- Over the past five years, the agricultural economy as measured by the gross value added (GVA) reported in the National Account Statistics has grown at an average rate of 2.3 percent.
- Even though the terms-of-trade movement favoured agriculture, income may have shifted from farmers to agricultural labourers as a similar terms-of-trade calculation for farmers vis-à-vis non-farmers shows no such improvement and is static through these years.
Current state of agriculture in India
- Farming in India is moving from a subsistence and traditional mode to a modern capitalist mode with farmers investing in land improvement and irrigation, adopting new seed varieties, new crops and new methods of cultivation.
- Many farmers with marginal holdings are leasing their land to larger farmers so that there is a de facto dilution of ceiling laws.
- Enterprising farmers are borrowing and investing in these improvements in a business where weather and market volatility risks have not been significantly reduced.
- The volatility of weather – The key to weather risk lies in water management and there the record of irrigation development is not inspiring. Surface irrigation is declining and the modest growth in irrigated area for quite some time has come from tube-wells set up by individual farmers which are leading to groundwater depletion problems in many areas.
- Obscure MSP distribution – More than 60 per cent of the gross cropped area produces products others than rice and wheat, for most of which, even if minimum support prices (MSPs) are announced, hardly any procurement takes place. Farmers are entirely dependent on private traders.
- Unexplored crops – A particularly important component of agriculture is the production of perishable fruits and vegetables and milk. For many of these products, markets are volatile with large differences in flush and lean season prices.
Reforming the agricultural marketing system is essential to respond to the fury of farmers. Co-operatives of growers and linked investments in processing and cold chains, opening the doors for organised retail to deal directly with farmers, removing restrictions on how and to whom farmers can sell, all of them present in the case of milk marketing today, are a set of focused measures that can be implemented, provided the government is willing to take on the traditional traders who dominate the rural and urban markets for most perishables.
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