Probable Impact of New Procurement Policy on Production of High Value Crops - Dr.S.S. Chhina
Albeit, it is an annual exercise that the commission for Agricultural costs and prices announces the minimum support prices of two dozen of crops, prior to their sowing, but only four are being procured by the Government, at those announced prices. Wheat and paddy are procured by Food Corporation of India along with the State Agencies to maintain the buffer food stocks at the central level. The cotton is procured by Cotton Corporation of India and Sugarcane by the Sugar Mills of the State ushering of the green revolution was largely dependent on the assured marketing, that proved a big gladiator to enhance the area and production of wheat and paddy, the staple crops of the country. The total production of food grains that was only 82.02 million tonnes in 1960-61 thrived to 129.59 million tonnes in 1980-81 and further rose to 271.96 million tonnes in 2016-17 that includes 163.29 million tonnes of Paddy and 96.64 million tonnes of wheat. The production of paddy was only 51.87 million tonnes and wheat was just 11.00 million tonnes in 1960-61. But the staggering results were obtained in the production of these two crops.
By 1970 the country that was heavily dependent on food imports turned as an food exporting country because of the green revolution. At present it is the top exporter of paddy. In 2015-16, it exported 10.50 million tonnes of paddy and surpassed much ahead to the other rice exporting countries like Thailand, Vietnam, Pakistan, U.S.A. and Mynamar.
The new high yielding varieties of wheat and paddy were developed by the research Institutes and Agricultural Universities. As Paddy and wheat both requires adequate quantity of water for irrigation, so the area under those crops escalated much higher in Punjab, Haryana and U.P. those had abundant water and particularly the ground water on which, 60 percent of the irrigation was dependent. So the farmers of those states diverted towards the cropping pattern of wheat and paddy. The Punjab and Haryana saw the staggering results in the output of these crops that is why these two states had been contributing about 80 percent in the total food stocks of the country.
It is quite evident that the escalation of area under wheat and paddy was mainly resulted because of assured marketing as it was available to these two crops, whereas the area under other crops went on depleting. India is the largest producer, largest consumer and largest importer of pulses. As the states where the assured marketing was provided to wheat and paddy, the area under pulses remains stagnant or went on declining and the Import bills for pulses goes on rising, because of the surge in prices of pulses in other countries because of the limited supply. Area under pulses was 23.56 million hectares in 1960-61 and the total production was 12.70 million tonnes, but this area goes on rising till 1990-91 when the total area under pulses became 24.66 million hectares and total production was 14.26 million tonnes, but after that goes on declining. The announcement of higher and higher of minimum support prices was an big allurement to the farmers so again after 2006-07 the area started rising gradually. In 2007-08 it was again 23.63 million hectares with output of 14.76 million tonnes. The rise in the area of pulses was on the snail’s pace, even with the big jump of M.S.P. every year. In 2016-17, the total area under pulses increased to 28.86 million hectares with output to 22.14 million tonnes. It vindicated the contention that assured marketing is much more important than the allurement of higher but volatile and uncertain prices.
The same happened with oil seeds production. The country went on importing more and more quantity of oil seeds at the hefty prices in the International market, though area under oil seeds thrived perpetually from 1960-61, but the demand exceeded supply. So the surge in output of oil was not commensurate with the demand of the country. In 1960-61 there were 13.77 million hectares under oil seeds with total production of 6.98 million tonnes. The area further increased to 17.60 million hectares with 9.37 million tonnes of production in 1980-81. In 2016-17 area under oil seeds thrived to 26.63 million hectares with production of 33.60 million tonnes. But area of certain oil seeds crops depleted much. The area under groundnut that was 6.46 million hectares in 1960-61 declined to 5.32 million hectares similarly the area under sunflower that was 2.34 million hectares depleted to only 0.37 million hectares in the same period.
Pulses and oilseeds are the high valued crops those could be helpful to enhance the income of the farmers, but as shown by data concerned with these crops where the area under pulses had increased marginally, the area under oilseeds could not escalate significantly. Since the inception of the minimum support price policy in Agriculture, when the M.S.P. of both the pulses and oilseeds were enhanced significantly, the area and output must have increased accordingly but while analysing the main reasons for this dismal situation, the lack of assured marketing was identified as one of the major factor. The new crop procurement policy announced by the Central Government looks as a most prudent policy that would mitigate the uncertainty as well as the fear of volatile and unfavourable prices of those crops.
In this new procurement policy the government has envisaged the three alternatives. In the first, the additional crops would be procured by the Central Government with partnership of the concerned State Government. In second case the seller of those crops would be paid the balance of M.S.P. and the market price by the government, but the farmers would have to register themselves with the regulated market of the area. In the third option the private traders can procure those products but those traders would have to pay the minimum support prices as announced by the Central Government. While analysing the probable impact of these three options, the first one looks as the most prudent and appropriate to enhance the confidence of the farmers because the Government either Central or State would be responsible to pay the announced minimum support price. Definitely it would have very favourable impact. The area as well as output would escalate of those high value crops that includes the pulses and oil seeds in the country.
Already the country is producing enough food grains, where the rice is being exported. The wheat prices in the International Markets are not attractive that is why the export of wheat is not economical. But once the area under pulses, oilseeds and other high value crops would increase it would reduce the import of those crops. It would not only save the precious foreign exchange but even the consumers would be recured to purchase adequate quantity at the reasonable prices.
Already the sugarcane output of 30 million tonnes that is much higher than the required sugarcane for the demand of sugar of the country that is estimated to be 25 million tonnes. The area under paddy can be diverted for high value crops without impacting the food stocks of the country.
India is a country of small farmers, the large number of holdings belongs to marginal and small farmers below 2 hectares, those are 85.01 percent of the total holdings and holdings below 4 hectares are 95.05 percent of the total. Any agricultural policy must address the problems of this large number of farmers where the assured marketing is a significant imperative. As these farmers are to eke out their living by their farm income, they can’t adopt the crops those are involving even an iota of risk. That is why all such farmers are opting for the wheat and paddy being of their assured marketing at the announced prices.
For drifting of their cropping pattern towards the high value crops, the assurance of the sale of their crops at the remunerative prices would be the most significant factor. Since the inception of the policy of announcement of minimum support prices, that includes the high value crops of pulses and oilseeds, no significant impact had been noticed either in enlargement of area or production of those crops rather the area and production of some of the pulses and oilseeds has depleted remarkably.
While looking on the minimum support prices and the per hectare yield of those crops it is quite discernable that those crops are equally beneficial. The M.S.P. price of sunflower was only Rs.600 in 1990-91, but it was raised to Rs.4100 in 2017-18, similarly price of maize was raised to Rs.1425 from Rs.180 per quintal in the same period. Minimum support price of gram was raised to Rs.4000 per quintal in 2016-17 and that of soybean to Rs.3050, the price of Moong was raised to Rs.5575 and similarly the prices of other high value crops of pulses and oil seeds were raised. It was only because of the absence of assured marketing that the surge in area and output could not be registered.
There are certain other high value crops those are being used for medicines and for other necessities. The fruits and vegetables are also in the list of high value crops, but those are affected by the big volatility in their prices. The lack of proper storage with the farmers to preserve them for sometime is also an impediment. Apart from minimising the post harvest losses, it is imperative to explore the Export potential, but assured marketing is the well tested gladiator to enhance the production of these products. Only in one year of 2017-18, the vegetables worth Rs.5182 crores and fruits of Rs.4229 crores had been exported from the country. It had been observed that the daily use items of potatoes and onions had much volatility in their prices that is why their production had been affected. So many times the onions had been imported from other countries to meet the demand of the masses but at the other time those had been exported. The production of these vegetables can be increased very easily but the volatility in prices affecting its production would have to be removed. How a small or marginal farmer can undertake the risk to grow such crops with the hope to raise his Income, without the assured marketing.
Now when the new policy of procurement is announced, some of the high value crops of daily use including vegetables and fruits must be included in the list of state procurement on the basis of the high yielding crops of that area. The diversification of crops with the growing of other crops along with the traditional crops would promote the level of employment, adequate and regular use of machinery, proper use of inputs including water and enhancing of income through new policy of assured marketing.
It has been observed that a few agro processing units are operating for value addition of agricultural products but uncertainty of raw material is assigned as the main hinderance for their sluggish development. Such impediments can also be removed by encouraging the contract farming between agro-processing unit and the farmers with the prudent and suitable legal frame work in the state. The rules to obtain the material from the farmers and the disposal of their product to the processing units must be justified, safe guarding the interest of the farmer as well the processors for the smooth functioning of Agro Processing Industry. It is never desirable that the nation may waste its precious sources. The sources must be utilized to the maximum for the welfare and uplift of the farmers and the general public. The contract farming, a sort of assured procurement could be the best option. The new procurement policy with the objective of assured marketing must boost the area under high value crops.
For enhancing the income of the farmer, the hard realities those are confronting as constraints must be realised. The farm size is the most important factor of production, but area cannot be enhanced rather the size of the holdings would further deplete by division of land among family members. The yield of the crop is already at its saturation point particularly those of the principal crops, because of the application of the law of Diminishing marginal returns. But yield of high value crops can be enhanced being the new crops. Even the new varieties of those crops can be evolved, as small attention had been paid on research of those crops in the past.
While analysing the overall situation of cropping pattern in the country, it can be concluded that state procurement of some other high value crops must have its favourable impact in the enhancement of the income of the farmers particularly the small scale farmers, those are below 5 acres but precautions to mitigate the challenges must be adopted while implementing this new procurement policy. The main among them is that the cropping pattern may not get drifted towards the high value crops, jeopardizing the food crops and food stocks of the country. As the new procurement policy would be adopted with the partnership of the states, so the states must identify the various zones even in the same states on the basis of the yield of the crop in the respective zone. The new procurement policy would prove much useful for enhancing the farm income, reducing of the imports of pulses and oilseeds, saving of the foreign exchange and moreover for the best utilization of the limited sources for the best interest of the country.
The Writer is a Senior Fellow of
Institute of Social Sciences, New Delhi