Rejuvenating Agriculture in Karnataka: Challenges and Options

1. Rejuvenating Agriculture in Karnataka: Challenges and Options S. Subramanya Secretary ( Budget & Resources) Government of Karnataka

2. 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?

3. Phases of Agricultural Development in India • Phase 1 1951 to 1967 • Dominated by extensive agriculture. Reforms in the form of land grant and land reforms. • Phase 2 1967 to 1999 • Productivity enhancement measures through green revolution technologies • Phase 3 1999 till now • Attempted liberalization of agriculture

4. Recent trends indicate that though the performance of the Karnataka State’s 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 state of our agriculture- Deceleration ? Gross State Domestic Product at constant prices

5. 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.

6. 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.

7. 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. Growth pattern of agricultural production in Karnataka Total food grain production in Karnataka from 91-92 to 06-07

8. 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. Production Volatility in agriculture Sown area and yield relation of food grain production

9. 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? Impact of production of price of agricultural commodities

10. 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.

11. 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.

12. 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.

13. 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 Who gained and who lost on account of change from Self Reliant farming to Externalised farming? While the consumer got the benefit, the producer was not equally benefited

14. 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.

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

16. 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.

17. Possible objectives of Rejuvenation • Food security • 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. • Increasing income of farmers. • 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!

18. 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.

19. Part 4SWOT analysis of Agriculture system

20. 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

21. 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.

22. 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.

23. 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

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

25. Measures required for rejuvenation of agriculture. • Productivity improvements of food crops. • Diversification of food crops • Diversification towards non food crops • Measures to ensure sustainability of cropping systems. • Providing security net to the farming community.

27. 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.

28. 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;

29. 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.

30. 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.

31. 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.

32. 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.

33. 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.

34. 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….

35. Thank you