to duplicate, instead of improving on, the mess of U.S. biotechnology policy. There we find that three federal agencies regulate genetically modified (GM) foods: the Food and Drug Administration (FDA), the U.S. Department of Agriculture (USDA), and the Environmental Protection Agency (EPA). Oversight by these departments is based on a random collection of pre-existing statutes and conflict of interest is structurally embedded by, for instance, having the USDA regulate and promote GM crops. Problems with the BRAI We need an overhaul of the regulatory bodies and regulatory processes for GM crops in India. Riddled with conflict of interest, lack of scientific rigour, outright lies by the companies, and corruption of Indian regulators, every aspect of the regulatory system requires a rethink. The BRAI, which is based on a different

version of the older National Biotechnology Regulatory Bill, 2008, simply adds to the chaos in the institutions that regulate GM crops. According to article 63 of the proposed law, "whoever, without any evidence or scientific record, misleads the public about the safety of the organisms and products ... shall be punished with imprisonment for a term - and with a fine or with both". Another controversial new article, 81, indicates that decisions made at the state level can be overridden. Yet another clause, article 27, suggests that the BRAI could override India's Right to Information Act, which mandates citizens' right to obtain information from the government. This confusing, not to say, disingenuous legislation has many civil society groups up in arms and is perceived as unconstitutional by many of them. Moreover, any discussion of GM crops must take place within the larger framework of the indispensable need to promote biodiversity and set up agricultural policies that will support or, at the very least, not be in conflict with this necessity. At the same time, we must cut down on the use of petroleum products such as fertilisers so that we can reduce greenhouse gas emissions. We should consider what kinds of innovations What role do practices such as intensification of organic agriculture, ecological agriculture and improving agricultural yield in a warming advance storage and distribution of food grains with other changes? We need an integrated policy, not the piecemeal methods adopted by evidenced in the case of Bt-brinjal.

We learned, almost in an offhand manner, that the government has secured cabinet approval for a new agreement with the U.S., which, among other things, promotes the privatisation of agricultural extension services and facilitates collaboration between American agribusiness and the farm sector in India. Where is the science?

could be promoted in agriculture. farming, low or no-till farming, farmer?s cooperatives have on world? How will methods to improve food security in concert systemic approach to agricultural the government thus far such as

While all these regulatory changes were taking place, an international conference was held in the MS Swaminathan Research Foundation (MSSRF) in Chennai, with

high-level experts from different parts of the world. A nine-point plan for boosting biodiversity was announced in a Chennai Declaration, a manifesto that links food security, climate change and biodiversity. Various measures to strengthen and expand biodiversity were highlighted, as were methods to build resilience in a changing climate. The need to protect our ecosystems from the threat of monoculture and the connections with rural livelihoods, health and food security were noted along with the need to establish gene banks. The promotion of GM crops by MSSRF on the one hand - thus promoting monoculture - and calling for the preservation of biodiversity on the other hand, leaves many activists confused about the organisation's goals and motivations. Privatising extension services Yet, perhaps all this happened in some sort of vacuum. We learned, almost in an off-hand manner, that the government has secured cabinet approval for a new agreement with the U.S., which, among other things, promotes the privatisation of agricultural extension services and facilitates collaboration between American agribusiness and the farm sector in India. According to The Hindu, "An India-U.S. Agriculture Knowledge Initiative is already in place that allows for US-based private multinational trading and seed giants like Cargill and Monsanto to be appointed on the board, enabling them to bear influence on the country?s farm research". The last thing we need is Monsanto and Cargill giving us advice on food security. According to Doug Gurian-Sherman from the Union of Concerned Scientists, "this is potentially a very serious development for several reasons. One is that a system of private extension could shift farm practices toward technologies preferred by the private sector - especially the large companies. Extension acts as a conduit of science and technology to farmers, and can be very important and influential in shaping farm practices". He adds that extension in the US has gone down this privatization course over the past 30 years. While public sector extension scientists, usually associated with agricultural universities, may provide farmers with information on the best practices, private extension may be influenced by incentives from companies to push their preferred solutions. Practices based on knowledge - like organic farming rather than expensive inputs that are attractive to big business - will not have big business constituencies to buy off extension agents with incentives. "In practice in the US, industrial agricultural methods were pushed by public sector extension

scientists too, because of the undue influence of industry and large farms on our Department of Agriculture. But at least if structured properly, public sector extension could be more objective". While many were celebrating a delay in Bt-brinjal commercialisation, our policymakers were selling our farmlands for all varieties of crops as dictated by agribusiness. While some people in MSSRF were calling for biodiversity, our gene banks were being handed over to American agribusiness. I do not believe that this is simply the result of pressure from agribusiness, although I know that such pressure is nothing to be scoffed at for its power and reach. Agribusiness in the US has done all it can to destroy their ecosystems, consolidate family farms, and industrialise agriculture. It has resulted in an increase in monoculture, contributed to the expanding American waistlines and made the US one of the unhealthiest countries in the developed world. What we need in India is an integrated agricultural policy. There are excellent approaches suggested by groups such as the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), and others. We need to establish far stricter rules for transparency in government at every level. Only then can we at least begin our task by voicing our opposition when we want a different future from the one envisioned by our policymakers. Sujatha 27 Mar 2010 Byravan

Dr Sujatha Byravan writes on Science and Technology Policy. She is based in Chennai. Reasons for the Bt Brinjal moratorium Barely three days after the conclusion of the last of six public hearings, Minister of Environment Jairam Ramesh slapped a moratorium on the release of Bt Brinjal.Anupama Rao summarises key points from the Minister's note. Write the author GE/GM Agriculture policy Send to a friend Printer friendly version

12 February 2010 - Anxious eyes must have scanned through 16 pages of rationale to arrive at the italicized bold font quoting Minister for Environment Jairam Ramesh imposing 'a moratorium on the release of Bt Brinjal till such time studies establish the safety of the product from the point of view of its long-term impact on

human health and environment, including the rich genetic wealth existing in Brinjal in our country to the satisfaction of both the public and professionals'.

The Bangalore Bt Brinjal consultation on 6th February with Minister Jairam Ramesh at the centre and former prime minister H D Deve Gowda on the right. Pic: Gandal Srikanta. Before the moratorium was imposed on 9th February, at the final hearing in Bangalore on 6th Feburary, the 'No's outnumbered the 'Aye's in favour of release of Bt Brinjal. Critical were voices of the agricultural universities, public sector organizations, Kerala State Biodiversity Board and the Organic Farming Mission of Karnataka. There were also concerns over biopiracy, protection (or lack of it) under the Biodiversity Act, Food Safety Act and Prevention of Food Adulteration Act. The Minister laid bare all the factors for his decision in his lucid report, and as he predicted the nation is divided into the happy and the unhappy. Reasons cited by Minister Jairam Ramesh for imposing the moratorium There is no over-riding food security, production shortage or farmer distress arguments favouring release of Bt Brinjal, other than the need to reduce pesticide use.

 The apprehensions expressed on and caution called for by Chief Ministers / Agriculture Ministers of 9 states for release of Bt Brinjal, are extremely important as agriculture is a state subject. Non Pesticide Management or NPM, a part of the National Mission on Sustainable Agriculture (one of the missions under the National Action Plan on Climate Change) scores over Bt technology as it eliminates chemical pesticide use completely whereas Bt technology only reduces the pesticide spray, albeit substantially. The Minister has in the past also suggested to the Union Agriculture Minister on the need to evaluate large scale replicability of the NPM experiment conducted in Andhra Pradesh. The threat of contamination and natural toxins resurfacing is worrisome. In this context, the fact that the safety tests have been carried out by the Bt Brinjal developers themselves and not in any independent laboratory raises legitimate doubts on the reliability of the tests. There is a lack of large-scale publicly funded biotechnology effort in agriculture to compete with and countervail Monsantos expertise and capabilities so that it does not jeopardise national sovereignty. Further fingers have been pointed at the manner of funding of the Bt related research in government owned Tamilnadu Agricultural University, Coimbatore (TNAU) and University of Agricultural Sciences Dharwad as well as TNAUs right to transfer products and germplasm to Monsanto. India is undoubtedly the country of origin for Brinjal. The National Bureau of Plant Genetic Resources of the ICAR has pointed out the likelihood of diversity loss due to gene flow (also relevant is the experience of Bt-cotton seeds taking over non-Bt seeds). The Central Institute of Cotton Research, Nagpur has, in the light of its review of Bt Cotton in India, highlighted the need for development of data regarding pest resistance and strategies for pro-active Insect Resistance Management as well as for resistance monitoring after release, all to be carried out independently. Several tests suggested by Dr. P.M. Bhargava and Expert Committee I members were discarded by Expert Committee II (EC II) while evaluating Bt Brinjal. The EC-II report and the biosafety dossier have been criticised from a statistical point of view as well. A National Biotechnology Regulatory Authority which is professional and science-based, independent

of the government, equipped to conduct all essential tests with integrity and impartiality is on the anvil but yet to come into being. In the absence of such a body, arguments that have been made on the limitations of the GEAC cannot be ignored. Many countries, particularly in Europe, have banned GM foods. Chinas policy is to be extremely cautious about introduction of GM in food crops, even when it has a very strong publicly-funded programme in GM technology unlike India. The current standards by which the GEAC has formulated the decision to approve Bt Brinjal do not match global regulatory norms to which India is a party, specifically, the provisions in the Cartagena Protocol on Biosafety, pertaining to public consultations prior to the release of GM food crops and those governing risk assessment, Article 15 of the Rio Declaration on Environment and Development (1992) which echoes the precautionary principle and Section 45 of Codex Alimentarius containing "Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Plants". Scientists in the USA, France, Australia, UK and New Zealand have written to the Minister raising very serious doubts on the way tests have been conducted in India for Bt Brinjal. 17 noted scientists from different countries have addressed a joint letter to the Prime Minister on February 8th, 2010 giving scientific reasons against the release of Bt Brinjal. The Indian Council of Medical Research and the Drug Controller to the Government of India have recommended that chronic toxicity and other associated tests be carried out independently drawing a parallel with independent testing for drugs on human beings instead of relying on developer companies data. Doctors for Food and Safety, a network of doctors across the country have warned of the health hazards related to GM foods in general, Bt Brinjal in particular and the possibility of loss of medicinal properties of Brinjal used in Ayurveda, Siddha, Homeopathy and Unani. Dr. Swaminathan, whose research foundation is working on GM technology, has highlighted concern over chronic toxicity and called for credible independent testing of the chronic effects of consumption of Bt Brinjal. Additionally he sees the need for an independent regulatory system

The Bangalore hearing on 6 February In favour of Bt Brinjal and for conservation and collection of India's existing genetic variability in Vice Chancellors of University of Agricultural Brinjal. Sciences, Dharwad and The decision on Bt Brinjal also has to take GKVK, Bangalore. They note of the Public Interest Litigation filed cited favourable results based with the Supreme Court which is pending specifically on own studies. response from the Union of India on the Farmers would get seeds steps taken to protect traditional crops. It is 'virtually free of cost' and can them. also relevant that the Supreme Court has save invoked the precautionary principle as a Balasubramanian (Tamil Agricultural guiding instrument in environmental Nadu University, Coimbatore). decisions. Cited large doses of Minister Ramesh also countered the suggestion pesticidal sprays (citing the for a limited release for the reason that in a retail Coimbatore situation) needed brinjal. market such as Indias it would be extremely for difficult and impractical to mandate labeling and Farmers who favoured Bt monitor limited usage. Other pro-Bt Brinjal Brinjal spoke primarily of arguments that he has deliberated upon also their success with Bt Cotton. suggest setting up a regulatory authority for Opposition to Bt Brinjal governing GM crop cultivation upon release. Ramesh also cited the development of Bikaneri Nerma (whose seeds can be saved by farmers) by the Central Institute of Cotton Research, Nagpur, as an example for the need to strengthen good public research. He is also equally vocal in the report about encouraging science based companies launched by Indian entrepreneurs. Vision for the moratorium period Reiterating his support for tapping the tools of modern biotechnology, the Minister hopes it would aid crop improvement and strengthen national food and nutrition security. He has indicated his interest in harnessing the full potential of GM technology in agriculture and for prioritising introduction of the public sector Organic farmers - said integrated pest management was superior. Dr Vijayan (Chairman, Kerala Biodiversity Board) Irrevocable risk of contamination. Claude Alvares (Organic Farming Association of India) - The agriculture universities guilty of 'biopiracy' for patenting farmers' heirloom seeds. Dr A S Ananda (Chairman, Organic Farming Mission, Government of Karnataka) A Gazette notification (October 2009) has excluded protection under the Biodiversity Act for brinjal (and 189 other plants). Health professionals, Dr

products. He has however emphasized that there must be no rush with establishing public trust in the very first genetically modified vegetable anywhere in the world. In his report, Ramesh sets out the need for a fully operational independent regulatory body, a need to evaluate transgenic seeds in the context of the Seeds Bill (awaiting parliaments approval), to strategise public and farmer control over the seed industry, a comprehensive discussion in the National Development Council and the need for a debate in Parliament on the subject. The to-dos for the GEAC include following up on further tests with appropriate protocols (to be decided in consultation with certain named scientists) and in appropriate laboratories. The Minister further expects the GEAC to engage and interact with scientists, institutions and civil society groups who have submitted written representations. Meanwhile the GEAC will be renamed as Genetic Engineering Appraisal Committee. The change in emphasis from the approvals to appraisal is there for all to see. If the public consultations were themselves a novel experience for the layperson, Jairam Ramesh's report that publicly acknowledges the government's duties 'as a measure of our sensitivity to public opinion' elicits appreciation. It was right up there with the best of people-centric acts in our country. Even as we expect effective and even-handed regulation of GM, it will take an informed public to ensure there is no compromise in law, policy or practice. Anupama 12 Feb 2010 Rao

Anupama Rao is based in Bangalore and is a freelance author. She attended the Bangalore public consultation. Watching prices rise, helplessly The current situation of impotence that the Government finds itself in should prompt some soul searching about the reliance on market mechanisms to take care of India's food security, writes Kannan Kasturi. Write the author Agriculture Policy Trade in 20 January 2010 - Food prices have become a major Agriculture talking point for the media. The opposition parties too, it Send to a friend Printer friendly version

seems, have just woken up to defend the aam aadmi. Under mounting pressure, the Government has unveiled some short term measures to curb prices. The problem, however, is not short term in nature. A timeline of food prices of common food items serves as a reminder that the rapid food price inflation dates back two years, and even more in the case of certain items. Government-speak The price rise is variously blamed by the different government representatives on last year's drought, on "cost push" and on "dysfunction in distribution". The Government has been fairly candid in admitting its helplessness in combating the price rise. The Planning Commission Deputy Chairman has made public his belief that policy changes to make credit dearer are not a remedy. Imports without a government subsidy are also not possible as prices internationally are higher than in India. Action against hoarding and profiteering must be taken by state governments, says the Agriculture Minister, only to be roundly rebuffed and pointed out his errors of omission and commission. Several questions arise. Why have prices risen? Are farmers benefiting from the rise? And why is the government so helpless? In any discussion of food price rise, it is not long before one hears the word 'drought' - last year's drought is assumed naturally to be the main reason behind the price rise. The facts, however, say otherwise. The possibility of a drought became apparent barely five months back (July 2009) and its effects - a below average crop of paddy, pulses, potatoes (Kharif crop) and sugar - would only begin to be felt with lower arrivals in the market from October onwards. Last year's drought could account for the price rise over the last two months; prices however have been on the rise since the beginning of 2008.

Time line of retail prices in Delhi for common food items. The data in the chart is from the Department of Consumer Affairs. However, other than government outlets such as the Kendriya Bhandar, grocers charge higher prices than these. Inflation amidst plenty The case of rice is illuminating. Prices rose sharply in 2008 after record harvests in 2007 and indications of a higher production in 2008. Was the rise a "cost push" effect - due to the higher Minimum Support Price (MSP) for paddy fixed by the Government each year? Comparing the rise in retail prices with the rise in the price paid to the farmer should provide some answers. The MSP announced as the price per quintal of paddy has been converted into an effective price per kg of rice using the standard assumption that paddy will yield 67 per cent by weight rice on milling for comparison. (For example, the MSP of Rs 950/quintal fixed by the government for paddy for the 2009-2010 translates to an effective remuneration of Rs 14.18/kg rice to the farmer.) Comparison of retail price of rice (Delhi, end of the month, Government figures) with the MSP offered to the farmer. All prices shown in Rs/kg).

Of the additional Rs.7 that the customer in Delhi pays now compared to 2 years ago for 1 kg of rice (typically of the lowest quality, available from a 11.12 4.88 government outlet), about Rs.3 goes to Dec 16.0 the farmer while Rs.4 is the increase in 2007 the markup of the retail price over the Dec 22 13.43 8.57 price paid to the farmer. The increased 2008 payments to the farmer in themselves would account for an increase of 9 per Dec 23 14.18 8.82 cent in rice prices each year over the last 2009 two years. The difference between the retail price and the price paid to the farmer - accounting for the cost of milling, storage, transportation, taxes and the commissions of the traders, wholesalers and retailers in the supply chain - has inflated by over 80 per cent in the last 2 years and by over 75 per cent in just 2008. What can account for this inflation? Fuel prices rose sharply during 2008 but were back to their 2007 year-end levels by the end of 2008. The wholesale price index rose by only 6 per cent during 2008. The Government and its economists never came out with reasons behind this inflation. The likely explanation is that prices went up due to hoarding following the extraordinary increase in the international market price of rice in 2008, with the expectation that a killing would be made in exports. International rice prices more than doubled between Jan and May 2008 before settling down at higher than January levels towards the end of 2008. About 10 million tones of rice were exported from India in 2007 and 2008 before the government banned exports in April, 2008. After coming down marginally in the middle of 2009, prices have again gone up on the "inflationary expectation" arising from last year's bad monsoon. Sugar: some bitter truths Sugar is another example of a problem that has been some time in the making. The Central Government declares a Statutory Minimum Price (SMP) for sugarcane every year to set expectations for the farmer (This has been renamed "Fair and Remunerative Price" after a recent amendment to the sugarcane law). Some States, including UP - the largest sugar producing state - declare a State Advisory Price

Retail Effective price price realised by farmers at MSP

Retail price markup over farmers' price

(SAP) that sets a higher minimum for the price to be paid by mills for the sugarcane; others, like Karnataka, are content with the center's minimum price. The effective price realisation of the farmer is calculated with the standard assumption that a quintal of sugarcane will yield 9 kg sugar - thus the Rs.130/quintal price of sugarcane fixed by the UP Government translates to Rs 14.45/kg of sugar. In 2007 the sugarcane production was in plenty and the millers were paying only the minimum prices set by the Government. Wanting to pay only the lower SMP set by the Central Government, millers even challenged the legality of the UP Government's higher SAP. The situation has undergone a sea change since then, after 2 years of severe shortfall in production and depleted stocks; millers in UP are paying a premium over the SAP to cane growers to prevent them from diverting their cane to khandsari units or selling to mills in neighboring states. Here too, the figures show that despite being courted, the farmer gets the short end of the stick. Of the Rs.22 more that a customer now pays for 1 kg of sugar compared to 2 years ago, the farmer gets Rs.10.55 while the sugar mills, wholesalers and retailers together take Rs.11.45. Central govt. support price for sugarcane (Rs./qunital) U.P. govt. support price for sugarcane (Rs./qunital) Prices paid by UP millers (Rs./qunital) Prices Retail realised price by UP (Rs./kg) farmers (Rs./kg) Retail price markup over farmers' price (Rs./kg) 2.55 4.89 14

Dec 81.18 2007 Dec 81.18 2008 Dec 120.85 2009

125-130 140-145 165-170

130 145 225

14.45 16.11 25

17 21 39

The current crisis of sugar availability is largely of the government's own making. It allowed the export of sugar on the back of record production in 2006-07 and 2007-08. Initially prices in the world market were higher than Indian prices and traders and exporters booked their profits. In 2007, the world market prices fell.

The central government, however, continued to push exports by waving taxes and providing a subsidy to exporters. In the 3 years 2006 thru 2008, a total of over 9.5 million tones of sugar were exported. The average price realisation of these exports of raw sugar in the period after April 2007 was only Rs 11.76/kg! This was not all. With a view to curb sugar production, the Government actually held the SMP for 2008-09 at the same level as the previous year even while the support price for food grains was raised. The non-remunerative price announced for 2008-09 pushed farmers to cut back on acreage of cane and sell their cane, when it was ready, to khandsari units who were offering a better price - all resulting in a severe fall in sugar production. Sugarcane production did not recover even in 2009-10 with acreage remaining below 2007 levels and the drought also taking its toll. The government has been importing sugar for the last two years at roughly double the unit price of the earlier exports. Export when prices are low and import when the prices double - that is India's sugar story of the last 4 years. Policy - the real culprit Export when prices are low Clearly, neither "cost push" nor drought really and import when the prices accounts for the food price inflation. The larger double - that is India's sugar causes are the "dysfunction in distribution" and a story of the last 4 years. government policy which is short sighted and makes no contingencies for the vagaries of Inflation: Perception and nature. The "dysfunction in distribution", in plain reality speak, stands for speculative hoarding all along Sour on sugarcane the supply chain from farm gate to consumer's table. And the government policy of exporting surplus agricultural produce without saving for the rainy day profits no one but traders. It will now be clear why the Government is helpless. While cracking down on hoarding could bring some relief temporarily, it is a difficult option for the governments at the center and in the states, since the trading community is a major source of funds and has close connections with the political parties and politicians. For the Government's economic advisors, this is also anathema - it militates against the direction of reforms to free markets from all shackles. The preferred policy is to correct the markets through imports, but this will not work when international prices are higher or when the requirements are so large that the initiation of

imports would drive up world market prices. Unfortunately, this is just the case now with pulses such as toor dal and with sugar. The current situation of impotence that the Government finds itself in should prompt some soul searching among those who advocate that market mechanisms and free trade across borders will take care of India's food security. With bio-fuels competing with food for farming resources, it will become increasingly dangerous to rely on the international market to make up for large shortfalls in local production. It is perhaps time to rekindle the debate on the need for near self sufficiency in essential foods and investment in food storage infrastructure. Kannan 20 Jan 2010 Kasturi

Kannan Kasturi is a researcher and writer on law, policy and governance. Farmers sour on sugar cane The handling of sugar production, sale and external trade by the government shows a complete absence of strategic planning on an issue that critically affects the aam aadmi. Kannan Kasturi reports. Write the author Agriculture Policy Trade in Agriculture Send to a friend Printer friendly version

11 September 2009 - Sugar prices have doubled over the last 15 months. A severe shortfall in production is forcing massive sugar imports on India at a time when the world market prices are at a 28-year high. The government has laid the blame on a poor monsoon and the "cyclical nature of the sugar industry", factors that it presents as beyond its control. Curiously, a year ago, it was actually subsidising sugar exports. How has the situation changed so quickly? The facts need a closer look.

A few preliminaries are in order to better understand the sugar production cycle. Sugar cane has a long growth period - it stays in the field for 11 to 15 months. Cane crushing starts around October of every year and keeps the crushers occupied for up to 6 months. The accounting year in the context of sugar - the sugar season is October to September. Lower acreage, lower yields, more gur

The graphic below shows the area under sugar cane and the quantity of cane grown over the last few years (Figures for 2009-10 are estimates). Note the sharp dip of 12 per cent in acreage for the crop processed in 2008-09 on the back of a smaller dip the previous year. To make things worse, the cane production itself fell by around 20 per cent, indicating that in addition to lower acreage under cane plantation, there was also a lower yield in 2008-09 - attributed to less than perfect weather conditions in the sugar growing areas in 2008 even though the monsoon was an overall normal one.

Sugarcane acreage (in millions of acres, right axis) and production (in millions of tonnes, left axis) during the last few years. 2009-10 data are estimates. A portion of the sugar cane is also used to manufacture other sweeteners - gur (jaggery) and khandsari - and some is retained for seed. Thus, beyond growing cane, we must ask how much of this is used to produce sugar itself. In 2008-09, particularly, a larger part of the sugar cane was used for making gur than in earlier years. This exacerbated the sugar shortage; even though cane production that year saw only a 20 per cent drop from the previous season, sugar production tanked 43 per cent. Why did farmers reduce the acreage under cane so dramatically? And why did they prefer to sell the cane to small scale gur units rather than to the sugar factories? We will return to these questions later. Before that, let's look at something else. Bad trade policy

There is yet another dimension to the sugar crisis - trade policy. From 2006 onwards, India started exporting sugar first in anticipation of and then on the back of record sugar cane production. India's current sugar consumption is between 2022 million tonnes, and this level was exceeded in 2006-07 and 2007-08. Initially prices in the world market were higher than Indian prices and the exporters were a happy lot. In 2007, the tide turned and world market prices fell. But the central government continued to push exports by waiving taxes and providing a subsidy to exporters in the period April 2007 to Sept 2008. State governments also added their own subsidies to the central subsidy. In the 3 years 2006 thru 2008, a total of over 9.5 million tonnes of sugar were exported. The average price realisation of these exports in the period April By February 2008, analysts 2007 to the end of 2008 was Rs.11,765/tonne for were already predicting a raw sugar, a price that is less than half the current sharp fall in 2008-09 sugar international price of around Rs 24,000/tonne. output based on fall in acreage cane. But the This was not all. The government modified under sugar cane control regulations in December government continued to allow 2007 to allow direct production of ethanol from massive exports. sugar cane juice by sugar companies without any quantitative restrictions. Plans were also Sugar being made to mandate a 10 per cent (up from downturn the current 5 per cent) blending of petrol with Burning ethanol to absorb the expected ethanol crops production prompting Reliance and HPCL to acquire sugar mills for fuel production. co-ops down face standing

By February 2008, analysts were already predicting a sharp fall in 2008-09 sugar output based on fall in acreage under cane (See, for example, CRISIL's analysis at this link). Why then did the government allow further exports in the 2008 financial year, adding up to a massive 3.3 million tonnes? Why was sugar export actually subsidised by the government till September 2008, to be withdrawn only under pressure of WTO action from Australia and Thailand? In early 2009, India began importing sugar. The spurt in prices in the world market is itself linked to the knowledge that India may have to import as much as 1/4th of its sugar requirements for 2009-10. Why were adequate reserves not built up in the

years of overproduction - the buffer at the end of 2007-08 season was reportedly only 9 million tonnes - so that the country could tide over the bad year? If storage infrastructure was a problem, why was investment not guided into this infrastructure that would provide fantastic returns for the nation? Moving away from sugar cane Now let's return to the questions posed earlier on why farmers grew less cane and why they sold less of the cane grown to the sugar mills. Farmers in India have only one way to respond to the market - by reducing or increasing acreage of different crops. Farmers suffered during the years of good production - 2006 and 2007. They were turned away by sugar mills that refused to lift their cane. The Hindu reported in May 2007 the instance of 43 farmers who had committed suicide in Bidar district of Karnataka, most being sugarcane growers who were unable to sell their cane to the local sugar factories. Even where the mills accepted their cane, farmers' dues were not cleared for months, in some cases years. In Uttar Pradesh alone, the government owed more than Rs.1500 crores to sugar cane farmers for previous season cane purchases at the start of the 2007-08 crushing season. The central government kept sugar prices depressed by keeping the statutory minimum price of sugarcane practically unaltered between Rs.80.25 and 81.18 per quintal, from 2006-07 to 2008-9. During the same period, the minimum support price of paddy was increased by 46 per cent. With the government forsaking them in this critical period, it was no surprise that farmers started turning away from sugar cane to other crops with better prospects. The farmers' woes did not end even with lower production and supply. In UP, the sugar millers contested the price fixed by the state government for the 2008-09 cane in court, leading to a delayed start to the crushing season. A large number of sugar cane farmers in Uttarakhand and nearby areas of western UP sold their produce to small private gur units as the sugar mills had not paid them their dues on time. Gur manufacturers reportedly offered much higher prices than the millers. Millers in UP, the largest sugar producing state, now want a government regulation that will force cane farmers to sell their entire produce to the sugar mills for the 2009-10 season (Business Standard, August 25 2009). So much for a free market! All this brings us to the present situation where the consumers are facing a runaway inflation in sugar prices with no respite in sight; the government has made the country hostage to international speculators in a sellers' market. But even as

both the farmer and the consumer suffer, certain elements in the sugar processing and distribution chain are doing very well by themselves. The table below showing the increase in the stock price of some of the top listed sugar manufacturers is revealing. Company Stock price Jan 2009 Stock price 01 Sep 2009 203.75 184.25 118.90 2296 Increase 01 173% 149% 130% 69%

Shri Renuka Sugars 74.55 Balaji Hindustan Balrampur Chini Nifty Mid-cap 50 74.10 51.60 1356

The handling of sugar production, sale and external trade by the government at the very least shows a complete absence of strategic planning on an issue that critically affects the well being of the aam aadmi - perhaps a consequence of the prevailing economic philosophy that attaches low importance to food security and self sufficiency in agriculture. But worse still, the commissions and omissions of the government lend credence to the idea that policy decisions are timed to allow certain business elements to profiteer at the expense of the people of this country. Kannan 11 Sep 2009 Kasturi

Kannan Kasturi is an independent researcher and writer on law, policy and governance.