Sunday, 5 April 2020

Farmers, Entreprenurs & HVA

Updated: April 27, 2013 4:46 pm

Last week, your columnist was invited to speak on High Value Agriculture (HVA) to the IAS probationers at LBS national academy at Mussorie. This course co-ordinator wanted me to share my views on how agriculture can transform rural economies and livelihoods, especially in the context of development interventions made by the National Horticulture Mission and the national mission on micro irrigation.

However before talking about HVA (horticulture, dairying, livestock, poultry and fisheries), it was important to discuss the context in which HVA was becoming centre stage. First, conventional agriculture—wheat, paddy, jute, pulses and oilseeds, etal had touched a plateau, and barring major technology breakthroughs it was not likely to result in manifold increases in yields or incomes. Rather, this cycle had exhausted the soil increased input costs and stretched the public procurement system to the hilt. Second, the demand pattern was changing. As incomes rose, people were shifting from consumption of cereals to a far diverse basket in which dairy products, fruits and vegetables had an increasing share. Third, with rising urban populations, especially the growth of Tier II and Tier III cities, the demand for HVA was not limited to the large metros alone : over a hundred cities in the country were lapping the produce of HVA, and asking for more, (both literally, and metaphorically! )Last, but not the least, HVA did not require large land holdings—rather it was possible to breach the BPL barrier with HVA as it was more skill intensive than conventional agriculture.

Let us now examine these in some detail. As reported in these columns, the country is now producing more food than it can consume, and even if the Right to Food Bill is enacted, the country has the ‘technical capacity’ to muster its requirement. Of course this will call for higher investments in fertilizer and inputs- and substantially higher investments in the logistics of procurement- but this also means that farmers producing food grains will never really break free from ‘input subsidies and procurement agencies’ with the attendant ‘inefficiency’ and the near impossibility of higher growth trajectory as procurement prices do not unleash the entrepreneurial spirit of farmers. In fact, when government decides to enforce the Right to Food, even the existing agribusiness entrepreneurs will be crowded out as over two thirds of the population will depend on the PDS for their basic food supplies. The only ones happy will be the intermediaries—who will collect the produce from the farmers and bring it to the FCI and those who own PDS shops.

The only option for the enterprising farmer then is to move out of the business of cereals, and to grow commodities which are not under the price control regimen of the government. This means fruits, vegetables, dairy products, fisheries, and processed foods, and flowers, medicinal and aromatic plants. These are commodities in which the market sets the price, and there is a premium on quality produce—unlike public procurement systems in which the focus is only on Fair Average Quality, and thus there is no system of giving a premium on quality produce.

Will High Value Agriculture work for all farmers across the country? The answer is an emphatic NO. HVA works best in areas which are close to urban centres because unlike cereals, whatever is high value is also usually perishable in nature. Given the rather rudimentary stage of cold chain development in our country, it therefore makes sense to grow green vegetables in villages which are well connected to the consumption centres. This is also what the Vegetable Initiative for urban clusters envisaged – however the stumbling block for VIUC is also the problem faced by all High Value Agriculture—moving commodities from the farmers filed to the markets. HVA is more about grading, packaging, logistics, marketing and value addition, rather than about production per se. For while it is easy to establish Tissue Culture Labs and a series of green houses equipped with drips, sprinklers and fertigation techniques, the real challenge lies in ensuring that the produce gets a proper remuneration. Many innovative steps have been taken for this as well—including provision for certifying that Good Agricultural Practices have been adopted, and that the residue levels are well within control. Thus the incomes and livelihood opportunities around HVA come from all the services associated with the production process. As a matter of fact, most HVA farmers are also keen on getting their facilities insured—for these are fairly capital intensive.

The point being made is that when farmers adopt HVA—they unleash an entire chain of economic activities in their villages. These range from farm advisory services to micro irrigation engineers/technicians to agri insurance providers, besides of course all those who are involved in the value chain from the farm to fork. Also, the periodicity of operation is such that the man days generated is significantly higher than in conventional agriculture. One thousand square feet of protected cultivation generates incomes and employments equivalent to five hectares of irrigated, and ten hectares of un-irrigated land!

Last but not the least, there is an ecological perspective as well. Protected cultivation optimizes the use of precious resources—especially water which we are losing very rapidly, and fertilizers—the subsidy on which far exceeds the agriculture budget of the country. Therefore let us apply our technical, managerial and professional skills to HVA, wherever we can, and giver higher and sustained incomes to farmers!

 By Sanjeev Chopra

(An IAS Officer, the author is Joint Secretary & Mission Director, National Horticulture Mission, Government of India. The views expressed are personal.)

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