Mains Paper 3: Economy
Prelims level: APMC
Mains level: Transport and marketing of agricultural produce and issues and related constraints
• It is now clear that the battle against the Covid-19 pandemic has to be fought on two fronts:
• the first, of containing the virus itself, and
• the second, the longer-term and much more complex challenge of getting the economy back on the rails.
Analyzing the two fronts:
• The first front is under the somewhat wobbly control of central and state authorities, even if it takes another three to four months to declare some kind of victory.
• The second front is just opening up, and the fog over the battlefield is slowly lifting, leaving us guessing about the challenges that await us.
• While eminent thinkers and experts are weighing in daily on the broader macroeconomic policy choices, the focus of this piece is on agriculture and the options available to revitalize the sector.
Some context setting is necessary:
• For almost two months, while the industrial and service sectors largely ground to a halt and are now struggling to restart, Agri supply chains have quietly kept humming.
• This is despite severe disruptions in long-distance road transport and shortage of labor.
• An even bigger challenge from the ordinary farmer’s perspective was the closure of local mandi across the majority of states, choking off the only real marketing platform available to them.
The country continued to receive supplies:
• Yet, all major cities across the country continued to receive supplies of fresh vegetables, fruits, and milk throughout the lockdown.
• Even as dozens of instances emerged of produce being dumped for lack of buyers or crashing prices, farmers as a community have kept the agri-engine running on a lower gear.
• They have quietly and without fuss harvested a bumper rabi crop of wheat in North and Central India amid unfamiliar social distancing protocols, and even managed to notch up early Kharif planting, topping last year’s figures.
• All this has been achieved against a backdrop of institutional credit virtually drying up and informal credit rates shooting up savagely.
• The good news is that government procurement of wheat is progressing satisfactorily and, by all accounts, the supply chain for inputs like seed and fertilizer for Kharif sowing is also beginning to function normally.
Macro agricultural story:
• We have had several years of sub-4% growth in the sector, prices for most crops are stagnant or falling, and no technology breakthrough has been delivered in over a decade.
• Markets remain restricted by APMC led monopolies, and e-NAM has failed in its promise to deliver an alternate channel to farmers to tap a wider, pan-India market.
• Despite the recent excitement generated by UP, MP, Gujarat, and a few other states liberalizing direct sourcing of farm produce, the hard fact is that, till now, no state has notified the rules and regulations under which the new liberal order will operate.
• To add to the many woes of agriculture, we also have the unprecedented reverse migration of lakhs of migrant laborers, fleeing
locked-down cities, and closed factories and workshops.
• This burden will have to be shouldered by agriculture for the next couple of years at least, as there is little likelihood of a quick return of the majority of these migrants to industrial or service sector employment.
• At the same time, the domestic supply of all agri-goods, except oilseeds, is in surplus.
Require an export-led agricultural strategy:
• An export-led agricultural strategy offers an inclusive pathway towards growth, income, employment, and rural poverty reduction.
• One may argue that India is already a major exporter of items like frozen buffalo meat, marine products like shrimp, and basmati rice, besides a varied basket of goods ranging from grapes to spices.
• However, exports of agri-products in 2018, at $38 billion, made up only 11.76 % of India’s total exports and hardly 2.5 % of global agri-trade.
• In contrast, a small country like Holland exports $100.5 billion worth of agri-products every year and commands a 6.7% share of the world trade in agri-goods.
Proactive agriculture export strategy:
• It covering every category of agri-produce available in India: field crops, horticulture, dairy, livestock, poultry, and fisheries.
• Today, we are in a position to both address our needs of food security and become reliable suppliers in the international market.
• This is not to say we can start exporting from the next marketing season.
• Too much needs to be done in terms of aligning our cropping systems with globally accepted production, storage, packaging, transportation, and handling norms.
• Our farmers and supply chains will need to reorganize and reorient themselves to address a global market and its attendant challenges.
• By setting a goal to gradually open up all agri-produce to exports, the country can set an inspiring and exciting new horizon for itself.
• It introduces an entirely new dimension to how investments in agriculture by farmers, cooperatives, and farmer producer organization (FPOs), SHGs, supply chain agents, technology providers, and value addition players—and, most of all, the government—will be viewed.
• The choice to move toward export-oriented agriculture also provides a chance to play up our most under-leveraged strengths:
• The millions of family-run farms spread across the second-largest arable area in the world, which is situated in 15 agro-climatic zones, has abundant labor, and a long tradition of farming that makes for quick adoption of new technologies.
• No other sector offers such an inclusive and pan-India potential for reviving growth, employment, and incomes in the next 18-24 months.
Q.1) With reference to the COVID-19 Global Humanitarian Response Plan, consider the following statements:
1. The plan puts a special focus on more vulnerable countries and combating food insecurity and gender-based violence.
2. It was launched by the United Nations and partner agencies.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) What are agricultural export reforms require in India after post-pandemic?