While Modi Bumbles Farms Sector Tumbles

Bad news for Narendra Modi govt as negative growth looms in farms

By: Harish Damodaran | New Delhi | December 13, 2014 12:18 pm

 

 

Summary For the first time since 2009-10, India’s farm sector faces the prospect of a negative growth.

 

 

Farmers have sown less area under wheat and also the two other major rabi crops: gram or chana and rapeseed-mustard. (Reuters)

 

For the first time since 2009-10, India’s farm sector faces the prospect of a negative growth, which isn’t a great start for the Narendra Modi-led government at the Centre.

The Agriculture Ministry’s latest data on plantings for the ongoing rabi (winter-spring) season shows progressive crop acreage, at 470.74 lakh hectares (lh), to be below the 503.66 lh covered during this time last year.

Farmers have sown less area under wheat (241.91 lh versus 251.32 lh) and also the two other major rabi crops: gram or chana (71.51 versus 85.75) and rapeseed-mustard (61.48 versus 64.54).

The rabi setback comes on top of a not-so-good kharif (summer-autumn) season that saw production declines in most crops, courtesy a poor south-west monsoon. “Going by the current acreages trends, it looks the rabi crop may not make up for the kharif shortfall. In that case, registering a positive growth for agriculture in 2014-15 would be a challenge”, said Ashok Gulati, former chairman, Commission for Agricultural Costs and Prices.



But it is farmers, not consumers, who are likely to pay the price this time round. The current drought-like situation notwithstanding, prices in mandis are ruling lower compared to levels a year ago for most crops (see table).

Also, annual consumer food price inflation fell to 3.14 per cent in November, from 5.59 per cent the previous month, as per official numbers released on Friday.

“Farmers are facing a double whammy, from both declining output and prices. The time has come to think more about them than consumers”, noted Gulati.

According to V N Saroja, Chief Executive Officer of Agriwatch, a Delhi-based agri-commodity consultancy firm, the price drops are happening mainly in crops where India is a major producer and exporter. This is the case with rice, wheat, maize, cotton, soybean or sugar.

“The crash in global prices of these crops over the last 7-8 months is getting transmitted to the domestic market. But prices are ruling firm in commodities where we are a large consumer and importer, especially pulses and oilseeds such as rapeseed-mustard. They may even go up as the effects of the drought are felt,” she added.

Atul Chaturvedi, CEO of Adani Wilmar that manufactures the Fortune brand of edible oils, said that a reduced rabi harvest is unlikely to cause any significant food inflation, “when the world is awash in commodities”. Prices may rise only in “niche” products such as rapeseed-mustard or groundnut oil, as against globally-traded and mass-consumed commodities like palm and soybean oil.

The lower rabi plantings are being attributed mainly to the lack of adequate soil moisture. Cumulative rainfall in the northeast monsoon season (which runs from October to December) has so far been 31 per cent below the normal long-period average for this period at an all-India level.

This is over and above the 12.5 per cent deficit during the main southwest monsoon season from June to September.

The impact of weak winter precipitation has been felt the most in Madhya Pradesh, which has recorded a 75 per cent northeast monsoon rainfall deficit. As a result, progressive area sown under wheat in the state is down from 48.89 lh to 41.42 lh this time, while also falling from 32.35 lh to 26.42 lh for chana. The possible withdrawal of a Rs 150 per quintal bonus paid by the state government in 2013-14, in addition to the
Centre’s minimum support price of Rs 1,400, is also seen as a reason for farmers planting less wheat this year.

In 2013-14, India’s wheat production hit an all-time-high of 106.54 million tonnes (mt), with similar records for wheat (95.91 mt), maize (24.35 mt), pulses (19.27 mt), total foodgrains (264.77 mt) and oilseeds (32.88 mt).

The Modi government may not be as lucky in its first year.

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 1
ANALYSIS OF TRENDS IN INDIA’S AGRICULTURAL GROWTH
Elumalai Kannan
and Sujata Sundaram
*
Abstract
The present study discusses the trends and patterns in agricultural growth at the national and sub-national levels in India. Data on important variables like area, production, input use and value of output were
compiled for the period 1967-68 to 2007-08 from various published sources. The analysis of data reveals that the cropping pattern in India has undergone significant changes over time. There is a marked shift from the cultivation of food grains to commercial crops. Among food grains, the area under coarse cereals
declined by 13.3 per cent between 1970-71 and 2007-08. Similarly, the performance of pulses in terms of area and output was not impressive during the study period. The use of technological inventions in the cultivation of other crops was also not so conspicuous in pulses. Nevertheless, the increase in crop yield has
been a major factor for accelerating production in the country since the late 1960s. The use of modern varieties, irrigation and fertilisers were important factors that ensured higher growth in crop production. However, technological and institutional support for a few crops like rice and wheat brought significant changes in crop area an d output composition in some regions. The results of crop output growth model indicate that the enhanced capital formation, better irrigation facilities, normal rainfall and improved fertiliser consumption helped to improve crop output in the country.

Background

The Indian economy has undergone structural changes over time with the anticipated decline in the share of agriculture in the GDP. Despite a fall in its share from 55.1 per cent in 1950-51 to 17.0 percent in 2008-09,
the importance of agriculture has not diminished for two major reasons. First, the country achieved self
-sufficiency in food production at the macro level, but still is a food deficit country ifacing massive challenges
of high prevalence of malnourished children and high incidence of rural poverty. The pressure on agriculture to produce more and raise farmers’ income is high. Second, the dependence of the rural workforce on agriculture for employment has not declined in proportion to the sectoral contribution to GDP. This has resulted in widening the income disparity between the agricultural and non-agricultural sectors (Chand and
Chauhan, 1999).
The experiences of developed countries show that transfer of labour force from agriculture to non-agriculture
,in particular the manufacturing sector took place. This had brought enhanced productivity growth in agriculture and hence higher income (Gollin et al., 2002). However, India’s manufacturing sector witnessed
volatile growth and its share in GDP has almost remained constant at 15 per cent for the last three decades.
Further, given the fact that the current economic growth pattern is driven by the service sector, labour
absorption outside agriculture will be slow until rural education improves dramatically in the near future.
Under these circumstances, higher growth in agriculture assumes great importance and is a matter of concern
for policy planners and research scholars in recent times (Chand et al. , 2007; Balakrishnan et al. , 2008; Bhalla and Singh, 2009; Reddy and Mishra, 2009; Vaidyana than, 2010 ).
*
Associate Professor and
Research Associate, respectively, ADRTC, ISEC, Bangalore–560 072.
The paper is drawn from the study “Policy and Institutional Options for Inclusive Agricultural Growth” funded by the National Agricultural Innovation Project (NAIP), ICAR, New Delhi.
Authors would like to thank the anonymous referee for the useful comments.

 2
Sustained agricultural growth, which is facilitated through constant policy and institutional support has the
potential to augment growth in the rural economy and associated secondary activities like food processing and retail trading. However, agriculture-led rural industrialisation has not received due attention from
policy makers in the country notwithstanding the fact that maintaining the growth of agricultural per se was lost sight of during the 1990s (Sen, 1992; Bhalla and Singh, 2001; Rao, 2003; Bhalla and Singh, 2009).
In fact, the growth performance of agriculture at the national level was splendid during the 1980s and its deceleration during the 1990s was attributed to the reduction in and/or stagnation of public expenditure on
agricultural infrastructure, defunct extension services and biased economic reforms (Thamarajakshi, 1999;
Balakrishnan, 2000; Hirashima, 2000; Mahendradev, 2000; Vyas, 2001; Rao, 2003).
However, there has been a renewed policy thrust from the government since mid 2000s to revive agricultural growth through various development programmes such as interest subvention on crop loans, the National Food Security Mission, the National Agriculture Development Programme (Rashtriya Krishi Vikas Yojana)
and the Pulses Develop ment Programme.
These programmes are likely to affect agricultural growth and farmers’ income in the country by providing
great erflexibility to the state governments to allocate resources to the priority areas of development. Aside
,patterns and trends in India’s agricultural growth is a well-researched subject.
Systematic efforts were made to analyse growth in crop output and its elements through decomposition analysis (Minhas and Vaidyanathan, 1965; Sagar, 1977; Sagar, 1980; Sarma and Subrahmanyam, 1984;
Majumdar and Basu, 2005, Joshi et al. , 2006). Historical aspects of agricultural growth, disparity and impact on farmers’ income and employment have been studied by several scholars. Some recent studies include those of Sawant and Achuthan (1995), Rao (1998), Bhalla and Singh (2001), Radhadrishna (2002),
Bhalla and Singh (2009) and Vaidyanathan (2010).
Some studies also looked at the effect of agricultural technology on growth of crop output and its instability (Cummings and Ray, 1969; Hazell, 1982; Ray, 1983; Mahendradev, 1987; Deshpande, 1988;
Vaidyanathan, 1992; Chand and Raju, 2009).
The present study contributes to the existing knowledge base on Indian agriculture in a way that it estimates the crop output growth model through econometric method.
The study also discusses the trends and patterns in agricultural growth at the national and state levels.
The paper is organised in seven sections.
While the second section discusses sources of data used for the study, the third section analyses changes in cropping pattern and output at national level.
Growth performance of major crops and crop output growth model at All India level are presented in
the fourth and fifth section, respectively.
The sixth section presents the growth performance of crops sector at regional level and the final section provides concluding remarks.

...and I am Sid Harth