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Rejuvenating Agriculture in Karnataka:

Challenges and Options

S. Subramanya
Secretary ( Budget & Resources)
Government of Karnataka

Phasing of the
presentation
Part 1. Agriculture deceleration and crisis
Part 2. From Self Reliant Farming Systems to Externalized Farming
Systems
Part 3. What should be the objective of rejuvenation of Agriculture?
Part 4. SWOT analysis of Agriculture system
Part 5. How do we overcome the weaknesses and utilise the
opportunities for rejuvenating agriculture?

Phases of Agricultural Development


in India

Phase 1 1951 to 1967

Phase 2 1967 to 1999

Dominated by extensive agriculture.


Reforms in the form of land grant and land
reforms.
Productivity enhancement measures
through green revolution technologies

Phase 3 1999 till now

Attempted liberalization of agriculture

Current state of our agricultureDeceleration ?

80000
70000
60000
50000

Agriculture

40000

secondary sector
tertary sector

30000
20000

10000
0
99-00

00-01 2001-02 2002-03 2003-04 2004-05 2005-06

Gross State Domestic Product at


constant prices

Recent trends indicate that


though the performance of
the Karnataka States
economy in terms of growth
in Gross State Domestic
Product (GSDP) has
improved, growth in
agriculture has not been
very satisfactory.
The deceleration in
Agriculture has been rightly
recognized as the root cause
of rural distress that has
surfaced in Karnataka as
well as in many parts of the
country

Current crisis in farming families

There seems to be an all pervading crisis in farming families.


Low farm incomes due to inadequate productivity growth and low
prices for the farm output have pushed farmers to crippling debt, a
few among them unfortunately resorted to suicide.
Investments in creating irrigation potential, providing improved
inputs and provisioning of credit has contributed to increase in
productivity. But productivity increase has not contributed
appreciably for improving the quality of life of farming community.
It has not enhanced the confidence of farming families.
The crisis in farming sector is not purely a distributional one
arising out of small land holdings. The whole farming sector
irrespective of the size of holding is affected.

Contextual importance of agriculture

Agriculture can be seen in two


contexts.

Firstly, as a system for improving the


production of agricultural commodities
for providing food security.
Secondly as a system contributing to the
income of farming families and thereby
contributing to improvements in the
quality of living of farming communities.

Growth pattern of agricultural production


in Karnataka

160
140
120
100
80

60
40
20
0

91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 2001- 2002- 2003- 2004- 2005- 200602 03 04 05 06 07

Total food grain production in Karnataka


from 91-92 to 06-07

Karnataka agriculture grew at


an average rate of 4.4 per cent
during the first half of 1980s
(1980-85), but then decelerated
sharply in the latter half.
In the beginning of 1990s,
although it picked up
marginally, it was far from being
a dynamic and vibrant sector.
From 2000 onwards agricultural
production varied enormously
on account of drought.

Production Volatility in
agriculture

160
140
120
100

yield in lakh tons

80

sown area in lakh ha

60
40
20

2006-07

2005-06

2004-05

2003-04

2002-03

00-01

2001-02

99-00

98-99

97-98

96-97

95-96

94-95

93-94

92-93

91-92

Sown area and yield


relation of food grain
production

Our agriculture by and


large is still dependent on
rainfall and determines
the production.
Dry land technology and
drought resistant
cultivars indeed have not
helped appreciably to
overcome the problem
arising out of drought.
Sown area data indicates
that farmers have not
stopped farming.

Impact of production of price of


agricultural commodities
Production in lakh tons

160
140
120
100
80
60
40

20
0
93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 2001- 2002- 2003- 2004- 200502
03
04
05
06

% change in WP index for agricultural commodities in Karnataka


10
8
6
4
2

0
-2
-4
-6
-8

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 2001- 2002- 2003- 2004- 200502
03
04
05
06

Food commodities are


demand inelastic
commodities. Higher
production is often
associated with price
crash.
Higher productivity many
not mean higher income to
farming families.
Drought poses investment
risk. Better productivity is
often associated with price
crash
Where are incentives to
the farmer to contribute to
higher productivity?

Part 2.
From Self Reliant Farming Systems to
Externalized Farming Systems:

Population growth and intermittent droughts


caused very serious famines in India in the past.
Faced with the severe food deficits the country
embarked on a new food grain production
strategy, Green Revolution which introduced
significant changes in farming practices.

Self Reliant Farming System of the past

In the past farming was basically a family pursuit.


It was a self-contained system with inputs like seeds coming
from previous harvest and manure from farm and animal waste.
Labor, as an input, was largely contributed from family
members.
Production was basically for the consumption of the family and
surplus was reserved for lean years. Very little of agricultural
produce was marketed.
Indeed cash was not required for farming operations in the past.
Thus, farming system could be titled as Substance Farming.
with very little disposable surplus of food grains.

From Self Reliant farming to Externalised farming

Under the High Yielding Variety programme new and elite


cultivars and hybrids of crop plants were introduced in place of
farm saved local seeds.
Use of chemical fertilizers was supported in a big way by the
research and extension machinery.
In order to supply improved seeds and fertilizers, parastatal
agencies came into being and farmers had to purchase these
inputs from such agencies.
Family and barter labour was replaced by hired labour.
Cash was required to pursue agriculture.
The produce entered the market.
Farming was influenced by many externalities.

Who gained and who lost on account of


change from Self Reliant farming to
Externalised farming?

The Consumers were undisputedly


the most gained.
Food famines almost vanished from
the country and the Public
Distribution System with all its
inefficiency helped the targeted
provisioning of food grains.
Hunger deaths have become so
rare in the country that even one
occasional hunger death gets
reported in the national newspapers
and rocks the parliament.
The country has indeed stopped
importing food grains and even
enjoys modest food exports.

While subsistence farming required


no cash infusion the new practices
cash was required for implementing
new agricultural practices. Credit
provided by institutional sources
was far less than the actual
demand. Farmers were forced to
borrow
from
non-institutional
sources.
Food commodities, being demand
inelastic, small surpluses in market
led to huge distortions in the market
price. With poor ability to hold
stocks farmers often become
victims of market failure.
Farmers continue to produce for
unknown markets

While the consumer got the benefit,


the producer was not equally benefited

Distinct classes of farmers

In the post Green Revolution period, the farming community,


too, has evolved into two distinctly different entities.

a small segment of outgoing, venture-some and enterprising


farmers capitalizing the emerging opportunities The Indian Farmer,
a large majority of inward looking, resource poor and conformist
farmers just seeking their security of livelihoods The Kisan.

While the first group is able to quickly avail the economic


incentives provided, the later seems to be grouping in a
confused world to find a direction in their efforts.
When isolated success story of the first group is revealed in
seminars, interaction sessions , a few try to emulate and a large
majority sigh in despair. The anguish gets expressed in many
forms.

Part 3
What should be the objective of
rejuvenation of Agriculture?

Efforts made to rejuvenate agriculture

Karnataka agriculture was guided by the National policy till 1996. It


did help to increase yield substantially from 1976 to 1987. Stagnation
set in after 1986.
Concerned by the stagnation of production during late eighties
government constituted a committee under the Chairmanship of Sri.
Satishchandran for understanding the reasons for poor growth of
Agriculture and for suggesting remedial action.
Karnataka Agriculture Policy was pronounced in 1996 on the basis of
recommendations of the above committee. Most of the measures
suggested circled around yield enhancement interventions,
provisioning of inputs, credit extension and modification of the
extension measures. Majority of the policy measures have been
implemented.
Our agriculture policy was revisited in 2006 and a New Agricultural
policy has been adopted by the state.

Possible objectives of Rejuvenation

Food security

Increasing income of farmers.

It is felt that if agriculture continues to be stagnant


the country will face food crisis. Food imports may
have to be resorted.Hence Rejuvenate agriculture.
Farmers are not getting good income and their
incomes can be raised by increasing the
productivity and diversification of crops.

To upkeep the growth witnessed in


secondary and tertiary sector.
One is against the other!

Required policy shift

Change of priority from food Self


Sufficiency concerns to raising
income of farming community.
Providing safety net to the farming
communities.
Encouraging the farmers to play a
vital role in rejuvenation of
agriculture.

Part 4
SWOT analysis of Agriculture system

Strengths of our
agriculture

Huge manpower already engaged in agriculture.


Illiteracy in the farming community is no longer seen as
a development constraint.
Clear title on land and water.
Good public sector research facility and network.
System of banks and Cooperatives to provide credit.
Ability of domestic market to absorb domestic
production.
A realization that Agrarian sector is lagging
behind and something must be done to impart
growth

Weaknesses

Agriculture seen as a system for food self-sufficiency alone.


Shrinking Land-man ratio.
Depleting vegetative cover.
Dwindling water resources.
Decreasing productivity of land.
High dependence on rainfall.
Increasing cost of production.
Poor capital formation in agriculture.
Lack of economic sense in production process.
Decreasing Public Research Support Public extension support
becoming irrelevant.
Production for unknown markets.
Poor forward market support.
Lack of legal systems for using land as a capital contribution.

Opportunities

Enormous Scope for diversification from a system for food


production to a system for providing energy.
Time to align agriculture as a system to meet existing demand
instead of a mere food production system.
Rapid growth of secondary and tertiary sectors.
Globalization of agriculture.
Environment conducive to support private investments in faming
A growing realization that agriculture and farming communities
need better support.

Threats

Production crash
Market failure and Price crash
Short term changes in demand for agricultural
commodities affecting long-term actions.
Lack of clarity about legal system to
safeguard interests of farmers and other
stakeholders including investors.
IPR rights and private research.
WTO and International agreements

Part 5
How do we overcome the weaknesses and utilise
the opportunities for rejuvenating agriculture?

Measures required for


rejuvenation of
Productivity improvements of food
agriculture.
crops.

Diversification of food crops


Diversification towards non food
crops
Measures to ensure sustainability of
cropping systems.
Providing security net to the farming
community.

Agriculture seen as a system for food selfsufficiency alone.


Change in policy statement
Shrinking Land-man ratio
Consolidation of holdings
Depleting vegetative cover
Support agroforestry
Support irigation, water harvesting and
Dwindling water resources
regulate use of ground water
Use oganic manure, improve soil nutrition
Decreasing productivity of land
status
Grow short duration crops, drought resistent
crops and improve efficiency of irrigation
systems. Introduce better insurance
High dependence on rainfall
mechanisms.
Can be reduced through scientific use of
Increasing cost of production.
inputs. Providing targeted subsidies.
Create enabling provision to support
Poor capital formation in agriculture.
investments in agriculture.
Lack of economic sense in production
process.
Improve awareness of farming communities
Revamp agricultuarl research priorities and
enable extension workers to acquire
Decreasing Public Research and extension technologies both from private as well as
support
public research
Support contract farming. Create facilities
Production for unknown markets
for forward trading.
Lack of legal systems for using land as a
Change legal system to enable farmers to
capital contribution
contribute land as their share

Issues relating to
productivity enhancement
measures.

Food commodities are by and large Demand inelastic commodities. Demand is


almost constant and limited deficits and surpluses in availability influence the
market price significantly.

The comparison of yield between research trials and farmers fields itself
indicates that with proper application of technologies in the area of soil, nutrition
and water management is possible to increase the yields. These measures
may increase resource use efficiency and help the farmer to reduce cost of
production.

The sad story is that increased productivity may not necessarily mean more
income to farmers. If more food commodities are produced, the ultimate
beneficiary is the consumer and farmers might even may be affected adversely,
if proper price support mechanisms are not in place.
Thus productivity improvements of food crops may be very useful to the nation,

but may not be for the farming community.

Diversification from food


crops to non food crops.

There are however, many opportunities


to rejuvenate agriculture. It is time to
transform our agriculture into a system
to meet the non food demands of the
domestic market instead of viewing it as
a mere food production system. Some
prominent opportunities available are
noted below;

Opportunity under biofuels

The country is facing fuel crisis. Precious foreign


exchange is being spent on import of petroleum
products. Present technology allows use of biofuels
either directly or along with other fuels. There exists
scope for diversification from a system for food
production to a system for producing biofuels. At 15%
replacement of Diesel and Petrol, the
market
available is estimated to be about Rs 1200 crores for
Karnataka state alone. If automobile system is further
refined to use more of biofuels market available will
be proportionately higher.

Opportunities available
under Packging

Packaging of goods is an emerging sector.


Opportunity has been completely utilized by
plastic almost to an extent of rendering
agricultural inputs useless.
With a legislative framework in place for
curbing the use of plastics in packaging and
supporting organic products through
appropriate policies it is possible to transfer
domestic packaging opportunities to the tune
of 6000 crores to agriculture.

Opportunity in the area of


Pharmaceuticals

Biopharmaceuticals is a very
important sunrise sector and is
heavily loaded with IPR. With
proper legal framework in place it
should be possible for supporting
contract farming in this sector.

Opportunity in the area of power


generation

Electrical power is in short supply in the


whole nation. Production of electrical
power using cogeneration plants in
sugar factories is not new. But, why
waste alone has to be burnt. Our
agriculture production system can be
realigned to produce of high calorific
value fuel.

What is the role of governments?

Agriculture continues to be a priority


sector. Funding of interventions is difficult
but not insurmountable.
The policies required for greater flow of
private investments are not in place. The
sector now needs third generation
reforms. These reforms involve political
ideologies. Political will to usher in
reforms is perhaps the need of the hour.

Suggested reforms

Changes in land reforms.


Changes in laws relating to
marketing of agricultural produce.
Providing safety net to farmers.
Recognizing private sector research
contributions
Revamping of extension system.

Many more.

Thank you

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