About Agriculture

Agriculture in India

In a developing country like India, the agricultural sector along with the rural economy play significant roles in providing livelihoods, ensuring food security, and providing momentum to the growth of industries and service sectors. With a population of 1.37 billion, India is the world’s second-most populous country. 60.3% of India’s arable land employs close to 60% of the Indian labor force, makes up for only 18% of the national GDP, and 15% of the total GVA at current prices.
Of the total holdings, 85% fall under the marginal and small farm categories of less than 2 hectares. The average size of landholding has been estimated to be 1.15 hectares. During the last five decades, global agricultural production has increased at an average annual rate of 2.5-3%. The slowdown in agricultural growth has become a major cause for concern. India’s total rice yields are one-third of China’s and about half of Vietnam and Indonesia’s. The same is true for most other agricultural commodities.
The uncertainties in growth in agriculture are explained further by the fact that more than 50 percent of agriculture in India is rainfall dependent which aggravates the production risks. Climate change must also be cogitated as more extreme events – droughts, floods, erratic rains – are expected and would have significant impacts in rain-fed areas.

Challenges for agriculture in India

India’s food security depends on the production of cereal crops, as well its production of fruits, vegetables, and milk to meet the demands of a growing population with rising incomes. To do so, a productive, competitive, diversified and sustainable agricultural sector will need to emerge at an accelerated pace. However, innovative solutions to the challenges mentioned below are the need of the hour for India’s overall development and the welfare of its farmers:

1. Low Yield

All measures to increase productivity will need exploiting, amongst them: increasing yields, diversification to higher-value crops, and developing value chains to reduce marketing costs.

2. Irrigation

The total percentage of net irrigated area to total cropped area is 34.5 percent, which makes a large segment of cultivation dependent on rainfall. Ways to radically enhance the productivity of irrigation (“more crop per drop”) need to be found. Better on-farm management of water and the use of more efficient delivery mechanisms such as drip irrigation are among the actions that could be taken.

3. Low Productivity

Inadequate means of transport or market linkage often force farmers to sell their produce to local money lenders at low prices. Due to a general lack of warehousing or storage facilities, farmers are unable to store their produce when prices are low. Such factors contribute to the low productivity of Indian agriculture.

4. Agricultural Credit

In India, access to credit remains a significant challenge for small and marginal farmers. Typically, they access to credit through the informal sector, where monopolistic practices frequently occur, and interest rate can easily exceed 100 percent per year (Dooner, 2008:14). There has been little increase in the farmer coverage under institutional credit, leaving 60 percent of farmers outside the net. An increase in access to and availability of institutional credit would help solve this issue. If rural cooperatives and commercial banks begin acting as sources of credit, they may be able to replace the widely prevalent money-lending through informal sectors. Institutional credit is also essentially non-exploitive in nature and is largely directed towards raising agricultural productivity and increasing farmer income.

5. Market Access

For small and marginal farmers, the marketing of their products is the main problem apart from credit and extension. The challenge also lies in organizing the small and marginal farmers for marketing and linking them to high-value agriculture.

6. Limited Extension Services and inaccessible technology

The resource-poor farmers are becoming victims of exploitation by unscrupulous traders and money lenders. There is an immediate need for revitalizing the existing agricultural extension system. The main ingredient of reforms should be increasing the use of media and information technology including cyber kiosks to disseminate the knowledge on new agricultural practices and the information on output and input prices.

7. Climate Change

Predicted temperatures and India’s recent trends in precipitation, give rise to estimates for farm income losses of 15 percent to 18 percent on average, rising to 20 percent-25 percent for unirrigated areas. At current levels of farm income, that translates into more than Rs. 3,600 per year for the median farm household. India needs to spread irrigation – and do so against a backdrop of rising water scarcity and depleting groundwater resources.

8. Debt Traps

Average Indian farmers generally work on uneconomic holdings using traditional methods of cultivation. This leaves them exposed to the risks of poor agricultural cycles and almost perennially in debt. Once farmers fall into debt due to crop failures, low revenue, or money-lender malpractices, they risk never coming out of it. A large part of farmer liabilities is often ‘inherited debt’ wherein along with inherited property or land, farmers inherit or pass on debt to the next generation. With an increase in the amount of institutional credit loaned to farmers, this cycle can be ended.

9. The scaling-up challenge for AgTech Start-ups

Agricultural Technology or AgTech companies develop technologies that allow farmers to amplify and maximize yield by supervising and governing crop variables such as soil conditions, micro-climates, moisture levels, etc., through automation. However, India currently has only 500 established AgTech startups. With the current Indian government endorsing private entrepreneurship that drives value addition to farmers’ produce and allied activities, startups have the potential to grow. However, these start-ups require a viable route to reach farmers and provide solutions customized to local needs thus achieve scale and business sustainability.