VISION IAS

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Approach Answer: General Studies Mains Mock Test 12 625 (2015)

All the questions are compulsory and carry 12.5 marks each. NOT MORE THAN 200 WORDS.

1. Food processing industry needs a fillip in the form of better logistics, access to credit, technology
indigenisation and implementation of food safety laws. Discuss.

Approach:

Briefly introduce the potential of food processing industry in India.

Explain the need for the development of better logistics, access to credit, technology indigenisation
and implementation of food safety laws in order to exploit the complete potential of food processing
industry.
The given issues can be discussed under separate headings along with the suggestions.

Answer:

Food and food products are the biggest consumption category in India, with spending on food
accounting for nearly 21% of Indias GDP. But the overall processing level is just 10% in India whereas it
has reached nearly 80% in some developed countries. Its share in exports of processed food in world
trade is just 1.5%.

Some of the major constraints to food processing industry are: inadequate logistics, access to credit,
technology indigenisation and implementation of food safety laws.

Need for better logistics

The national highways are highly strained by low capacity and high traffic volumes, leading to delays
in transit.
Rail freight network suffers due to lack of last mile connectivity, inefficiency, low availability of
wagons, lack of private participation etc.
The dependence on manual labour and low technology usage affects turnaround times at ports,
including cost.
There is an urgent need to develop dedicated freight corridors in rail, supplemented by concretised
dual carriageways for the State and national highways.
There is a need to support development of organised strategic logistics hubs and incentivise
operators in setting up end-to-end logistics and warehousing.

Access to credit

The Government should establish a national bank, on the lines of NABARD, or extend the scope of
NABARD, to lend credit to food processing industries.

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 This will ensure speedy disbursal of funds to the food processing sector, which is always grappling
with the issue of lack of access to credit from banks.
State governments should play a catalytic role in partnership with banks, financial institutions,
technical and management institutions and farmers groups, so that small and unorganised players
become globally competitive.

Technology Indigenisation

Most R&D institutions have not been able to develop innovative products, processes and machinery
of a global stature. The key reasons for this are segregation of academics from applied research,
inadequate industry interface, low commercial orientation and lack of collaborative efforts with
global peers.
Technology is still being imported for the establishment of large-scale, exported-oriented units for
production of items such as even banana paste, concentrates of various fruit juices, sorting, cleaning,
washing, waxing and packaging of raw fruits and vegetables.
In order to achieve global standards and self-sufficiency there is an urgent need for technology
indigenisation in food processing industry.

Implementation of Food Safety Laws

The Government should ensure enforcement of the Food Safety and Standards Act (FSSA) in spirit,
including increasing radically the number of trained inspectors and state-of-the-art lab facilities.
Given the objective of the FSSA and the mandated transparency, it is important that: food
authorities, scientific panels and scientific committees must be given defined tasks with specified
objective of rule-making; public and industry participation at an early date.

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In order to increase the exports of processed foods, there is a need for enforcing strict safety

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standards as per the global requirements. There have been many incidents of rejection of Indian

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food products due to safety concerns.
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The National Mission on Food Processing is an important initiative of the government, which aims to
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overcome the above constraints and reap the potential of food processing sector in India.
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2. On what grounds is the prevailing Minimum Support Price mechanism in agriculture being criticized?
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How does the recent initiative to fix MSP at cost-plus basis addresses the concerns?
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Approach:
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The question is mainly focused on the purpose of MSP and the current debate regarding its effectiveness.
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The answer should critically discuss the demands from various quarters for fixing the MSP in terms of
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cost of production. Ultimately, the answer should discuss as to whether such a demand would address
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the concerns.
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Answer:
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The MSP policy was launched by the government in 1966-67 in the wake of Green Revolution for
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incentivizing farmers and for saving them from depleting profits. MSP is the price at which the
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government purchases the agricultural produce from farmers, irrespective of the actual price of the
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produce. Effectiveness of the policy can be viewed from the impact it has on controlling the fluctuations
in prices, as an incentive price to farmers, reduction in the poverty ratio in some states like Karnataka,
and distribution parameters.

However, the MSP policy has been criticized for the following reasons:

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 While the MSP policy has been very effective in surplus producing states like Punjab and Andhra
Pradesh, it has not been so effective in the deficit states.
This policy has adversely impacted the local cropping pattern of the regions, and has aggravated the
disparities, both inter- and intra-regional.
There is no fixed formula to determine the levels of floor prices. Therefore, MSP is increased year
after year without any sound criterion, and often it is subjected to politicization. In such a situation,
either the government or the farmers bear the loss.

Thus, in recent times, the debate has been renewed to fix the MSP on cost-plus basis considering the
increasing agrarian distress. The proposal is to set MSPs at 50 per cent above the weighted cost of crop
output, as was first mooted by the National Commission on Farmers headed by M S Swaminathan in the
mid-2000s. It would be beneficial in the following ways:

Such a move would increase the farm income.

Since it is being envisaged to incentivize farmers for diverse crops, therefore it is expected to address
the issue of skewed cropping pattern.
It would provide the sound basis for deciding MSP without any extraneous factors.

Though, such a move can address some of the above-mentioned concerns, but the move has been
opposed by a section due to the following reasons:

Fixing MSPs on a cost-plus basis would discourage efficiency and negate efforts to bring down the
cost of cultivation.
A mechanical increase of 50 per cent on cost would distort the market as well as the cropping
pattern.

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MSPs in any case work just for rice, wheat and to some extent for cotton - and that, too, only in parts

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of a handful of states. For other crops, these prices are of little consequence for want of actual

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market intervention through government procurement.
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Thus, the cost-plus MSP before being implemented should be widely discussed and debated. Perhaps,
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the government has done the right thing to hold this policy from being implemented for having more
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informed discussion.
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3. Agricultural marketing in India is the weakest link in the agricultural economy. In this context discuss
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the problems of agricultural marketing in India. How far can setting up of national markets help in
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addressing these problems?

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Approach:
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The answer should start with a very brief introduction of agricultural marketing. The next part should
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discuss the major problems besetting the agricultural marketing. The answer should also discuss the
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possible advantages of setting up a national market. The answer should end with the challenges to
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setting up such a market.

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Answer:
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Agricultural marketing involves many operations and processes through which the food and raw
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materials move from the cultivated farm to the final consume. Agriculture provides goods for
consumption and exports and manufacturing sectors. The suitable marketing system can be instrumental
to give proper reward or return to the efforts of the tiller of the soil. However, presently in Indian
agricultural economy, agricultural marketing is the weakest link due to the following reasons:

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 There is no organized and regulated marketing national system for marketing the agricultural
produce. Farmers have to face many hardships and overcome several hurdles to get a fair and just
price.
Presence of multiple channels of procurement and distribution eat away the pockets of both farmers
and consumers.
At present there is no free flowing to agricultural produce across states. For example, different states
have different tax structure, ranging from 5 percent to 14 percent, which they levy in APMC mandis.
This leads to price variation and thus hampers trade across states.
The exploitative nature of APMCs regulation, which force the farmers to sell their produce at the
sub-optimal price levels. The provision of APMCs empowers the state to impose the mandi fee on
buyers even if the trade is done outside of market without utilizing any infrastructure of the
committee.
Other problems include- the inadequate storage facility of food grains, improper transportation,
problems of packaging facility and cold storage facility etc.

Thus, the 2013-14 Economic Survey calls for creation of a national common agriculture market by
removing restrictions and bottlenecks for free trade. It further said that the country was in an anomalous
situation of being largely self-sufficient in foodgrains, yet registering high food inflation. This may due to
the plethora of interventions by the government, which actually served as barriers to trade. Such a
market can address the above challenges in the following ways:

Creating a national market would do away the trade barriers, and thus there would easy flow of
produce across the states. Removing market distortions will create greater competition in markets,
promote efficiency, growth.

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National market, if created, would lead to the creation of much needed infrastructural facilities, like

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storage and transportation facilities which are the big hurdles in the present scenario.

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It would override the APMCs committees thereby their exploitative regulations.

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It may prune down the unnecessary intermediaries, thereby increasing efficiency, and ensuring fair
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However, agriculture is a State subject and thus all the States have set up Agricultural Produce Marketing
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Committees (APMC) to regulate the marketing of agricultural commodities. To implement this initiative,
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consensus among the states and the center is necessary. In fact, the 2015-16 Budget has proposed the
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setting up of a national agriculture market if the states themselves do not reform their agricultural
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markets (APMCs).
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4. Procurement, Distribution and Stocking functions of the FCI are key to ensuring the success of food
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security in India. Discuss in the light of Shanta Kumar Committee recommendation.

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Approach:
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The question is mainly focused on the issues in the functioning of FCI, especially with respect to three
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functions of procurement, stocking and distribution. Therefore, the focus should be as to how such
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issues can be overcome, while discussing the recommendations made by the Expert Committee under
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Shanta Kumar.
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Answer:

FCI was set up in 1965 against the backdrop of major food shortage. Self-sufficiency in grains was the
most pressing objective and FCI was mandated with three basic objectives: Procurement, Storage, and
Distribution. The object was to balance the food security and to incentivize the farmers through MSP.
However, India has moved far away from the shortages of 1960s, into surpluses of cereals, but somehow
the food management system, of which FCI is an integral part, has not been able to deliver on its
objectives very efficiently.
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 The Government set up a High Level Committee (HCL), under Shanta Kumar, on restructuring of FCI,
which has submitted its report in January 2015. Following are the issues and their resolution according to
the HLC:

Issue: The benefits of procurement have not gone to larger number of farmers beyond a few states.

Recommendation: FCI hand over all procurement operations to the states that have gained sufficient
experience in this regard. FCI should accept only the surplus from these states to be moved to deficit
states. FCI should move on to help those states where farmers suffer from distress sales at prices
much below MSP, and which are dominated by smallholdings.

Issue: Currently, MSPs are announced for 23 commodities, but effectively price support operates
primarily in wheat and rice and that too in selected states. While country is short of pulses and
oilseeds (edible oils), their prices often go below MSP without any effective price support.

Recommendation: Pulses and oilseeds deserve priority and government must provide better price
support operations for them.

Issue: The leakages in PDS remain unacceptably high, ranging from 40 to 50 percent, and in some
states go as high as 60 to 70 percent.

Recommendation: States should introduce end-to-end computerization; put the list of beneficiaries
online for verification, and set up vigilance committees to check pilferage from PDS. HLC also
recommends gradual introduction of cash transfers in PDS.

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Issue: There is lack of sufficient storage capacity which leads to wastage. Buffer stocks are in excess

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of buffer stocking norms. This is costing the nation thousands of crores of rupees loss without any

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worthwhile purpose being served.

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Recommendation: FCI should outsource its stocking operations to various agencies under central or
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state government and even to private warehouses. Further, Negotiable warehouse receipt system
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(NWRs) should be taken up on priority. Under this system, farmers can deposit their produce to the
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registered warehouses, and get say 80 percent advance from banks against their produce valued at
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MSP. They can sell later when they feel prices are good for them. This will bring back the private
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sector, reduce massively the costs of storage to the government, and be more compatible with a
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market economy.
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Thus, with these recommendations if implemented, the new face of FCI will be akin to an agency for
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innovations in Food Management System with a primary focus to create competition in every segment of
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food grain supply chain, from procurement to stocking to movement and finally distribution in TPDS.
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5. Animal rearing is a key livelihood and risk mitigation strategy for tribals and small and marginal
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farmers, particularly across the rainfed regions of India. Substantiate. Also, discuss some strategies to
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realize the potential of this sector.

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Approach:
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Briefly discuss the scope of the sector.

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Bring out its significance for tribals and small and marginal farmers.
Discuss steps that need to be taken to realize the potential of the sector.

Answer:
Livestock have been an integral component of Indias agricultural and rural economy. Livestock
contribute over 1/4th to the agricultural GDP and about 5% of the countrys GDP and engage about 9% of
the agricultural labor force. The livestock sector has been growing faster than crop sector.

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 Its growth has special significance for small and marginal farmers, landless laborers and tribals and
farmers in rain-fed areas as they are more dependent on livestock for supplementing incomes and
generating gainful employment. To elaborate:

In India, livestock wealth is much more equitably distributed than wealth associated with land.
About 70 per cent of the livestock market in India is owned by 67 per cent of the small and marginal
farmers and by the landless. Thus, growth of the livestock sector would reduce poverty more than
growth of the crops sector.
Distribution patterns of income and employment show that rural poverty is less in states where
livestock accounts for a sizeable share of agricultural income as well as employment.
The small ruminants and poultry livestock provide livelihood support to the poor underprivileged
landless, and marginal farm households as there upkeep cost is low and are source of milk, eggs and
meat.
Rain-fed regions face uncertain and erratic weather conditions which negatively impact crop
productivity and wage labor in the agriculture sector. Animals are natural capital, which can be easily
reproduced to act as a living bank with offspring as interest, and an insurance against income shocks
of crop failure, natural calamities and climate change.
Tribals have community controlled lands which provide them large pastures for their animals.
Moreover tribals are still engaged in subsistence agriculture. Thus, livestock is a good source of
income and support to them.

In the light of immense potential of the sector in providing inclusive economic growth to the rural folks,
government has come up with several projects. Yet, the sector has shown a decline in recent years.
Following steps can be taken to improve the potential of the sector:

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Livestock producers, including traditional pastoralists and smallholders, are both victims of natural

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resource degradation and contributors to it. Corrective action related to environmental protection,

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ecosystem services, community led interventions and through incentives for private investment
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Improving livestock-related technologies for livestock feed, breeding, processing, technical
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manpower and infrastructure.

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Frequent outbreak of diseases and poor productivity should be tackled with improved focus on
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animal health and outreach of veterinary services.

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Development of a better paying markets for livestock and commercialization of livestock.

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Livestock sector did not receive the policy and financial attention commensurate to its contribution.
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Systematic implementation of loans and insurance schemes particularly in remote areas is needed.
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6. With reference to Bali decision clearly stating that Peace clause under Agreement on Agriculture (AoA)
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would remain in force, until permanent solution is found, can we say that India was at least partially
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successful in placing Food Security Box and Development Box alongside Green Box? Analyze. Also,
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suggest some remedies to counter the adverse effects of huge Green Box subsidies offered by
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developed nations to their farmers.

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Approach:
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Briefly write about the Agreement on agriculture and the need for food security box and
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developmental box alongside Green box.

Then explain about the Bali decision to include peace clause until permanent solution is found and
its significance for India.
Write briefly about the adverse effects of huge Green Box subsidies offered by developed nations to
their farmers and suggest some remedies to counter them.

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Answer:

There has been a demand for Development Box and Food Security Box along with Green Box in
agreement on agriculture (AoA) in order to cater to the needs of food security, rural development, and
poverty reduction in developing countries. The basic aim is to ensure that developing countries have the
policy flexibility to support domestic agricultural production and ensure the food security of their
population.

With the recent rise in global food prices, many countries have begun giving higher subsidies to farmers
to promote agriculture, putting them in danger of breaching the 10 per cent cap under the deminimus
levels.

During the 9th ministerial conference held in Bali a peace clause was agreed between developed and
developing countries. The peace clause said that no country would be legally barred from food security
programmes even if the subsidy breached the limits specified in the WTO agreement on agriculture. This
peace clause is expected to be in force for four years until 2017, by which time a permanent solution to
the problem will be found.

With reference to this outcome, one can correlate to the provisions of Green Box subsidies allowed
under AoA which includes items like decoupled income support, research expenditures, pest control
measures, training & extension expenses and promotion expenses and infrastructure expenses. However
some of the direct payments are also listed in this category. There is ambiguity in head and expense
classification, which makes this subsidy highly contentious as many developed nations misuse the
loopholes under this category to support their farmers, USA being at the top with 1/3rd of GDP support.

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So we can definitely say that with the Bali statement regarding peace clause, India was at least partially

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successful in placing the Food Security Box and Development Box alongside the Green Box. However

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India and other developing countries should be cautious of following issues.

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Accepting a temporary peace clause should not be amounted to admitting that the subsidy
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programmes in India and other developing nations violate global trade norms.
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If the clause expires before a permanent solution is in place, food security programmes and policies
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to protect farmers, such as Minimum Support Prices, would come under siege.
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The peace clause requires full disclosure of MSPs and annual procurement for food security
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programmes, which might leave India open to questioning by other countries on domestic matters.
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Hence there is a need for permanent solution in this regard to ensure food security programme in
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developing countries.
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The WTO agreement with its complex structure provides enough room for maneuvering subsidies to
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provide protection to domestic produce under the Green Box subsidies. Level of subsidies is so high in
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developed countries that level playing filed in agriculture trade is a far cry. To counter adverse effect of
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such support and subsidies following suggestions are made:

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Developing countries should seek clubbing of all kinds of support to agriculture in one category and
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seek some parity among developed and developing countries.

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Other member countries should have the freedom to impose protective tariff linked to differences in
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domestic support.
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In order to counter the adverse impact of GBS in other countries on domestic produce, we need to
pay serious attention to infrastructure development, which has been deteriorating for quite some
time.

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7. Agro forestry has immense potential in contributing to sustainable development and increasing farm
income. Yet, it has failed to take off in a big way in India. In this context discuss the problems and
challenges of Agroforestry in India.

Approach:
Briefly define Agro forestry.
Bring out its economic & environmental benefits.
Describe the problems that the sector is facing
Suggest reform measures to increase the contribution of agro forestry.

Answer:

Agro forestry is the practice of growing of trees on farms along with the crops by combination of
agricultural & forestry techniques & therefore provides benefits available from both.

Economic benefits:

Increases farm productivity and diversification of farm products.

Source of cheap energy through production of bio-mass, bio-char, bio-diesel etc.
64% of timber used by the industries comes from farms, hence immense potential.
For farmers practicing mixed farming, it provides fodder & other tree products for domestic animals
and farm waste is used as nutrient & manure.

Sustainable development benefits:

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Contribute to greenhouse gas mitigation.

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Agro forestry helps in adapting to climate change by growing trees like Jackfruit.

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Assists in soil & water conservation & nutrient recycling.
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Contributes towards prevention of deforestation, extreme weather & climatic events.
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Support to farm incomes combined with sustainable agricultural practices and capacity to mitigate
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climate change impacts, it is ideal tool for sustainable development.

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Yet, in spite of its immense advantage, the sector has failed to realize its potential. It still has weak
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market for its products, adverse policy scenario and dearth of institutional finance. In specific terms, it
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suffers from following drawbacks in our country.

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It falls between Agriculture & Forestry. Hence, is excluded from government schemes for both these
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sectors.
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Wood based industries including local craft and handlooms have been major contributor to the
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economies of North-Western states. Due to policy bottleneck and lack of support the industry is
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facing slowdown, hence reducing the demand for timber.

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Credit & insurance schemes like National Crop Insurance etc. are not available to the agro-forests.
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Ambiguity in forest laws & harassment by officials acts as a problem for transport & sale of Agro-
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forest timber.
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Tenet farmers dont practice it due to lack of security.

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Lack of awareness among farmers about the benefits of agro-forestry. Moreover, government does
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not provide any compensation for the intangible benefits that we get from forestation.
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Lack of cooperative farming culture, which provides large tracts of land making it easier to practice
Agro forestry & also even distribution of benefits gotten from it.

However, government has recently launched the National Agro forestry Policy, 2014. The aim of the
policy is to promote innovation & provide for cooperation & synergy between various elements of Agro
forestry scattered along different missions & schemes & under different ministries of Agriculture, Rural
Development & Environment.

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8. The idea of Second Green Revolution needs to be explored if India wishes to achieve food security, raise
farmer income and develop sustainable agriculture. Discuss. Also, elaborate the steps that the
government has taken to implement the Second Green Revolution.

Approach:

Explain Second Green Revolution and its features.

Elaborate its benefits in regard to food security, income and sustainable agriculture.
Elaborate steps taken by government in implementing second green revolution.

Answer:

The Second Green Revolution (SGR) in India was suggested as an idea of sustainable agriculture in mid-
1990s by the agro scientists since the ongoing green revolution was not based on sustainable agricultural
practices although it was able to increase crop-yields. Its scope was later widened to include crop
management, crop diversification, mixed farming, cost reduction, value addition, food processing,
marketing, agricultural storage and transportation, credit delivery, use of biotechnology in agriculture
and inclusive development through promoting latest agricultural practices and techniques to relatively
less developed agriculture particularly of North-Eastern states.

Second Green Revolution if implemented earnestly will have all following benefits.

Food Security:

Increase agricultural production and reduce the cost of food production thus providing food security

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and access to food for all.

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Cater to the changing dietary habits of population owing to rapid urbanization and rising incomes.

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Increase the nutritional choice for poor as prices and shortage of non-cereal food will also decline.
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Farmer Income:
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Surplus food will enter world market and agriculture sector will be able to tap benefits of
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globalization.
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Create gainful employment sources in the sector and serve the purposes of poverty alleviation, rural
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development, economic equality etc.

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Development of agricultural practices like mixed farming, agro-forestry, use of bio-technology etc.
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will reduce cost thus increasing profit margins for farmers and will also provide additional income
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sources.
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Sustainable Agriculture:
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Develop agriculture which is in harmony with ecology by minimizing wastage of resources.

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Sustainable agricultural practices like organic farming, mixed farming, agro-forestry, Systemic cross
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intensification etc. provide a cyclic model of agriculture reducing dependence upon fertilizers and
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intensive irrigation.
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Develop crops which are climate specific and resilient to climate change through use of bio-
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technology.
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In 2004, the government announced SGR with an initial fund of 50,000 crore but, did not specify the
meaning of SGR. It was an exhaustive programme that hardly left any area left untouched, thus,
converging with the idea of SGR as an inclusive, high yielding and sustainable agriculture. Approach
paper to 11th FYP mentioned the need of SGR to raise agricultural GDP growth to 4%. Government
programmes for agriculture in 12th FYP like National Horticulture Mission, National Bamboo Mission,
National Mission on Dairy Farming, Schemes for North-East States, Development of Food Processing,
Programme of Bio-diesel etc. aim to fulfill broad goals of SGR. Yet, a comprehensive policy framework to
attain specific targets subservient to goal of SGR is still missing. Government recently hinted to bring
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 technology driven second Green Revolution with focus on higher productivity, North-East states,
Biotechnology and protein revolution. Thus, it is expected that government will soon bring in specific
policy to tap the potential of the SGR.

9. What is precision farming? How does it help in soil fertility management? Given its high costs, suggest
some measures to make it economically viable in India.

Approach:

Clear definition of precision farming should be provided it essentially involves GPS/ Satellite systems for
monitoring etc. It should not be confused with other techniques of increasing farm production like
chemical control, fertilizer, irrigation techniques, etc. Soil management should highlight testing for
chemical composition, water availability, colour codes (use of Soil Health Cards), etc. For viability, private
leasing of services, cooperative farming, government subsidies, etc. can be examined.

Answer:

Precision farming is a crop management technique based on observing, measuring and responding to
inter and intra-field variability in crops with the help of modern means like satellite data and information
systems. Since crops vary both spatially and temporally, every patch on the field has different
requirements at different times. Precision farming ensures adding right amount of treatment (like water,
fertiliser, pesticide, etc.) at the right time and right location in a field.

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Essential features:

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With use of technologies like Global Positioning System (GPS) and Geographic Information System

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(GIS), more and accurate data can be collected and decisions to optimise crop output can be made
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Typically, the GPS and GIS devices are mounted on tractors or sprayers so that exact mapping of the
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entire field is done.

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Next, to assist in implementation of the decision, modern equipment supporting Variable Rate
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Technology (VRT) controlling rate of dispersion of say, water and chemicals, based on information
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gained from remote sensors, is used.

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It should be noted that there are several scientific farming methods like laser planning of land, chiseling,
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minimum tillage, weed control, drip and sprinkler irrigation, etc. However, the concept of precision
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farming is outside the domain of these techniques. It necessarily involves satellite based observations
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and information systems.

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Role in Soil Fertility Management

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With the use of GPS, the farm can be divided into small and equal sub-divisions and soil can be
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collected from each of these. This is known as Grid Sampling.

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Samples are tested in a modern soil laboratory for about 17 parameters including physical and
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chemical characteristics of soil and recorded.

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Using the results, a composite colour coded chart can be prepared. The sub-divisions on the field can
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be marked based on colour codes and compared with the colour chart or a Soil Health Card.
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The colour coded map of the field can be stored on the on-board computer of the tractor/
equipment.
The soil fertility can then be balanced and maintained through use of Variable rate technology,
supplying nutrients to the field based on colour codes of sub-divisions.

In a similar manner, other variables of soil fertility such as texture and water content can be maintained
using suitable equipments.

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 Economic Viability in India

Precision farming involves large initial investment in modern equipments. There are several ways to
make it economically viable in India:

Establishment of farm machine leasing agencies in rural areas. Such agencies already exist for leasing
out harvesters and trained man power to use them.
Creating R&D base and a huge pool of engineers, scientists and agriculturalists to develop various
components of technology like robots and drones.
ICAR scientists, industries and farmers can work together to develop machinery and establish leasing
agencies.
Corporate Social Responsibility funds can be channelled towards Precision Agriculture activities.

Even though the savings can be significant, the small farm holding size in India makes it difficult to reap
the returns to scale. To overcome this, cooperative leasing in of equipments and development of smaller
robotic equipments is necessary. The village panchayats and government extension agencies would have
to take lead in this regard.

10. Lack of resources and inadequate incentive structures have led to the breakdown of agricultural
extension services in most states. Comment. Suggest some measures to improve agriculture extension
services in India.

Approach:

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m
co
l.
Briefly explain about Agriculture Extension Service and their importance.

ai
gm
Bring out the reasons behind the breakdown of agriculture extension services in most of the states.
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Suggest some measures to deal with the issues and improve the agriculture extension service in
10
India.
dy
va

Answer:
a(
th
ut
m

The institution that bridges the gap between farmers and agricultural research scientists is the
ed

Agricultural Extension Service. This service works through an Agricultural Research System in the States.
.b
m

Agricultural extension services mainly consist of:

an
m
dh

the dissemination of useful and practical information related to agriculture, including improved
ar

seeds, fertilizers, implements, pesticides, improved cultural practices, and livestock

rv
fo

the practical application of useful knowledge to the farm and the household.
ed
is
al

Extension is an essential pillar both for rural community progress and as part of a strategy of agricultural
on

research and development. However lack of resources and inadequate incentive structures have led to
rs
pe

the breakdown of agricultural extension services in most states in India.

s
ti
en

The focus is mainly on the transfer of technology for increasing crop production. A wider definition of
m
cu

agricultural extension, beyond improving crop productivity, has not been embraced.
do

Access to extension is a problem because of the low level of outreach by public extension services.
is

This is partly due to the public staff being overburdened with implementing state and centralized
Th

schemes, which are also not easily modified to suit local needs and conditions.
There are also insufficient funds for operational costs, training, and capacity development, which
limits the activities and continual development of the extension staff.
The research extension link has been criticized for not absorbing or using feedback from farmers
and extension staff.
Extension personnel and farmers are passive actors, and scientists have limited exposure to field
realities.
11 www.visionias.in Vision IAS
 The Agricultural Technology Management Agency (ATMA) has been set up in response to remedy the
breakdown of agricultural extension services. Even though these arrangements are good
conceptually, making them work is a big challenge for the Indian government.
There has been some success with respect to the transfer of technology using the Krishi Vigyana
Kendra (KVK). It has been observed that such schemes are more successful when they are run by
NGOs.
Even though private sectors are playing an increasing role in agriculture extension services, they tend
to focus its services on areas with sufficient resources and are limited to a few crops and areas where
profits can be assured.

Some suggestions to improve agriculture extension services in India are:

The agriculture extension departments should strengthen its understanding on matters with respect
to technology, markets, prices, demand and policies. Departments have to either recruit specialists
or have to hire the services of professionals in these areas.
Apart from technical skills extension personnel needs several social science skills with respect to
need assessment, group formation, conflict resolution, mobilisation, use of IT etc.
Increase the allocation for operational expenditure in departments.
Decentralise the operations of the department and provide flexibility to field level officers to decide
appropriate extension programmes.
Improve the capabilities of extension managers in order to operate effectively in the pluralistic
extension environment.
Private-public partnership should be encouraged in order to reach the remote areas.
The farmers should be made aware of the benefits of utilising agriculture extension services and

)
m
should be educated in order to utilise the extension services efficiently.

co
The extension services should also be demand driven and the feedback from the farmer community

l.
ai
should be taken into consideration.

gm
1@
In order to strengthen agricultural extension and transfer of technology to farmers, formation of self-
10
help groups such as farmers clubs of Andhra Pradesh should be encouraged.
dy
va
a(
th
ut

11. The food grain stocking programme of India has been not just costly but also imprudently wasteful.
m
ed

Discuss. Also, analyse the impact of maintaining large buffer stocks on exports and private trade.
.b
m
an

Approach:
m
dh
ar

Explain the need of maintaining buffer stocks briefly. Then enumerate the deficiencies of the system,
rv

mainly in terms of costs and wastage it leads to. Its impact on private trade and distortions created in the
fo

export market and non-realisation of export benefits when international prices are high should be
ed
is

analysed.
al
on
rs

Answer:
pe
s
ti

The buffer stocking policy has been a tool for supporting food producers and consumers and of ensuring
en
m

food availability at national level. However, an evaluation of the policy reveals gaps and inefficiencies.
cu
do

Large stocks of food grains have accumulated in warehouses of FCI and its nominated state agencies,
is
Th

raising questions about economic efficiency of entire operation. At the same time there is high incidence
of malnutrition and rising food grain prices across the country.

In July 2014, FCIs stock of food grains was about 65 million tonnes, as against an already high norm
of 32 million tonnes for the quarter, leading to huge cost overrun. This is compounded by wastage
due to lack of storage capacity. CACP estimated the value locked in these excess stocks to be about
70,000-92,000 Crore.

12 www.visionias.in Vision IAS

 With more than 75% of marketable surplus procured by the government, very little grain is available
in the open market. This exerts upward pressure on the prices, neutralising subsidies benefit.
Economic Survey data shows that while net production on per capita daily basis has increased from
458 to 488 gms between 2007-11, the net availability has increased from 443 to 463 gms. This
indicates an increasing gap between production and availability, due to possible leakages, wastage,
etc. from the system.
The governments procurement policy has been counter-cyclical. Instead of procuring in a high
production year (when prices are low) and releasing in times of scarcity, it does the opposite.
Anticipating higher off-take in bad crop year (when prices are high), it not only withholds stock
(which will fulfil the stated purpose of bringing the prices down), it also steps up procurement,
pushing the prices high in already constrained market.

Impact on exports and private trade

The existing system of food grain management in India is characterised by dominance of government in
production (incentivising wheat and rice through MSP), stocking and marketing (APMC). From input
pricing to post harvest handling to cross border trading, all decisions are taken by the government.

Private Trade

o The private sector has been largely marginalised in traditionally high producing states like Punjab
and Haryana. Open ended procurement means that private involvement is edged out and the
system is isolated from market forces.
o Curbs on private stock holding and imposition of state levies govern the viability of private
participation. The total procurement cost comes out around 180% of the MSP, which makes

)
m
co
private participation economically unviable.

l.
ai
Exports

gm
o 1@
Such levies also exert pressure on price competitiveness of Indian grain in international market.
10
o The export policy had been ad-hoc in nature and it has failed to realise the potential benefits.
dy
va

Late decisions have only managed to contain the losses.

a(

o One of the reasons behind fall in exports in FY15 was 9% fall in agricultural exports. Had wheat
th
ut

exports taken place, India could have gained $5-7 billion extra.
m
ed

o The fall in global prices over the past year has led to a situation where import of food grains into
.b

India is cheaper, at least in coastal regions, than it is to buy from FCI or open markets due to MSP
m
an

and high maintenance costs.

m
dh

Exporting at subsidised rates only benefits the traders and not the farmers. FCIs operations have hit
ar
rv

Indias export potential. That is something the government must factor in while formulating its
fo

agricultural strategy while considering Shanta Kumar Committees recommendation of bringing down
ed
is

buffer stock to 10 million tonnes.

al
on
rs
pe
s
ti

12. Land reforms in India have neither been beneficial in increasing the production of farms nor in setting
en
m

up new industrial units. Comment. Also, evaluate the need for repealing the existing land ceiling laws.
cu
do

Approach:
is
Th

The answer should discuss inadequacies of land reforms vis-a-vis their objectives. Various reform
measures should be examined, both from the perspective of farmers and industries. In the second part,
both sides of the argument need to be dealt with. In accordance with the tone of the question, a
generalised conclusion in favour of repeal can be put forward, but not necessarily.

13 www.visionias.in Vision IAS

Answer:

Land reforms in India have been a vital aspect of agricultural development policy and have been an issue
of national importance. The basic goals of land reforms have been promotion of social justice and
improvement of rural economy and farm productivity. However, even though well intentioned, their
implementation has been tardy and has led to a situation where the remedy is worse than the disease.
Not only have they mostly failed to realise their objectives, they have had a debilitating effect on
industrialisation, especially in rural areas.

Unproductive impact on farming:

Tenancy laws, though designed with the objective of helping tenants, actually reduced tenancy in
most parts of the country. This has had negative effect on productivity, suggesting equity-efficiency
trade-off, meaning that in absence of equity in land rights, the tenants do not work as efficiently as
otherwise.
Skewed land distribution was not reformed in significant manner. Land owners with more than 4
hectares of land, about 5% of total, still own more than 50% of total agricultural area. Per unit
productivity of smaller farms has been found to be more because of higher effort.
Land rights transferred were not realised due to poor land records and high rates of compensation to
be paid by the owners. Also, this did not benefit sub tenants and sharecroppers as they did not have
occupancy rights.
Many landholders continued to hold large landholdings through benami transactions, absentee
landlordism continued till recently, effecting productivity.
Since only the inferior and uncultivable land was surrendered, the allottees in many cases could not
make proper use of the land as they did not have enough resources for improvement.

)
m
co
l.
ai
Unfavourable impact on industry:

gm
1@
The complexity of laws led to a situation where neither the farmer could sell the land and move to
10
urban areas, nor could the entrepreneur buy the land and set up an industrial unit.
dy
va

Absence of proper land records and small scattered land holdings has made task of agglomerating
a(

land from numerous land holders cumbersome and time taking for corporate sector.
th
ut

High costs and number of procedures have meant that it is the government which becomes the sole
m
ed

acquirer of land, even for private purpose. Not only does this have financial implications, it also
.b

incorporates the element of political meddling in corporate affairs, as was reflected in Singur land
m
an

case for Tata Nano project in West Bengal.

m
dh

Need for repealing existing land ceiling laws:

ar
rv
fo

The imposition of land ceiling on agriculture is pre-eminently a redistributive measure. It was compelled
ed

due to shortage of land in relation to the population and a limited prospect of transfer of population
is
al

dependent on agriculture to other means of livelihood. However, the socio-economic realities have
on
rs

changed since the time these laws were introduced.

pe
s
ti

With modernisation of agricultural inputs, both costs and returns have increased. The ceiling laws
en

deny farmers to hold more land to generate surplus and profits.

m
cu

This is compounded with the tenancy laws which have practically abolished the lease market.
do

It has also curtailed the development of contract farming and downstream food processing industry,
is
Th

both of which have large potential to absorb the released agricultural labour.
As the recent NSSO (2012) survey showed that majority of small land owners are indebted and are
not able to meet their expenses from farming activity alone, this becomes even more imperative.
Agricultural growth needs to pick up to achieve rural prosperity. This needs private investment,
which has been negligible since last many years, partly due to land ceiling laws.

Although repealing of ceiling laws is now a desirable goal, several measures need to be taken before
considering such a drastic change. These laws can only be repealed in a phased manner. The model of
14 www.visionias.in Vision IAS
 Urban Land (Ceiling & Regulation) Repeal Act, 1999 can be applied in phased manner to cover the
hinterland. The foremost beneficiaries would be the agro-processing and housing sectors. But with
glaring inequity in access to resources and power, a blanket repeal of land ceiling laws would make an
already highly speculative land market more attractive, leaving limited scope for farmers to grow.
Therefore, framing a land use policy and instituting a regulatory body along with digitisation of land
records needs to be done to ensure fairness in transfer of land titles.

13. E-technology has a crucial role in increasing the productivity of agriculture and allied activities in India.
Explain. Bring out the major constraints in utilizing e-technology in the Indian agricultural sector.

Approach:

Briefly write about the need of e-technology in agriculture.

Explain the different ways e-technology can be used to increase the productivity in agriculture and
allied activities in India.
Bring out the major issues and problems in the implementation of e-technology in agriculture.
Conclude with brief suggestions.

Answer:

In the context of agriculture, the potential of e-technology can be assessed broadly under two heads: as
a tool for direct contribution to agricultural productivity; and as an indirect tool for empowering farmers
to take informed and quality decisions which will have positive impact on the way agriculture and allied

)
m
activities are conducted.

co
l.
ai
gm
Precision farming, popular in developed countries, extensively uses IT to make direct contribution to

1@
agricultural productivity. 10
The techniques of remote sensing using satellite technologies, geographical information systems,
dy

agronomy and soil sciences are used to increase the agricultural output. This approach is capital
va
a(

intensive and useful where large tracts of land are involved. Consequently it is more suitable for
th

farming taken up on corporate lines.

ut
m

The indirect benefits of IT in empowering Indian farmer are significant and remains to be exploited.
ed
.b

The Indian farmer urgently requires timely and reliable sources of information inputs for taking
m

decisions. At present, the farmer depends on trickling down of decision inputs from conventional
an
m

sources which are slow and unreliable.

dh

The changing environment faced by Indian farmers makes information not merely useful, but
ar
rv

necessary to remain competitive.

fo
ed

Various programmes have been initiated in this regard such as ITC e-choupal, Rice knowledge
is
al

management portal, Village knowledge centres, Village resource centres, e-krishi, Mahindra Kisan Mitra
on
rs

etc.
pe
s
ti

Some of the major constraints in the implementation of e-technology in agriculture in India are:
en
m
cu

Duplication of efforts: It is observed that some initiatives have already been made to provide IT
do

based services to rural community. However, duplication of efforts are witnessed as most of the
is
Th

services revolve around limited subjects.

Power Supply: In most of the rural India, power supply is not available for long hours. This will
reduce the usefulness of the intended services.
Connectivity: Despite the phenomenal progress made in the recent years, the connectivity to rural
areas still requires to be improved. Reliable connectivity is a prerequisite for a successful penetration
of IT into rural areas.

15 www.visionias.in Vision IAS

 Bandwidth: Even in areas where telephone and other communication services exist, the available
bandwidth is a major constraint. Since internet based rural services require substantial use of
graphics, low bandwidth is one of the major limitations.
Restrictions: governments map restriction policies often threaten to stifle the optimal utilisation of
the tools of remote sensing and geographical information systems.
Lack of awareness and education: The majority of farmer community is unaware of the benefits of
e-technology. The present technologies are not user-friendly. The success of e-technology depends
on the ease with which rural population can use the content.
Local languages: Regional language fonts and mechanisms for synchronisation of the content provide
a challenge that needs to be met with careful planning.

Rapid changes in the field of information technology make it possible to develop and disseminate
required electronic services to rural India. The existing bottlenecks in undertaking the tasks need to be
addressed immediately. A national strategy needs to be drawn for spearheading IT penetration to rural
India.

14. Despite numerous schemes and programmes the growth of food processing industry has been very
slow in India. In this context examine the problems with respect to various government initiatives to
boost the food processing sector in India.

Approach:

Briefly mention the growth attained by the food processing sector.

)
m
Mention few of the government schemes in this regard.

co

l.
Explain how it is yet performing below its potential.

ai

gm
Bring out the factors that have led to limited success of these schemes.
1@
10
Answer:
dy
va

Accounting for about 32% of Indias total food market, the Food Processing Industry (FPI) is ranked 5th in
a(
th

terms of consumption, export and expected growth. Government has taken following initiatives for the
ut
m

growth of the sector:

ed
.b
m

Till 2005, there were about 13 laws regarding FPI. Government passed Food Safety and Standard Act,
an

2006 to act as a single reference point for regulation.

m
dh

Government has allowed 100% FDI in industry.

ar
rv

Infrastructure Facilities: Mega Food Parks, Packaging centers, Integrated clod chain facility, Value
fo

Added Centre, Irradiation Facilities, Modernization of Abattoir

ed

National Mission on Food Processing for all round development of industry.

is

al
on

Reforms in APMC Act and rationalization of Food Laws.

rs
pe

Because, of these efforts by the government, the industry is growing at a satisfactory rate. However, its
s
ti

still well below the potential as the processing activity is still at a nascent stage with low penetration.
en
m
cu

Government schemes have not been adequately able to address the following problems that arise due to
do

inadequacy and poor implementation of reforms.

is
Th

The inadequate support infrastructure is the biggest bottleneck in expanding the sector, in terms of
both investment and exports. Long and fragmented supply chain, inadequate cold storage and
warehousing facilities, road, rail and port infrastructure, lack of modern logistics infrastructure such
as logistics parks, integrated cold chain solutions, last mile connectivity, dependence on road over
rail, customized transportation, technology adoption (barcoding, RFIDs) are still not addressed.

16 www.visionias.in Vision IAS

 Inconsistency in State and Central policies. In a survey done by FICCI, absence of comprehensive
national level policy on food processing sector has been identified as the second most critical factor
hampering Industrys growth.
Shortage of skilled, semi-skilled and unskilled workers has harmed the competitiveness sector.
Declining support to R&D.
Constraints in raw material availability because of inconsistent and insufficient supply of raw material
due to seasonality of crops, poor quality of raw material supply and high losses during transport from
farm to factory.
Lack of enthusiastic private sector participation in important schemes like Mega Food Parks which
still prefers to outsource and as a result about 50% processed food sold by FMCGs in India is
outsourced.
Still credit is a big problem to the industry which includes farmers and micro and small enterprises on
a large scale.
Failure to integrate land holdings and promote contract farming, which are key to the success of
industry.

15. The imbalance between subsidy expenditure and expenditure on public investment in agriculture call
for a long-term strategic re-orientation. Analyse.

Approach:

Discuss the scale and nature of expenditure on agriculture sector.

Point out the imbalance in public expenditure and subsidies

)
m
co
Stress the significance of public expenditure.

l.
ai
Provide comprehensive picture of future public investment.

gm
Discuss need to rationalize subsidies along with mechanism.
1@
10
Answer:
dy
va
a(

The government spending in agriculture sector is around 20%-25% of the GDP, one of the highest in
th
ut

South and South-East Asian region. Yet it does not result in desired output from agriculture.
m
ed
.b

The nature and manner in which expenditure is poured into agriculture is responsible for precarious
m

situation. Almost 80% of the public expenditure going to agriculture is in the form of input subsidies
an
m

(fertilizers, power, irrigation) and only 20% as investments in agriculture.

dh

In the post-reform period investment has been an overlooked aspect in Indian agriculture. The role
ar
rv

of government must evolve so that those activities which it still does are performed with the greatest
fo

effectiveness, in terms of meeting the needs of the agricultural sector.

ed
is

In past the large investment made by the government in irrigation works, agricultural inputs and
al
on

technology played crucial role in the success of the Green Revolution.

rs

Public investment has a leading role to play, in the form of infrastructure as well as necessary
pe

research and development in farm technologies. Spread of infrastructure in power, transport,

s
ti
en

communication, storage and processing sectors are important.

m

By investment irrigation systems can be developed, which in medium and long term will change the
cu
do

face of Indian agriculture from being rain-fed to irrigated.

is

Similarly investment in research and development can help to produce high productivity crops which
Th

can be resilient in face of climate change.

Along with this rural infrastructure and e-infrastructure creation can open new avenues for farmers.
This investment may also create favourable environment for allied activities and agro-based
industries.
Rationalisation of subsidies and better targeting of beneficiaries through direct transfers would
generate part of the resources for the public investment that is essential in research, education,

17 www.visionias.in Vision IAS

 extension, irrigation, water-management, soil testing, warehousing and cold-storage, whether
research, education, and extension.
Distortions emerging from various policies, including, exempting user charges for electricity and
water need to be reduced through better targeting and eliminating leakages.

Hence we can see that for a vibrant agriculture sector preferred approach should be investment instead
of providing subsidies. Although necessity of some subsidies cannot be written off but they need to be
rationalized so that money thus saved can further be invested for making Indian agriculture an attractive
and profitable profession. Proper balance between investment and subsidies can make agriculture
engine of Indian economy.

16. What do you mean by Upstream and Downstream requirements in the Food Processing industry? Also,
explain the importance of Supply Chain Management in the Food Processing Industry.

Approach:

Define upstream and downstream in food processing industry.

Elaborate on the upstream and downstream requirements.
Define Supply Chain Management and explain its importance.

Answer:

The complete framework from storage of raw materials, inventory and finished goods from point of

)
m
origin to point of consumption process of movement of material consists of two stages, namely upstream

co
and downstream.

l.
ai
gm
1@
Requirements of Upstream in Food processing industry: 10
dy

Accessibility to raw materials is the first upstream requirement for any industry.
va

The food processing industry also requires modern extraction techniques.

a(
th

To make the food processing industry sustainable, it is important to ensure good linkages with
ut
m

farmers.
ed

The storage facilities for raw materials like Grains, Meat, Fish etc. are important part of food
.b
m

processing upstream requirements.

an

Food processing industry also requires good quality testing facilities.

m
dh

Transport facilities are essential part of upstream requirements of food processing industry in India.
ar
rv

The food industry also requires a sizable amount of work force.

fo
ed

Requirements of Downstream in Food processing industry:

is
al
on

The downstream stage in the production process involves processing of the materials collected
rs
pe

during the upstream stage into a finished product.

s
ti

The downstream stage also includes the actual sale of product to customers like businesses,
en

governments or individuals. Since, downstream processing has direct contact with customers
m
cu

through the finished product; it requires a large work force.

do
is
Th

Importance of Supply chain Management-:

Supply chain management spans all movement and storage of raw materials, work-in-process inventory,
and finished goods from point of origin to point of consumption. Good supply chain links helps farmers,
manufactures, wholesalers, retailers and consumers. Importance for different stakeholders is:

18 www.visionias.in Vision IAS

 For Farmers:

Makes it easier for farmers to sell their goods at better prices

Facilitates investment in agriculture
Results in use of new technologies to increase productivity
Results in creation of rural infrastructure

For Consumers:

Availability of healthy, nutritious food material

Avoidance from inflationary pressures
Access to varieties of processed food

For Industries:

Easy access to raw materials

Quality controls and regulations
Healthy competition

India can become the food supplier of the world. The food processing industry has an important role to
play in linking farmers to the final consumers in the domestic as well as the international markets. Supply
chain management is critical in achieving that goal.

)
m
17. "Contract farming occupies a crucial role in agricultural economy of India because of small farm sizes".

co
l.
Evaluate. Analyse the various issues plaguing contract farming in India.

ai
gm
1@
Approach: 10
dy

The answer should start with a very brief introduction of contract farming. The next part should discuss
va

the given statements. While discussing the challenges the answer should also discuss the possible
a(
th

advantages of contract farming.

ut
m
ed

Answer:
.b
m
an

Contract farming can be defined as the production of agricultural produce based on the agreement
m
dh

between the producer and the prospective buyers. Such an agreement may include such things as quality
ar

required, price etc. The buyer often also agrees to support the farmer through, e.g., supplying inputs,
rv

assisting with land preparation etc.

fo
ed
is

In India, the majority of the farmers are small farmers, therefore it is important to evaluate the given
al
on

statement. Contract farming can be beneficial in the following ways:

rs
pe
s

It can open up new markets which would otherwise be unavailable to small farmers.
ti
en

It can overcome land constraints when working with the small farmers.
m

Since the small farmers lack adequate resources for investing in agriculture, contract farming can
cu

do

supply adequate inputs and production services.

is

Farmers' price risk is often reduced as many contracts specify prices in advance. This is particularly
Th

significant when seen in relation to the small farmers.

In our country this approach has considerable potential where small and marginal farmers can no longer
be competitive without access to modern technologies and support. There are few success stories on
contract farming, such as Pepsico India in respect of potato, tomato, groundnut etc. in Punjab. However,
there are certain issues plaguing the contract farming:

19 www.visionias.in Vision IAS

 There are problems of breach of contract either by the producers or the buyers. For example, Firms
rejected more contracted produce on quality grounds when market prices dipped below contracted
prices and farmers engaged in side-selling in open markets when market prices rose higher than
contract prices.
Companies prefer medium and large farmers because of transaction costs. They want farmers to
dedicate a minimum acreage, say, five acres of land, to the contracted crop. However, in India, 85 per
cent of the farmers are marginal or small, operating less than two acres.
There is lack of backward and forward linkages, especially in food processing sector. As result the
companies have to buy the raw material directly from the market.

Thus, the given statement is a sort of a paradox, on the one hand, contract farming can immensely
benefit the small farmers, while on the other, small farm size itself poses the challenge. To realize the
benefits of contract farming, perhaps, there is the need of promoting collectivization of small farmers.
Further, food processing sector along with backward and forward linkages should also be promoted.

18. The agricultural marketing system controlled by APMCs has been detrimental to the economy. Discuss.
How far can the model APMC Act address the lacunae in the present system?

Approach:

Explain the concept of APMC.

Describe how current system controlled by APMCs has been harmful for economy.
Describe the features of Model APMC Act.

)
m
co
Discuss whether the APMC Act can address these issues.

l.
ai
gm
Answer:
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10
APMC Acts were passed to avoid exploitation of farmers by intermediaries and ensure that they get
dy

appropriate prices for their produce. For this a State is divided geographically into agricultural markets
va
a(

(mandis) controlled by Agricultural Produce Marketing Committees. Farmers have to sell their produce
th

through the auction at these markets.

ut
m
ed

As a result:
.b
m
an

Wholesale, retail traders and food processing companies cannot buy farm output directly from
m
dh

farmer. This has led to the exploitation of farmer by the traders/middlemen at the market.
ar

Corruption and bribery in obtaining license from APMC. Hence, few get license resulting in
rv
fo

cartelization and thus exploitation of farmers.

ed

APMCs charge commission on both farmers and traders, thus increasing the cost of food items.
is
al

APMCs have failed to provide modern facilities of storage that still cater to cereals and not perishable
on

crops. In most of the markets the products are sold in open which results in wastage due to rain,
rs
pe

theft or rotting.
s
ti

APMCs have failed to ensure the benefits of high food prices to farmers which are siphoned by
en

middlemen.
m
cu
do

Government passed the model APMC Act in 2003 with following important provisions:
is
Th

Farmers can sell to anyone and dont need to bring their produce to the market.
PPP in the development of agricultural markets with regard to storage, packing etc.
Prohibition of commission agents and promotion of contract farming.
Ensuing that APMCs follow transparency in pricing and payment.
Development of agri-processing, agricultural exports, quality testing and communication
infrastructure.

20 www.visionias.in Vision IAS

 As agriculture is a state subject the final authority of reforms lies with states, Model APMC Act has not
been too successful in reforming the agricultural market. To elaborate:

State governments are reluctant to reform their APMC legislation because of fear of losing revenue.
Moreover, half of the states though implemented the Model Act have not been able to demonstrate
better results.
Some states have created entry barriers by prescribing either prohibitive license fees for setting up
private markets, or the minimum distance between them and APMC markets.
Some APMCs still impose the mandi fee on buyers even if the trade is done outside mandi without
utilizing any infrastructure of the committee. It is difficult to attract private investment under such
existing framework.
APMCs are considered an inhibiting factor for establishment of a national agriculture market as well
which is expected to greatly benefit farmers.

However, Model Act fails to resolve these issues. In light of these drawbacks and failure of Model APMC
Act, centre is mulling to enact a legislation for setting up a national common market for specified
agricultural commodities, viz., entry 33 which covers trade and commerce and production, supply and
distribution of foodstuffs and dissolving APMCs altogether.

19. Reviving the Farm Income Insurance Scheme could be the best tool for marginal farmers to fight falling
prices of agricultural products in an increasingly globalized marketplace. Explain.

Approach:

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Briefly introduce the issue of falling prices in an increasingly globalised marketplace and its effect on

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marginal farmers.
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Explain Farm Income insurance scheme and how it could be the best tool for marginal farmers to
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fight falling prices.
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One can compare the scheme with present National Crop Insurance Programme and write about the
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issues in it.
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Answer:
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Many small and marginal farmers in India are getting low prices for their produce because of increased
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global production and lower demand for various commodities. The latest NSSO report highlights the
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increasing input costs in agriculture and the alarming increase in consumption expenditure vis--vis
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income, especially among households with less than two hectares of land holdings.
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The Farm Income Insurance Scheme (FIIS), originally introduced in 2003 and withdrawn the next year,
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has been revived in Gujarat. The schemes main thrust is that it tries to ensure guaranteed income by
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insuring the difference between the farmers predicted income and the actual income.
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It calculates the predicted income by using the product of unit area yields and prices at the district level.
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Any decrease in the predicted income due to yield fluctuations or market fluctuations is insured under
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the scheme.
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By only considering yield losses from natural perils, it also ensures that farmers are incentivised to
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produce more, and that inefficiency in farming is not rewarded. The success of FIIS will depend on
whether the government is willing to move away from the current mundane system of manual inspection
and data gathering to the new era of big data and technology.

When the FIIS pilot was tried a decade ago, it proved to be premature, but the time is right now to
correct some of the errors in the previous scheme and move ahead.

21 www.visionias.in Vision IAS

 The concerns over reliable yield and price data in the earlier attempts can be largely eradicated using
present technologies. The maturing of satellite-based yield monitoring systems, integrating agricultural
markets in India, and ensuring the efficiency of commodity exchanges will remove most of the concerns
that arise over the large amounts of data needed for such a revolutionary scheme.

Additionally, leveraging mobile phone penetration levels and mobile-enabled technologies can ensure
the availability of real time data, and reduce the moral hazard problems that afflict current insurance
schemes.

The present National Crop Insurance Programme covers prevented/ failed sowing, post-harvest losses,
and losses from natural calamities on an individual basis. It is an area-based approach that covers a wide
variety of food, oilseed and horticulture crops.

However, low literacy, the absence of infrastructure to measure data accurately at the farm level, and the
limited penetration of formal financial credit have made the scheme inefficient, leading to reduced trust
among farmers. Additionally, in the current globalised market with widely varying market prices, the
scheme is unable to protect farmers against price fluctuations.

20. The scope of Land reforms needs to be widened beyond the mere activity of redistribution of land and
fixing land ceilings to a systemic restructuring that undertakes reforms in the sector of energy and
water. Discuss.

Approach:

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The answer should first explain the inadequacy of the current land reforms to make farming more

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productive and viable. Then it should illustrate the need for a multipronged approach, which includes

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building requisite infrastructure and distribution of services, with focus on irrigation and electricity, to
develop the agricultural sector.
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Answer:
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Land reforms in India have been undertaken with the objective of achieving social equity in access to
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land and improving farm productivity to make agriculture economically more viable. Both the targets
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have met with only little success. One of the many reasons for their failure has been a
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compartmentalised approach to land reforms adopted in the country. The overall target of robust
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agricultural growth can only be achieved when land reforms are increased in scope from a mere
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redistribution exercise to an activity to improve inherent productivity and farming capability. Provision of
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infrastructure in form of electricity and water supply would be crucial for this.
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Indian agriculture is now characterised by low viability and high vulnerability. High input costs and lesser
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realisation of final costs make agriculture less viable. Smaller size of landholdings, about 63 percent with
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less than 1 hectare, constrains the use of mechanised farm inputs to increase production. Also, in cases
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where land distribution has taken place, the land is often of poor quality, making economic viability even
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more challenging. Vagaries of monsoon, with about 2/3rd of total area dependent on rainfall for
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agriculture, lend high vulnerability to agriculture. Apart from it, exposure to volatile markets also
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increases vulnerability.
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To address these issues, comprehensive agricultural reforms are required. Structural reforms include
development of irrigation infrastructure and access to continuous power; institutional reforms include
making available modern scientific inputs and data, along with modernisation of agricultural marketing
methods and provision of insurance cover.

22 www.visionias.in Vision IAS

 Following reforms in irrigation and energy sector can be considered for national rural development:

Rationalizing water charges, improving collection rates and reforms in irrigation financing in order to
make state irrigation departments financially self-sufficient.
Improvements in irrigation systems by organizing farmers to take up operation and management
responsibilities.
Flood irrigation systems, which are wasteful as well increase salinity and water logging should be
replaced by more efficient drip and sprinkler irrigation with government support.
Institution of a system of water rights and modernization of irrigation agencies to make them more
autonomous and accountable.
Rationalisation of energy pricing flat rate system should be disbanded to disincentivise over
extraction from ground.
Jyotigram scheme of Gujarat, where electricity to farm tube wells is provided only for certain part of
the day, which achieved considerable success, should be tailored to all India level after incorporating
local agricultural requirements.
To address theft, High Voltage Distribution Systems (HVDS), which use Direct Current for transmission
can be installed (as is being done in Punjab and Andhra Pradesh). These require initial high
investment, but are efficient and will almost eliminate theft through technical barriers to tapping of
power lines.

The movement from agriculture to other economic activities in past has been because of push from
agriculture rather than a pull from the other activity. To make agriculture sustainable, it must continue to
grow at least at 4 percent when national growth is 6-7 percent. It must be made economically attractive
as well as sustainable to pursue as an occupation in order to sustain food security of the nation.

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Widening the scope of land reforms to energy and water sector would help meet these requirements.

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